Louisville Water Co. approves smaller rate increase after arm-tw - WDRB 41 Louisville News

Louisville Water Co. approves smaller rate increase after arm-twisting from mayor's aide

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LOUISVILLE, water company. (WDRB) – Starting in January, Louisville Water Company customers will see bills rise 3.5 percent – a slightly smaller increase than company officials had initially proposed.

For the typical home using 5,000 gallons per month, that means a water bill of $22.97, up from $22.19 currently.

A least some of that increase will come back to taxpayers in the form of metro government services. As the sole owner of the water company, metro government expects to receive $20.5 million in company profits next year, up from $20.2 million this year.

The water board was set to approve a 3.69 percent increase in the rate on Tuesday  – which would push the average customer bill over $23 a month – when Louisville Metro chief financial officer Steve Rowland suggested the water company cut about $260,000 in expenses to bring the increase down to 3.5 percent.

The water company, which has raised rates every year for at least the last decade, hasn't had an increase as small as 3.5 percent since 2003 – the year Louisville merged with Jefferson County.

Rowland said adopting the smallest annual increase since merger would have symbolic significance.

“I think it's a good message to send to the citizenry, our customers,” Rowland  said.

Rowland suggested a few ways the water company could cut expenses to cope with a slightly lower rate increase, such as giving non-union employees (customer service represents, engineers) raises that would average 2 or 2.5 percent instead of the planned 3 percent.

He did not suggest lowering the $20.5 million dividend the water company expects to pay metro government, which has grown by a slight amount each year since 2011.

In 2003, the dividend to metro government was $11.2 million, water company figures show.

In an interview after the meeting, Rowland said the water company dividend is set by a formula – half of its net income goes to metro government and half is reinvested in the business – so simply reducing metro's share isn't an option. Instead, the water company should hold rates down by being more efficient in its operations, he said.

Rowland noted that the $20.5 million will pay for “public services” through Metro's budget.

And water customers in Bullitt County and parts of Oldham County contribute to that dividend, since they get water from Louisville Water.

Water consumption is expected to be flat this year and has fallen “precipitously” on a per-household basis, CEO Jim Brammell told the Metro Council last week.

In addition to dealing with a lot of fixed costs – like repairing water mains – water company officials say the rate increase will go to investments that will pay off for metro government in the future, like extending service south to Hardin County, which would be the company's biggest wholesale customer to date.

Kelley Dearing-Smith, the water company's spokeswoman, said Louisville customers will still get a “great value” in water price after the increase. Water company research shows Louisville with 8th lowest rate among 25 cities.

While Louisville customers pay $22.19 for 5,000 gallons, customers of the Northern Kentucky Water District pay $43.94 for the same amount, according to Louisville Water. Nashville has the lowest rate -- $14.78.

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