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Rural Water Loss Investigation Reveals Widespread Financial Challenges

Photo: Courtesy Mountain Citizen

Kentucky’s Public Service Commission has released results of a months-long investigation into high rates of water loss in certain rural water districts. The findings point to systematic financial and managerial challenges facing rural districts, and solutions would likely require sweeping legislative change.

The PSC launched its investigation in March after 11 rural districts, most of them in eastern Kentucky, drew the commission’s attention for water loss rates exceeding 35 percent. High rates of water loss indicate leaky pipes, which in addition to raising a system’s operating costs, also expose customers to infiltration of untreated, potentially dangerous groundwater into the pipes. 

Eastern Kentucky’s Martin County has long been the poster child for struggling rural water districts: Water loss has at some points topped 70 percent, and discolored water, boil water advisories and days-long outages have left residents mistrustful of the government’s ability to provide basic services. But this PSC investigation into what PSC spokesperson Andrew Melnykovych calls the “Leaky Eleven” demonstrates that Martin County’s challenges, though dramatic, are far from unique in Appalachian Kentucky. 

“Many small water systems lack a sufficient customer base to support their continued operations,” said PSC Chairman Michael J. Schmitt in the report. “Board members and managers find themselves constrained by political and societal pressure when it comes to raising rates or exploring merger, consolidation or sale, even though taking such actions might be the best long-term solution for the water utility and its customers.”

In perhaps the most damning statement of the investigation, the commission said, “Though well meaning, many of the water utility commissioners lacked basic business acumen and any understanding of the importance of following industry standards and business best practices.”

The districts examined in the report each served only a few thousand customers, and included districts serving Harlan, Clay, Floyd, Leslie and Knott Counties, among others. Many were required to submit safety plans, training schedules and updated policies and procedures to the PSC, indicating those districts either did not previously have such materials, or existing materials were deemed insufficient.

As part of its report, the PSC recommended sweeping legislative and regulatory change, including expanding the commission’s ability to force water districts to merge, and requiring more extensive training for local water officials. Under the recommended changes, district general managers would be required to hold a college degree, and all districts would need to employ a qualified engineer.

“If the legislature doesn’t act, we’re going to continue to see these kinds of problems,” Melnykovych said. “In the case of utilities particularly in economically stressed areas, they’re likely to get worse.”

No relevant bills have been proposed on these issues for the 2020 legislative session. Bills including some of the PSC’s recommendations have not passed in previous years. 

Legislative and regulatory changes, however, are unlikely to completely solve Kentucky’s infrastructure challenges. The most recent report from the American Society of Civil Engineers found that the commonwealth would need to invest $8.2 billion over the next 20 years to ensure its drinking water remained safe and affordable in the coming decades. 

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