FRANKFORT — The Kentucky Public Service Commission has issued a report in which they determined the issue of water loss as symptomatic of larger operational, managerial and financial problems at troubled water utilities in Kentucky and issued an order to rectify those issues.

The report recommends legislative changes that would set qualifications for managers, create regional water authorities to help manage water districts, give the PSC greater authority to consolidate troubled water utilities and give the PSC the ability to initiate rate cases for financially struggling utilities.

The report was accompanied by a PSC order directing 11 water utilities to take steps to address excessive water loss, including pursuing mergers with neighboring utilities and filing for rate increases to provide adequate funding. The PSC listed steps that all 11 of the utilities must take as well as specific measures for each utility.

The report and order are products of an investigation that began in March, to examine the operations and finances of water utilities that were unable to account for 35 percent or more of the water that they produce or purchase.

The report reviewed each of the 11 utilities, identifying problems common to troubled water systems. Those include inadequate oversight and management, poor financial and accounting practices that often leave utilities with limited knowledge of their budgetary needs, and a reluctance to raise rates, often due to outside pressure.

The PSC investigation and resulting order and report were prompted by persistently excessive water loss by the utilities.

Water loss is defined as the difference between the quantity of water that a utility produces at its own treatment plants or purchases from another producer and the total amount of water that is sold, used by the utility, or used for fire protection or other authorized uses.

Leaks in the system, line breaks, theft, unauthorized usage and metering inaccuracies all contribute to water loss. A water loss of no more than 15 percent is considered acceptable under PSC regulations. Utilities are allowed to factor only a loss of 15 percent or less into their rates, meaning that water loss above that level represents a financial loss to the utility.

The PSC gathered data from each utility and, over the course of two weeks in June, conducted hearings into the operation, management and finances of each utility, which they say revealed a broad range of deficiencies.

To address the most prevalent problems, the PSC ordered all of the utilities to, within six months, to submit to the PSC plans to improve their operations and finances, plans to address water loss and improve business practices, and updated leak detection and water loss prevention manuals. All the utilities were ordered to begin using the PSC’s new water loss reporting form,

Those 11 water companies, the counties they serve, number of customers and water loss (2017 unless otherwise indicated) are, according to PSC figures:

• Big Sandy Water District (Boyd, Carter, Johnson, Lawrence), 4,794, 37% (2018)

• Cawood Water District (Harlan), 1,627, 46.44%

• Estill County Water District (Estill), 3,763, 37.65%

• Farmdale Water District (Anderson, Franklin, Shelby), 2,650, 35.93%

• Hyden-Leslie Water District (Clay, Leslie, Perry), 3,683, 35.74%

• Milburn Water District (Carlisle), 136, 37.73%

• Morgan County Water District (Morgan), 2,743, 38.04%

• North Manchester Water Association (Clay), 1,953, 36.27%

• Rattlesnake Ridge Water District (Carter, Elliot, Lawrence, Lewis, Morgan), 4,015, 62.98%

• Southern Water & Sewer District (Floyd, Knott), 5,457, 42.18%

• West Carroll Water District (Carroll, Henry, Trimble), 972, 38.46%

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