Corbin Utilities rate hike approved; will start Jan. 1

Starting the first of next year, customers of the Corbin City Utilities Commission (CUC) will see a sharp increase in their sewer and water rates, but officials say even with the hikes the utility company is still one of the most affordable in Kentucky.
Members of the City Utilities Commission voted to accept a resolution Tuesday afternoon that will put the rate increases into effect. The move comes following a long process the utility company started earlier this year that included a “rate study,” internal financial analysis and a public hearing on the issue.
CUC General Manager Ron Herd said the increases were necessary for the company to maintain profitability and to continue capital improvements to its sewer and water systems. In many cases, customers paid below what it cost CUC to provide the services.
“They just analyzed our audits and looked at our costs and how much revenue we needed to continue our capital improvements,” Herd said of the study performed by outside firm R.W. Beck. “I think the only people that will see a big increase is commercial customers … people that use a lot of water.”
Currently, CUC residential and commercial customers inside the city limits of Corbin pay $9.05 for every 5,000 gallons of water used. The average customer uses 5,000 gallons per month. That would rise to $16.09 Jan. 1, 2007, an increase of $7.04. Residential and commercial customers outside Corbin’s city limits would see a $4.03 increase in their average bill – from $18.10 to $22.13 per month. Industrial customers inside the city would go from $56.90 per 5,000 gallons to $75.90, a $19 increase, and industries on CUC outside the city would see a $27.95 increase … $141.75 as opposed to $113.80 under the old rate structure.
According to R.W. Beck’s assessment, the company has about $7 million worth of capital improvements planned for the next five years, but would only have about $4.5 million in revenue under the current rates – about $2.4 million short. The report also details how CUC would likely have a net loss of $45,000 in 2009, with less operating funds and a depleted reserve if no action is taken.
Herd said the rate increase also affected the different rate paid by customers outside the city as opposed to those in the city limits. Currently, residents and industries outside of Corbin on CUC services pay double for sewer and water.
“With the increase, we are adjusting that to where it’s fairer and more cost related,” Herd said. “Outside rates will now be about 25 percent higher than the inside of rates.”
Herd said grants CUC has received to improve and extend its water lines and sewer service required the utility to lessen the difference between in-city and out-of-city customers.
“If the state comes in here and audits and finds out we’re not doing that, they can make us pay all those grants back,” he said. “We have to follow the rules.”
According to the “Kentucky Water and Sewer Rate Survey,” published in September by engineering, architecture and planning firm Allen and Hoshall, CUC’s water rates were the cheapest in the state at $7.25 per 5,000 gallons. The proposed rate of $11.15 would only move the company back to sixth lowest out of the 158 utility providers that responded.
It was second only to the Boone County Water District on sewer rates at $9.05 per 5,000 gallons used. The hike will put it at 11th out of 92 who responded to the survey.