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Louisville Water Company 2010 Preliminary Budget

Thursday October 15, 2009

Louisville Water Company 2010 Preliminary Budget

At its October meeting, Louisville Water Company’s (LWC) Board of Water Works received a preliminary budget for 2010. It’s one that emphasizes investing in LWC’s aging infrastructure and investing to meet upcoming drinking water regulations.

The 2010 capital budget, which is $97.4 million, addresses both of those goals. A large component involves the Crescent Hill Filtration Plant, the state’s largest water treatment plant and the plant that serves 70% of LWC’s customers. LWC is in the midst of renovating the 100 year-old facility. Work in 2010 will focus on installing a new filtration system, upgrading the softening basins and bringing an on-site chlorine generation facility on-line. This budget also includes finishing the Riverbank Filtration System at the B.E. Payne Treatment Plant in Prospect, installing new transmission mains throughout our service area and improving pumping and storage facilities.

To help finance the capital budget for the next three years and complete the above mentioned projects, LWC plans to issue bonds in the 4th quarter of 2009 for $120 million dollars. The 2010 budget includes $4.8 million interest expense.

As part of the 2010 budget, the Board is considering a rate increase of 4.5 to 5.5%. This rate increase is needed to fund the interest expense on the $120 million bond issue and will increase a typical residential monthly water bill by $1.00, about 3 cents a day.

Like other businesses, the recession has impacted LWC. Water sales and interest income have dropped sharply. In 2009, water consumption is down 5% overall and nearly 17% for industrial customers. LWC has significantly cut operation and maintenance expenses and also reduced the workforce. The 2010 budget includes a small increase in water sales (< 1%); labor expenses are flat and operations and maintenance expenses are increasing only 1.5% from 2009.

The Board of Water Works will review and finalize the 2010 budget at its November meeting.

LWC welcomes customer comments. You can send an email with a question or comment about the 2010 budget.