I am writing to formally oppose Mountain Water District’s proposed rate increases in Case 2025‑00372. This request is not merely unreasonable—it is incompatible with the statutory requirements governing public utilities in Kentucky. Under KRS 278.030(1), a utility may charge only “fair, just, and reasonable rates,” and under KRS 278.030(2) it must provide “adequate, efficient, and reasonable service.” Mountain Water District has failed to satisfy either requirement. Approving another increase under these conditions would violate the Commission’s statutory mandate.
For more than a decade, Mountain Water District has raised rates while its system has continued to deteriorate. In Case 2014‑00342, the District admitted to chronic financial instability, excessive water loss, declining customers, and an aging system it could not maintain. It further acknowledged that rate increases alone would not resolve these failures. Twelve years later, the same failures persist. The only measurable change is the escalating financial burden placed on Pike County families.
This raises a fundamental question of regulatory integrity: How can a utility repeatedly admit the same failures for more than a decade, take no meaningful corrective action, and still be rewarded with higher rates?
An even more serious question follows: Why has Mountain Water District refused to pursue the state and federal grants that exist specifically to repair failing water systems?
Kentucky utilities have access to substantial funding streams, including the Kentucky Cleaner Water Program, Kentucky Infrastructure Authority State Revolving Funds, USDA Rural Development grants, FEMA mitigation funding, EPA Emerging Contaminants grants, Appalachian Regional Commission POWER grants, Community Development Block Grants, and Economic Development Administration infrastructure programs. These programs provide grants, loan forgiveness, and major subsidies for line replacement, leak reduction, treatment upgrades, and system modernization. Pike County qualifies for many of these programs at the highest levels of assistance.
These funds exist. They are available. They are designed for systems exactly like Mountain Water District. Yet the District continues to rely on rate increases instead of pursuing the funding intended to fix the problems it cites.
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Financial Mismanagement and Revenue Shortfall
Mountain Water District’s financial condition further demonstrates why a rate increase is neither justified nor lawful under KRS 278.030. According to publicly reported financial data, the District generated approximately $9.7 million in revenue in 2024, falling short of the $10.513 million authorized by the Commission—an $805,000 revenue deficit. This shortfall is now being used to justify a 22.4% rate increase, despite the fact that the District’s own operational and managerial decisions contributed to the deficit. The District’s board acknowledged this revenue gap when voting to pursue the increase, citing rising costs and insufficient revenue generation.
This pattern is consistent with prior filings in which Mountain Water District has repeatedly failed to generate sufficient revenue to meet its obligations, even as it continues to rely on ratepayers rather than pursuing available state and federal funding. The District’s own capital improvement documentation shows that wholesale water rates were previously set at $1.97 per 1,000 gallons, further underscoring the District’s long‑standing structural imbalance between revenue and expenditures.
Under KRS 278.030(1), rates must be “fair, just, and reasonable,” and under KRS 278.030(2), a utility must provide “adequate, efficient, and reasonable service.” A utility that repeatedly fails to meet revenue targets, fails to pursue available grant funding, and fails to correct long‑standing operational deficiencies cannot satisfy these statutory requirements. The Commission is not obligated—and is not permitted—to approve rate increases simply to compensate for managerial failures or avoidable revenue deficits.
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Federal and State Violations Demonstrate Statutory Non‑Compliance
Mountain Water District is not merely struggling—it is failing to meet basic federal drinking water standards. According to the Environmental Working Group’s Tap Water Database, which compiles state and federal regulatory data, Mountain Water District had 4 contaminants exceeding health‑based guidelines and 14 total contaminants detected between 2014 and 2024. The system was also classified in serious violation of federal health‑based drinking water standards for the most recent EPA‑assessed quarter (April–June 2024).
Kentucky’s Energy & Environment Cabinet’s Annual Compliance Reports—submitted to the EPA under the Safe Drinking Water Act—document repeated health‑based violations, including Maximum Contaminant Level exceedances and treatment technique failures. These reports confirm that Mountain Water District has appeared in violation categories across multiple years, demonstrating a pattern of non‑compliance, not isolated incidents.
Under KRS 278.040(2), the Commission has exclusive jurisdiction over utility rates and services, and under KRS 278.040(3) it must enforce compliance with all provisions of Chapter 278. A utility in repeated federal violation cannot be considered compliant with the statutory requirement to provide “adequate, efficient, and reasonable service.”
Furthermore, KRS 278.280(1) authorizes the Commission to require a utility to “furnish adequate and reasonable service” and to “make any reasonable improvements” necessary to ensure safe and reliable operations. Mountain Water District’s ongoing federal violations demonstrate that such improvements have not been made. Kentucky’s own administrative regulations confirm that these statutes form the PSC’s enforcement authority.
Despite this, the Commission has repeatedly approved rate increases for Mountain Water District without requiring corrective action, structural reform, or accountability measures. This pattern is not regulatory oversight—it is regulatory abdication.
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Ratepayers should not be forced to subsidize managerial failures, missed funding opportunities, or a decade of inaction. We should not be asked to pay more when the District has not exhausted available grants, reduced water loss, modernized its infrastructure, corrected long‑standing deficiencies, or met basic federal drinking water standards.
Under KRS 278.030, KRS 278.040, and KRS 278.280, the Commission is obligated to protect the public from unreasonable and unjustified rates and to ensure that utilities provide adequate and reasonable service. Approving another increase for a utility in documented federal violation status would be a direct failure of that statutory duty.
I urge the Commission to deny this rate increase and require Mountain Water District to take meaningful corrective action—beginning with pursuing the grants and funding programs already available—before imposing any additional burden on the people of Pike County.
Thank you for your attention to this matter.
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