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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

A Tale of Two Cities, Part Deux  Posted: November 11, 2009
Water plant foes make their case
PSC erred in OK'ing Costly Ky. American plan, judge told

ANDY MEAD AMEAD@HERALD-LEADER.COM
November 9, 2009

FRANKFORT - A citizen's group trying to derail a new Kentucky American Water plant and pipeline had its day in court Monday. Tom FitzGerald, an attorney for Citizens for Alternative Water Solutions, told Franklin Circuit Judge Phillip Shepherd that the case is a tale of two cities.

Louisville has a virtually inexhaustible supply in the Ohio River, he said, and excess treatment capacity. Lexington needs more supply and capacity at Kentucky American Water's plant on Pool 9 of the Kentucky River.

The state Public Service Commission erred in allowing Kentucky American to build a $162 million plant downriver from Pool 9 and a pipeline to carry the water to Lexington, FitzGerald said.

CAWS argues that the project is too expensive and that the PSC should have looked closer at conservation, fixing leaking pipes and running a pipeline from Louisville. It wants the project, now 70 percent complete, to be stopped.

It that doesn't happen, FitzGerald said, the Lexington-based utility will prosper at the expense of its customers.

"It is indeed the best of times for Kentucky American Water's shareholders and the worst of times for Kentucky American Water's ratepayers," FitzGerald said.

But attorneys for the PSC, Kentucky American and the state attorney general's rate intervention office disagreed.

PSC attorney Gerald Wuetcher said his agency had gone to extraordinary lengths to solve a Central Kentucky water supply issue that had been before it off and on for more than 20 years.

The PSC asked Kentucky American to supply records on every possible alternative to the new plant and pipeline, he said. It even used the state Open Records Act to get the same information from Louisville Water Co., which responded by trying to get a pipeline from Louisville approved instead of the Kentucky American project.

Wuetcher noted that the PSC spent more than a year on the case, collecting more than 40,000 pages of information before rendering its 90-page decision in April 2008.

"The commission has made every step procedurally to try to find the answer" to getting more water for Lexington, he said.

David Spenard, who represents the attorney general's rate intervention office, said it was unusual for him to be in court on the same side as the PSC and even more unusual to be on the side of Kentucky American.

But, he said, his office had fought for 17 years to find a solution to Lexington's water shortages and thinks it found the best deal for the people paying water bills.

Attorneys in the case had been willing to forego oral arguments, but Shepherd, the judge, said he wanted to hear them and ask questions.

Shepherd interrupted the attorneys more than 20 times, mostly to ask what standard the PSC uses to decide whether a project is necessary, and how future water demand projections are reached.

In response to a question about the state of the project, Kentucky American attorney Lindsey Ingram III said that of the 112 easements it needed for the pipeline route, it had 108. The others are held by two landowners, he said.

Another judge has ruled that Kentucky American has the right to use condemnation to get the easements but said the ruling won't take effect until the case heard Monday is decided.

Shepherd said he would decide as soon as he could, but he wasn't specific.


Pipeline Path Includes Courtroom
WTVQ 36 November 9, 2009

$162 million dollar project to increase Kentucky American's water supply capacity by 20 million gallons a day is 70 percent complete, yet the legal challenges continue. A small group of citizens, Citizens for Alternative Water Solutions, are asking a Franklin Circuit Judge to rule on whether the Kentucky Public Service Commission made a mistake when it game the private water company the green light to build the 31 mile, 42 inch pipeline from the Kentucky River in Owen County to Lexington. Franklin Circuit Judge Phillip Shepherd heard oral arguments in the case Monday afternoon, but did not give a timeline on when he will issue a ruling. While the citizens had two lawyers, ten lawyers sat on the other side of the courtroom, with Kentucky American gaining the support of the PSC, the Attorney General, Lexington Urban County government and an area water supply consortium.

"It is not enough to say here's your new toy," Tom FitzGerald, the citizens' attorney told the judge of the PSC's decision to allow the pipeline project. "Here's your 50 percent increase in the customers' rate and oh, by the way, when you get around to it would you do some conservation and do some leak detection. That has to proceed the approval of new capacity because unless you've done those things we don't know what the need is.

"Fitzgerald said Kentucky American has "over hyped" the demand, calling the project a "poster child of wasteful duplication."

The private company's attorney, Lindsey Ingram III told the judge the pipeline is "the best solution." "You've got a real water supply problem when we're at capacity now," said Ingram. "That is what this case is about your honor, a 20 percent increase in population growth."

Among the handful of citizens involved in the suit was Chris Schimmoeller. The Franklin County resident, who was in the courtroom, said "the system has failed the public." She agrees with FitzGerald's claim this is "more empire building than a regional solution."
"Kentucky American is a for-profit company and they seek to improve their bottom line over all else," alleged Schimmoeller.

That claim was disputed by a spokesman for the water company.
"Lexington's water needs are always our first interest, not our shareholders, okay," said Ray Golden of Kentucky American.

FitzGerald says if the courts agree with the citizens he hopes it would force the shareholders of the private company to foot the bill instead of the customers.

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