Governor Signs Affordability Legislation

04/14/2010 - House Bill 504, a law requiring regulators to consider “affordability” in Clean Water Act compliance efforts for Kentucky communities, was signed by Governor Steve Beshear on April 14, 2010.

This legislation was promoted and advocated by SD1 on behalf of its customers and many other sewer customers in Kentucky.

SD1 and other wastewater utilities in Kentucky are being forced by the U.S. Environmental Protection Agency (EPA) to address overflows from aging and deteriorating combined and separate sanitary sewer systems that occur during heavy rainstorms. These overflows send a mixture of storm water and raw sewage into local waterways and violate the federal Clean Water Act. Under agreements with the EPA, regions like Northern Kentucky, Louisville, and Ashland are required to make extensive infrastructure improvements to eliminate these overflows and customers face increased sewer bills to meet these needs.

HB 504 does not negate the need for future rate increases. However, it does require the Kentucky Division of Water (KDOW) to consider the costs of infrastructure improvement projects and the maximization of environmental benefits when negotiating and implementing improvement plans with local communities and U.S. EPA Region 4.

The legislation was sponsored by Kevin Sinnette, D-Ashland and co-sponsored by Reps. Adam Koenig, R-Erlanger, Alecia Webb-Edgington, R-Fort Wright; Addia Wuchner, R-Burlington; Jim Gooch, D-Providence; Joe Fischer, R-Ft. Thomas; Jeff Greer, D-Brandenburg; Tom Kerr, R- Taylor Mill; and Sal Santoro, R- Florence.

SD1 officials praised Kentucky lawmakers for their willingness to seek remedies for ratepayers. “Environmental regulators must recognize the need for achieving a balance between compliance with the federal Clean Water Act and the financial burden that is placed on our customers to make the infrastructure improvements needed for this compliance,” said Bob Elliston, President of SD1’s Board of Directors. “House Bill 504 requires that state regulators consider ‘affordability’ as a key factor when enforcing the Clean Water Act and developing a compliance program.”

In recent years, KDOW and EPA have cracked down on sewage overflows, issuing substantial fines to those who have failed to address these problems. SD1 and the Louisville/Jefferson County Metropolitan Sewer District are currently operating under federal court orders requiring them to eliminate these overflows.

The cities of Paducah, Owensboro, Henderson, Frankfort, Ashland, and ten smaller river city communities along the Ohio River are all required under the Clean Water Act to reduce their combined sewer overflows. In addition, the EPA is now moving inland away from the river and requiring Kentucky cities to eliminate sewage overflows from separate sewer systems.

In Northern Kentucky, the improvements to water quality mandated by the federal court order will cost SD1 approximately $450 million over the next five years, which means that rates are expected to increase by about 15 percent annually over that time period.

One way that HB 504 addresses the affordability issue is requiring KDOW to consider extending the time required for a sewer utility to make infrastructure improvements, which also would help make compliance with the Clean Water Act more affordable, Elliston said. In addition, the bill supports the use of innovative approaches, such as “green” technology, to improve water quality, similar to the approach that SD1 is taking in Northern Kentucky, as another way to make these improvements more affordable, he said.

It’s not just the larger sewer districts along the Ohio River that are being cited under the Clean Water Act. Last month, a federal judge ruled that Louisa, a small city in eastern Kentucky, must pay nearly $481,000 in legal fees to two non-governmental organizations for attorney fees and expenses stemming from a lawsuit they filed over Clean Water Act violations. The city attorney has said that this judgment may bankrupt the city of 2,000 people.

“Since local communities are required to fund federal mandates through increased sewer rates, then the least our state and federal governments can do is help make that funding effort more affordable,” Elliston said.

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