In the midst of an almost $1-million budget hole, the Kentucky Public Service Commission(PSC) agreed to allow the Martin County Water District an emergency rate increase. The PSC says the Water District needs to charge more in order to stop the utility’s financial collapse.
The PSC granted an annual revenue increase of 26.5% made up of increased rates and surcharges. The average monthly residential bill is expected to rise by $11.27 or about 28%.
The PSC said in a statement it is sympathetic to water customers who have seen severely interrupted services.
“Tthe reality of the situation is that, absent some amount of the emergency relief requested, Martin District will be unable to continue operating within 60 to 90 days, leaving every customer with no water service, forcing residential customers to abandon their homes and commercial customers, including schools, to close,” the PSC said in the order.
“While raising water rates clearly places an increased burden upon Martin District’s customers, the alternative of not raising rates would create an even greater burden.”
Solving Martin County Water’s problems will require “both time and a massive infusion of capital,” the PSC said, adding that Martin County Water, like all utilities, will have to rely on rates paid by customers to fund operations and pay for system improvements that are not covered by any grants the utility may receive.
The additional revenue comes with strict reporting requirements. Martin County Water must submit monthly updates to the PSC on its revenue and detailed accounting of its spending. Those reports will be available to the public. Furthermore, the increased base rates are approved on an interim basis and only until the PSC has conducted a more detailed analysis of Martin County Water’s finances and operations. If the PSC ultimately sets final base rates lower than the interim rates, Martin County Water will be required to refund any excess base rate collections to its customers as a credit on future bills.
Martin County Water has 3,243 customers. District officials stated that the utility could become insolvent within two or three months, and that $616,882 of its unpaid debts were more than 90 days past due. Martin County Water officials also testified that the district has considerable amounts of unpaid bills owed to it by customers. In an order, the PSC directed the district to file monthly reports on efforts to identify those debts, write off uncollectible amounts and sell older debts to a third-party collection agency. The PSC also directed Martin County Water to begin enforcing immediately its existing rules for disconnecting customers who do not pay their bills. Finally, the PSC directed Martin County Water’s board of commissioners and its managers to attend a PSC training seminar that will be held in April.
The PSC order cited Martin County Water’s lengthy record of difficulties in providing adequate service to its customers. The utility’s current condition is the result of “bad business practices, and ineffective management and leadership” that allowed facilities to deteriorate and left Martin County Water in such dire financial straits that it is “unable to address even immediate repairs,” the PSC said.
“To resolve the financial and operational problems facing Martin District, the commissioners will need to put forth an effort equal in commitment to that of the Martin County citizens who have worked to call attention to their need for better water service,” the PSC said in today’s order. “All citizens of Martin County are affected, and all citizens deserve adequate and reasonable water service around the clock.”