Louisville legislator pushing to put MSD under Kentucky utility regulator

LOUISVILLE, Ky. (WDRB) -- A state lawmaker from Louisville has begun working on a plan to place the Metropolitan Sewer District under Kentucky's main utility regulator.

Rep. Jared Bauman, a Republican, announced on social media Monday that he has begun drafting legislation to give the Kentucky Public Service Commission rate setting power over the public wastewater corporation.

"My constituents are sick of the rising rates without oversight and accountability for the leaders imposing rate increases," adding that MSD's decision makers "are not elected and there is very little oversight in their decision process."

Appointed by Louisville's mayor and approved by the Metro Council, the MSD board can raise annual rates by up to 6.9% on its own but must get council permission for increases above that amount. Late last month MSD announced the nearly 7% hike to cover upgrades and repairs – a move that will add $5.19 to the average monthly Jefferson County residential bill and $3.74 to the average Oldham County residential bill beginning Aug. 1.

"We have to do something to change the way we're managing MSD because it's not appropriate to continue to place the burden on the residents of Jefferson County," Bauman told WDRB News in an interview on Tuesday.

Despite his social media post, Bauman said he's not eyeing legislation that would make the MSD board an elected one. He said other details will be worked out as the bill is drafted, saying it's "still very early on."

"I'm envisioning them being regulated just like any of the other utilities that fall under the PSC," he said, with a goal of setting "fair and just rates for the ratepayers."

The PSC — a three-member commission appointed by Kentucky's governor and confirmed by the state Senate — regulates electric and gas rates, the tower locations of cellular phone providers and the construction of power plants, among many other responsibilities.

It oversees 34 sewer utilities in Kentucky, according to its website, including quasi-governmental agencies such Hardin County's two water districts, whose commissioners are appointed by the county's judge-executive.

The PSC did not immediately respond to a request for comment.

Bauman said he's not spoken about his proposal with MSD leadership or local leaders such as Mayor Craig Greenberg or Metro Council members. But, he added, he plans to work with "key stakeholders" in the months ahead.

His plan would have a hearing this fall during the General Assembly's interim session, when some legislative proposals for the full 2025 session are discussed, then introduce a bill next year.

Greenberg, a Democrat who appoints MSD board members, said Tuesday that he's not in favor of Bauman's idea.

"We want to have local control over local institutions," he said. "I don't like that rates are going up. Nobody likes when rates are going up. We have significant challenges here in our community that MSD works every day to address in terms of dealing with our sewer system, stormwater, protecting our city against floods."

Greenberg noted that MSD has been operating under a federally mandated consent decree, which aims to address outdated sewer systems that result in untreated wastewater and stormwater flowing into creeks and streams.

While meant to finish $1.15 billion in projects by 2024, the court-enforced agreement was amended in 2022 to delay that completion period to 2035, according to MSD's website.

In a statement, MSD officials argued that it's unlike other utilities in Kentucky: It treats wastewater, manages heavy rainfall and oversees the Ohio River's flood protection system. "These present unique and diverse challenges that historically have been best addressed with localized decision making," the statement said.

MSD also said it works with local elected officials on its budget and rate proposal and noted that about 90% of its capital needs are determined by federal or state requirements. "Still, any year we have a rate increase above 4 percent we present details to the Metro Council and the council has approval authority over any rate increase higher than 6.9 percent."

Markus Winkler, D-17, the Metro Council's president, expressed concern in an interview that Bauman's plan not only would eliminate local decision making but simply transfers that control to Frankfort officials.

"You're removing local control from people who are democratically elected and giving it to someone who's appointed at the state level," he said.

Bauman said he's typically not a fan of "working outside of local control.

"But in this case, it's needed," he said. "In this case, we have got to wrap our hands around what is going on MSD so they do not continue to raise the rates on the residents of Jefferson County to the point where it just becomes a completely unnecessary burden. We've got too many folks that cannot afford this."