Water Industry News

Apr. 29, 2005 

American Water sub sues Kentucky for rate increase

By Andy Mead

The day after the Urban County Council dropped its condemnation case against Kentucky American Water, the company went to court to try to get its rates increased.

The company wants Franklin Circuit Court to let it charge customers for more than $4 million for security costs and a share of the cost of its parent company's regional offices.

The Kentucky Public Service Commission declined to allow Kentucky American to pass on those costs when it approved the company's request for a rate increase in February.

Yesterday, condemnation supporters said the court action gives Lexington residents "four million reasons to sign the water petition" that would allow voters to decide on the condemnation issue.

A group called Let Us Vote Lexington is trying to gather 18,300 signatures to put the issue on the ballot.

"If this is a sign of gratitude from RWE for ending condemnation, I shudder to think how much more corporate monopoly ownership of the water system is going to cost us in the years ahead," said former Mayor H. Foster Pettit, who is chairman of Bluegrass FLOW (For Local Ownership of Water).

RWE AG is the German utility conglomerate that bought Kentucky American and its parent company in 2002, setting the stage for the condemnation attempt.

Kentucky American's attorneys, Lindsey Ingram Jr. and Lindsey Ingram III, could not be reached for comment last night.

The action they filed Wednesday in Franklin Circuit Court grows out of a Feb. 28 order of the Kentucky Public Service Commission that gave Kentucky American an 8.8 percent rate increase.

That was only about half of what the company had requested.

Among the expenses the PSC said could not be passed on to customers were $2.8 million that the company spent on extra security after 9/11 and more than $1 million for Kentucky American's share of the cost of a Shared Services Center in New Jersey and a call center in Illinois.

On March 18, Kentucky American asked the PSC to reconsider and allow it to pass those costs on to customers. On March 30, the PSC said no.

Now Kentucky American is asking the court to rule that the PSC erred, and that its customers should pay those costs.

2005 Lexington Herald-Leader and wire service sources. All Rights Reserved.