This saga dates back all the way to 1998, which was a memorable time for many Logan Countians. The "water crisis" of 1998 amounted to over a million dollars in repairs to the water plant. The city, according to Robert Hedges, city attorney, sold bonds to pay for the repairs. In an effort to pay back some of the costs, the city looked at raising water rates for its citizens.
At that time, the city was selling water to East and North Logan Water Districts. The problem did not come with the city voting to raise its own water rates. Cities can raise their own rates without going through the Public Service Commission (PSC). The problem arose when the city, by raising its own rates, had to raise the rates at which it sold water to the other water districts.
Before water districts can raise rates, according to East Logan Water Manager C.K. Hanks, they must go through its the PSC. At first, the PSC approved Russellville's newly imposed rates, but after concern was raised by the East and North Logan water districts after the fairness and validity of such rates, the districts were ordered to open an escrow account, according to Bill Stokes, chairman of the board of commissioners for East Logan. This account would hold the difference between the old and new rates the customers would pay until a final decision was made from the PSC.
According to Bill Stokes, this amounted to the price for 250,000 gallons of water that the districts purchased from the city. Hedges estimated this amount to be around $250,000, the amount of the difference between the new and old rates for fifteen months.
The reason there was a disagreement in the first place over the price of the new rates, according to Hanks, was that the water districts didn't feel that the city had brought forth reasonable proof of what the increased costs would cover. He also said that he didn't find it fair to have to pay for repairs of the water plant, when the above average wholesale price they were already paying should have covered regular maintenance.
Hedges said that the city did bring forth reasonable proof to the PSC that the new rates were "fair, just and reasonable." For 15 months the new rates were in place before they were voided. He said that the PSC voided the rates because they said that the city had not passed an ordinance, which was not necessary in the first place, according to Hedges.
Later the PSC said that the city had not filed proper "tariff sheets." Hedges argued that they had filed the proper documents and the PSC had the proof. The only problem the PSC had with the rate increases were in the administrative aspect.
"We are asking the Kentucky Supreme Court to hear the case. They don't have to hear it," said Hedges. The city has already used their one allowed appeal at Franklin Circuit Court. "We feel this is a matter that affects all municipalities, all of the cities of Kentucky, that when we want to file for a rate increase for those outside the city... that we have not been treated fairly."
And according to Hedges, Hanks, and Stokes, the so-called "escrow account" was paid back to customers two years ago through a credit on their water bill. This money, which was collected during that 15-month period when the districts' customers had to pay increased rates, was reimbursed back to the customers once the PSC voided its ruling.
So there is no extra money floating around that the city is haggling for. If the Supreme Court hears the city's Discretionary Hearing and overturns the two previous rulings made by the PSC and Franklin Circuit Court, East and North Logan will have to find a way to pay back a large amount of money to the city. Both sides have already paid a great deal of money in legal expenses.
Stokes says he is surprised the city wants to continue with the case since it has been overruled in two different instances. No one wants this to be a negative shadow on the new city council, but it does involve a large sum of money. Neither the city nor the other water districts want there to be tension.
"The issue is no longer relevant to the present day because we all now buy our water from Logan/Todd. We're talking about a set period of time they voided our rate increase. If we win, the water districts will have to come up with the money from their customers," said Hedges.
"We've always been on very good terms with the water districts. The two districts are managed by very good people, respected people. They are currently our partners in the Logan/Todd Regional Water Commission, but business is business and they owe us this money."
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