Water use rates for customers in Letcher County could go up if the Kentucky Public Service Commission accepts the results of a study done by the Rural Community Assistance Program (RCAP) at the district’s request.
Jared Schmal, a Community Assistance Provider for RCAP, told the Board of Directors of the Letcher County Water and Sewer District at its May meeting that if it wants to be able to service its existing debt and break even, it will have to raise monthly rates for water by $5, from $22 per month to $27.50 for the first 2,000 gallons consumed and by $1.50 for each additional 1,000 gallons, from $6 to $7.50.
The study revealed that the district is not generating sufficient income from water sales and will not be able to operate a sustainable system without a rate increase. District Manager Mark Lewis said if the rate increase is approved, it will be the first time the district has ever raised rates. Schmal said the request will now be filed with the PSC and it will do its own rate analysis. The entire process could take as long as six months.
Lewis said in the past, the amount of coal severance tax receipts coming to the county had covered the loss and allowed the district to ignore it. However, with coal severance taxes lowered to the point they are, it’s no longer possible.
Board Member Billy Stamper raised another question about finances. Stamper said that although the debt service payment is only made twice a year, something should go into the monthly financial report to reflect the payment because if a monthly deduction isn’t shown, it makes it look like the district is operating at a profit. However, if the debt payment is broken down into 12 monthly payments, at least on paper, it shows that it is already operating at a deficit. Finance Officer Brian Blair told Stamper that he can arrange to have it reflected in monthly reports in the future and said it is always correct in the annual report and on the audit. Stamper replied that he wasn’t criticizing the report but that if it showed the payment it would give a more accurate picture of the district’s monthly financials.
In other business, the board voted unanimously in favor of a resolution to allow for another interconnecting line along Highway 7 near the Knott County Line and a 150,000-gallon water tank. The interconnect will allow the Knott County Water District, which provides water to most of Letcher County through two existing interconnects, to provide water through one more source and to ensure a dependable water source for residents in the Deane area.
District Manager Lewis reported that the pump station for the Pine Creek Area went down and the repair cost was $13,471. Lewis said the district’s insurance will take care of all but the $500 deductible. He added that the water bill from Knott County, which had been increased by several leaks in recent months, is down about $10,000 now that the leaks have been found and repaired.
Lewis also said that a Customer Confidence Report is complete and will be available soon. An income survey meeting was recently held for Cumberland River residents to determine funding eligibility but only about half the residents showed up. He said the district will post notifications on Facebook, with One-call, and by letter for the next meeting.
In the Engineer’s Report, Alan Bowman of Bell Engineering told the board that the City of Cumberland is doing flow testing on its water system to see if it will be possible for it to supply water to the Cumberland River area, and the possibility of a connection to the Cumberland River system is being evaluated. Letcher County Judge/Executive Jim Ward has signed a request for encroachment permits to allow for the use of state land for a water plant and water lines for Cumberland River and they have been forwarded to the District 12 office of the Kentucky Department of Highways.
Bowman said that Bell Engineering met with the Abandoned Mine Lands Director and staff on May 11 to discuss pending Letcher County projects. AML wants to close out the year’s funding by June 15 and federal legislation is in the works to increase AML funding through 2021. He added that a recent meeting at AML offices was very encouraging for funding future projects in the county. He said the status of the Red Star, Ulvah, Hallie, and Turkey Creek Project, Phase II is now in AML’s hands and the remainder of the project will have to be split into several phases next year.