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Public Citizen Files Motion to Intervene in Lexington Water Case

Sept. 16, 2002

Public Citizen Files Motion to Intervene in Lexington Water Case

Public Ownership Would Better Serve Lexington Community, Groups Say

WASHINGTON, D.C. – Public Citizen, a national consumer advocacy organization, today filed a motion to intervene in proceedings by the Kentucky Public Service Commission (PSC) on the future of Lexington’s water system. If granted, the motion would allow Public Citizen to speak before the PSC in a case prompted by the acquisition of the company that currently operates Lexington’s water system by a giant German energy conglomerate.

The motion is the latest move in an ongoing battle by citizen groups, including Bluegrass FLOW, to persuade the Lexington-Fayette Urban County Government to gain control of the city’s water system. Both public interest groups advocate that a municipal buyout of the privately owned company, Kentucky-American, would stabilize rates and provide more reliable service. The county is considering pursuing a buyout.

“Cities across America are reclaiming their water systems because they are fed up with broken promises from corporations who report to their shareholders instead of to their customers,” said Wenonah Hauter, director of Public Citizen’s Critical Mass Energy and Environment Program. “When you treat water as a common resource for all, as it should be, public ownership makes sense. The citizens of Lexington will benefit from owning their water system, and we support their efforts.”

The county’s decision to investigate a public buyout stems from concerns that began in 2001 when American Water Works Company, the largest U.S. water company and the parent of Kentucky-American, agreed to be purchased by RWE AG, a German energy conglomerate. Uncomfortable with a multinational corporation owning their local waterworks, citizens began to ask if profits made in Lexington would be re-invested into their community or if the revenues would be used for the German company’s overseas expansion efforts. RWE has also acquired Thames Water, a large private water company in England. Under the conditions of the acquisition, executives of American Water Works would report to Thames officials in England.

The PSC is reviewing the deal because it oversees utilities. The PSC review is what prompted the county to consider a buyout.

“Lexington has a rare opportunity to reclaim control of its water service and build its future on its own terms, not those dictated from the distant headquarters of a giant German energy company,” said Hauter. “Who wouldn’t vote for lower rates, better service and economic development in their own city?”

While Kentucky-American has argued that the city would have to significantly increase water rates to pay for the purchase, proponents assert that the county government can finance the purchase by issuing tax-exempt revenue bonds to be paid solely from water revenues and therefore could afford the buyout without raising prices.