Why the need for a rate increase in Falmouth utilities?

The Falmouth City Council had their first reading of an utility rate increase on July 19, 2018. As with all first readings, no vote is required.

They had a second reading at a meeting on July 26, 2018.

The five city council members, Sebastian Ernst, Philis Wait, Amy Hitch, Amy Hurst and Joyce Carson, present voted in favor of both increases.

Councilperson April DeFalco had surgery and was unavailable for either meeting.

According to the article written by Ed Salerno on July 24, Kentucky Utilities had raised electric rates charged to the city of Falmouth effective July 1.

The city is on their last year of a contract with Kentucky Utilities to provide electricity to the city. It expires on May 1, 2019.

“For years, the city had absorbed rate increases like this,” said Mayor Ron Stinson.

With a recommendation to build their reserves for problems that arise as wll as funds to maintain lines, council decided to not absorb the rate increase.

Stinson used the last storm as an example. During it, there was a power outage in the city. With the resources they had on hand, the city has they were able to make a temporary fix and get the power restored in quick fashion.

Without the funds to build reserves and purchase switches that get burnt out leading to power outages, they would have to call in an agency to handle the outage. It would be costly and the outage longer.

The increase in electric rates was less than a penny. It was 7/10’s of cent raising the rate from $0.099 cents to $0.106 cents per kWh. There was a $1.25 flat fee that was raised, too.

Using 1,000 kWh per billing cycle for comparison, the increase for a regular home would translate to $7. For 1,000 kWh, the bill would be $106.

But with the rate increase occurring in one of the hottest months of the year and during a billing cycle that was four days longer than the previous, the increase in resident’s bills were shockingly high.

“It was a shock for me,” Wes Caid said simply. “My bill was nearly $150 higher.”

In comparison, Owen County Electric which supplies the northern portion of Pendleton County charges $0.08245 per kWh. That 1,000 kWh would be $82.45.

With Blue Grass Energy that supplies electricity to portions of the county, for residential and farms they charge $0.07534 for the first 200 kWh, $0.09034 for the next 300 kWh, and $0.10034 for the next 500 kWh. For that 1,000 kWh, the bill would be $92.54.

Kentucky Utilities rate schedule on their website is a little bit more detailed and harder to decipher what 1,000 kWh would cost. They have a Off-Peak Hours rate of only $0.05892 but a On-Peak Hours rate of a whopping $0.27615. On-Peak Hours are defined as 1-5 p.m. on weekdays for the months of April through October. and 7-11 a.m. on weekdays for November through March.

Council member Joyce Carson pointed out that her usage went from 1,076 kWh to 1,480 kWh during the hot days of July leading to her utility bill jumping from $385 to $507.

Water and Sewer

According to Salerno’s article on July 24, the city council was considering several options from a 35 percent to a 50 percent increase.

In the July 26 meeting, they voted for the 50 percent increase raising from $19.03 to $28.55 for the first 2,000 gallons.
The City of Falmouth provides water to both the East Pendleton and Pendleton County Water Districts. In comparison, East Pendleton has a minimum bill of $18.42 for the first 1,000 gallons. A 2,000 gallon usage, like Falmouth charges, would bring the bill to $27.75 or $0.80 lower. They have not had a rate increase since 2013.

Sewer for East Pendleton is a minimum bill of $20.18 for the first 1,000 gallons and a total of $27.33 for 2,000 gallons.

For the Pendleton County Water District, the first 2,000 gallons has a $22.55 minimum bill or $6 less. They have not had a rate increase since 2013.

The City of Falmouth is not regulated by the state and the Public Service Commission and does not have to go through the process to raise utility rates as a Duke Energy or KU would.

Falmouth officials have been meeting with engineers to determine the exact nature of the problems that their water and sewage lines have.

In the July 24 Falmouth Outlook article that first raised the issue of increased utility rates, the city council approved unanimously to move forward with the preliminary engineering report.

Once that is determined, they plan to seek state assistance to help pay for the much-needed renovation project.

According to Kentucky Infrastructure Authority reports dating back three years ago, in order for Falmouth to qualify for the necessary loan money from KIA to complete the makeover of the sewer and water systems. It must increase the revenue from sewer and water receipts by $370,000.

The increased revenue is needed to assure that the city can make the payments on infrastructure loans from KIA.

With both situations, the city council and residents find themselves between the proverbial