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Kentucky American Water has been authorized to build a pipeline that will connect its customers in the Owenton area to the company’s water treatment plant on the Kentucky River in Owen County.
The Kentucky Public Service Commission issued an order Thursday that found building a pipeline and related storage tanks is more cost-effective than making improvements to Owenton’s aging treatment facility, which KAW owns and operates.
The estimated $14.1 million project is expected to include approximately 16 miles of pipeline and a pump station. The project is also expected to include a 300,000-gallon storage tank outside Monterey and a 600,000-gallon tank near Owenton.
According to a press release from the PSC, Owenton’s current treatment facility is “substantially deficient” and “poses an unacceptable risk to the continuity of service,” in addition to being unlikely to meet stricter federal water-quality standards.
In its application to connect customers of the Owenton system to the Kentucky River Station II plant, KAW cited a number of problems with the Owenton plant and system including physical deterioration, inadequate treatment and storage capacity, poor reliability, a lack of backup systems and problems with water supply and quality in the warmer months.
According to the release, correcting all of those problems would cost about $11.4 million, the company said in its application.
Although that is $2.7 million less than the cost of the pipeline and new tanks, the higher cost is quickly offset by the elimination of the operation and maintenance expense of the Owenton plant, the release said. KAW would also reduce its need to purchase water from other water systems in order to serve those customers not served from Owenton.
The immediate annual savings would be more than $600,000, meaning that all the cost difference would be erased in the first three years of operation, the PSC found.
KAW has about 3,900 customers in its northern division in Owen, Gallatin and Grant counties. They use about a million gallons of water per day.
The division was created through the acquisition of several small water systems, including the city of Owenton system. Nearly 90 percent of the northern division customers receive water from the Owenton plant, with the rest receiving water that KAW purchases from neighboring water systems.
The majority of KAW’s customers, about 119,000, are located in the company’s central division, which serves Fayette and six surrounding counties. The company also provides water to nine other water districts or municipal districts.
The Kentucky River Station II, located on 127 South in Owen County has a capacity of 20 million gallons per day and is connected to KAW’s central division by a 31-mile pipeline. It is one of three plants serving the central division.
According to the release, the PSC did not determine how KAW will recover the cost of the new facilities and how those costs will be allocated. Those issues are expected to be resolved separately in a pending KAW rate proceeding.