Written Testimony of Tom FitzGerald, Director, Kentucky Resources Council, Inc. in Support of Regional Wastewater Commission Bill (HB 221 2010 Regular Session)
Dear Chairmen Thayer and Riggs, and Committee members:
I'm writing to convey the support of the Kentucky Resources Council, Inc. for the GA version of House Bill 221 (2010 Regular Session). As you know, House Bill 221 would provide the framework by which two or more wastewater utilities in the counties of Bullitt, Hardin, Jefferson, Meade, Nelson, Oldham and Spencer counties may elect to create a regional wastewater commission in order to better address the wastewater treatment needs of their residents.
As the Committee is aware, the proper collection and treatment of wastewater and stormwater runoff is, from a public health and environmental perspective, extremely important and not inexpensive. Many smaller communities, as well as major urban areas where the sewer systems were designed to collect both stormwater and wastewater in a combined system, face significant fiscal constraints in meeting those challenges.
The regional wastewater commission bill is not a mandate, but is instead an opportunity for regional cooperation in order to more cost-effectively treat wastewater generated by residential, commercial, industrial and institutional sources. The bill offers our community utilities faced with increasing operating costs for the treatment of wastewaters a way to benefit from economies of scale. It also provides a cost-effective means for our community utilities to remain in compliance with increasingly stringent environmental standards developed to protect stream and river health and enforced by the U.S. Environmental Protection Agency and the Kentucky Division of Water.
As originally introduced, KRC had very similar concerns to those voiced by Senator Thayer during the recent committee hearing on the bill. Working with other interested parties, significant changes were made in order to address our concerns with transparency and accountability, and we became supportive of the bill.
House Floor Amendment to House Bill 221 replaced the original text of House Bill 221 in its entirety, and made numerous changes to improve accountability to the public: in the decision by wastewater utilities to join together into a regional wastewater commission, in the setting of wholesale rates, in the compensation of employees, and in the operation of the regional commission.
The amended bill made these significant changes to increase accountability to the public and particularly to ratepayers of the member utilities:
The first is Section 10, which has been modified to assure that if a wastewater commission contracts with a Public Service Commission-regulated wastewater utility, and that contract would require any increase in rates to be paid by that utility's customers, the PSC will have the right to review and approve or disapprove the contract.
The other provision is in Section 11, which requires that the rates assessed by the commission be the "verified cost of providing the services" and must be "allocated based on usage" and "the cost of service". At least every 5 years, the Commission is required to have an independent cost of service study performed, and is required to adjust the rates based on the cost-of-service study and recommendations. The ability to increase rates, then, is constrained by the cost of service study.
I hope that these additions and changes to the bill address the concerns regarding accountability and transparency in the formation and operation of a regional wastewater commission.