Bluegrass Water appeals PSC case affecting several McCracken sewer systems | News


Bluegrass Water Utility Operating Company, a firm that owns several neighborhood sewer systems in McCracken County, has appealed the Kentucky Public Service Commission’s ruling in an August case that allowed Bluegrass to increase rates for several water and sewer systems it owns across Kentucky.

The appeal appears as a civil case in the Franklin County Circuit Court, with Bluegrass Water as the plaintiff and the PSC, Attorney General’s Office and seven neighborhood-affiliated associations as defendants. Three of those neighborhood associations, Arcadia Pines Sewer Association, Carriage Park Neighborhood Association and Marshall Ridge Sewer Association, are based in Paducah.

PSC ruled on Aug. 2 that Bluegrass could increase rates in several systems, but denied raising rates in other systems because of procedural issues.

“Bluegrass’s filing at the Franklin Circuit Court is, in essence, an appeal from the Public Service Commission’s Aug. 2 order denying a significant portion of their requested release,” David Samford, an attorney for the defendants, told The Sun.

The Sun previously detailed complaints from residents of the Carriage Park neighborhood in West Paducah, who said sewer rates in their neighborhood were too high. While residents in that neighborhood were paying $16 a month for sewer, Bluegrass Water increased rates by more than 400% to $85.97 a month beginning in August 2021.

Bluegrass Water also raised sewer rates in four other Paducah neighborhoods: Great Oaks Subdivision, whose sewer bills increased by 198%; Timberland Subdivision, whose rates increased by 148%; Arcadia Pines Subdivision, up 244%; and Marshall Ridge Subdivision, up 473%. Residents in those neighborhoods said they are also paying $85.97 per month for their sewer systems.

These rate increases were approved in a PSC ruling on Aug. 2. However, in letters to residents, Bluegrass Water wrote it wanted to raise sewer rates on single-residential homes to $96.14 per month.

In letters to residents, Bluegrass Water cited repairs made to systems as the primary reason for raising rates. For example, in a letter to Great Oaks residents from September of 2020, Bluegrass Water wrote it had invested $2.5 million in Kentucky communities, and planned to invest $5 million more over 18 months following the letter’s date.

Josiah Cox, president of Bluegrass Water, previously told The Sun the company invests in “small, environmentally distressed,” systems and invests money in improving the systems over time before charging new rates.

Cox could not be reached for comment on the company’s appeal.

McCracken County Judge Executive Craig Clymer said he had received two complaints from Great Oaks residents about Bluegrass Water rates. Clymer said the waste treatment plant for Great Oaks “fell into disrepair,” and was operated by the Joint Sewer Agency until some repairs could be made. Bluegrass Water obtained ownership of the Great Oaks system in 2019.

Larry Averitt, a Great Oaks resident, has also been in touch with the PSC and provided The Sun copies of some of his communications with the PSC and the AG’s office. Averitt, in a letter to the PSC, said the proposed rate increases by Bluegrass Water were “indicative of a private, for profit, corporation deliberately monopolizing and price gouging a captive market.”

PSC received nearly 550 complaints like Averitt’s regarding Bluegrass Water’s intent to raise rates, according to public comments available with the company’s case with PSC. The email, typed and hand-written complaints came from residents of the affected subdivisions as well as state senators, state representatives, business associations and neighborhood associations.

Averitt received a letter from the Office of the Attorney General signed by John G. Horne II, executive director of the Office of Rate Intervention, dated Aug. 25. In the letter, Horne said the Public Service Commission agreed with some of the Attorney General’s arguments against raising rates, including that “certain expenditures documented by Bluegrass amounted to wasteful duplication (e.g. remote monitoring),” and the rate of return proposed by Bluegrass was “too high and inconsistent with current market conditions.”

Horne told Averitt in the letter the PSC rejected the Attorney General’s argument that “any rate increase should be phased-in over time.” He also said the PSC ruled it was appropriate for Bluegrass Water to charge unified rates. PSC said to charge different rates in different areas would, “create unreasonable and undue hardship to individuals in some areas served by Bluegrass Water.”

Krista Buckel, deputy communications director for the Office of the Attorney General, said the Office of Rate Intervention is, “committed to representing the interests of Kentuckians in matters related to utility rates before the Kentucky Public Service Commission.”

“In the Bluegrass Water case, we argued that certain expenditures requested by Bluegrass were wasteful and that the rate of return was too high, inconsistent with market conditions, and would significantly burden ratepayers. In the event the PSC approved rate increases, we also urged the Commission to phase rate increases in small amounts over time,” Buckel said.

David Sparks, a Hamlin resident, told The Sun he is served by Center Ridge Water System, a system Bluegrass Water bought out. Sparks said water rates for single residential customers served by Center Ridge Water System went from $22.79 a month to $77.63 a month, a 240% increase. Sparks said he and other residents have been fighting the proposed increase in rates for more than a year. According to a news release from Bluegrass Water, the water system served 339 customers as of June 2020.

Sparks told The Sun he had been in contact with the PSC about Bluegrass Water’s case. When he recently called the PSC, a representative told Sparks they could not talk about the PSC case with him because of new pending litigation.

Sparks provided the case number the representative shared with him to The Sun. The case number was connected Bluegrass Water’s appeal.



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