May 282013
 

Statement regarding corporate entity Kentucky American Water’s proposed rate increases on Fayette Urban County citizens.

(Editor’s Note: Great job Jim!)

“Thanks for holding this hearing tonight.

 

  • You are right to scrutinize this request from Kentucky American Water for another rate increase.

 

  • You are right to make it convenient for people to comment by coming here.

 

  • And you are right to make this process more transparent.

 

I was a businessman for almost 40 years. So naturally, business is part of my DNA.

 

  • As a businessman, I’ve made good business decisions, and I’ve made bad business decisions.

 

I can tell you Kentucky American is making bad business decisions. Decisions that are bad for the citizens of Lexington .

 

  • The decision to build the plant in Owen County was a bad business decision. Industrial demand is what drives water consumption. Industrial demand and consumption are declining all over the country. Conservation is the key strategy.

 

When I was in business and made bad decisions, I had to pay for them.

 

  • Kentucky American is not paying for its bad decisions. It is asking the Public Service Commission to make Lexington citizens pay for them.

 

  • It is asking you to sanction their bad decisions.

 

  • Lexington citizens are getting pretty tired of this.  I sent out a notice to encourage people to come to this meeting and got back an earful.

 

Where have these bad business decisions led?

 

  • As customers we are all paying 71 percent more for water than six years ago after three rate increases … and now Kentucky American is asking you for another increase.

 

  • The reason for all these increases is the $164 million treatment plant that opened in 2010 … Kentucky American insisted on building the plant even though its customers are using less water … that’s a bad business decision.

 

  • This project was sold to the PSC as a regional solution. But no other cities bought in. So now, Kentucky American is buying small water plants and selling those customers its excess capacity from the Owenton plant and asking Lexington to help pay for that expansion, too. It’s happening right now in Owenton. Nicholasville and Paris may be next.

 

  • Lexington gets a triple whammy

 

o                   We are asked to pay higher and higher rates.

 

o                   We are asked to help pay for Kentucky American’s efforts to sell its excess capacity.

 

o                   And we are asked to pay for a Kentucky American decision that is already costing the city $3.2 million this year alone.

 

Ø                  Let’s delve a little deeper into this bad business decision.

 

Ø                  Kentucky American chose to stop billing for the city’s water, landfill and sanitary sewer fees. Irresponsible corporate decision making. And, more importantly, it is irresponsible and outrageous civic behavior.

 

Ø                  We were paying Kentucky American $1.5 million a year to do the billing for us.

 

Ø                  We project that decision will cost Lexington $3.2 million this year, including $2.1 million in lower collection of fees, $700,000 in annual increased billing expenses and $400,000 in implementation fees this first year.

 

Ø                  As we move forward, this irresponsible corporate decision could easily cost our taxpayers millions every year.

 

Ø                  Now Kentucky American wants their Lexington customers to make up for the money the company lost when it decided not to continue our billing … in other words, to pay for another bad business decision.

 

Ø                  Although I try to separate issues related to Kentucky American I can say this was the single-most anti-Lexington action I have seen in a corporate citizen of our City … and this corporate citizen promotes itself as operating in the public interest.

 

  • I am asking the Public Service Commission:

 

    • To say NO to this latest rate increase in its entirety.

 

    • To say NO to Kentucky American’s request to automatically pass along the cost of capital spending, chemicals and electricity without PSC approval.

 

    • And, most importantly, I am asking the PSC to step back, take a look at this company’s recent actions, and consider at what point we stop paying for all of Kentucky American’s bad decisions?

 

Thank you.”