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Metro Newsroom

Board of Water Works Approves 2010 Budget

Tuesday November 10, 2009

Board of Water Works Approves 2010 Budget
Budget Continues a Commitment to High Quality Drinking Water Amidst Tough Economic Conditions

Louisville Water Company’s (LWC) Board of Water Works approved the company’s 2010 budget at its regular meeting November 10. The budget emphasizes investing in LWC’s aging infrastructure and meeting upcoming drinking water regulations.

The budget includes $97.9 million for capital spending. A large component involves theSodium Hypochlorite Tank for the On Site Chlorine Generation Project at Crescent Hill Water Treatment Plant 2009 Crescent Hill Filtration Plant, the state’s largest water treatment plant and the plant that serves 70% of LWC’s customers. LWC is 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.

Riverbank Filtration Tunnel 2009The capital 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.

Like other businesses, the recession has impacted LWC. Water sales and interest income have dropped sharply. Water consumption is at its lowest level since 1993. Sales are down by 5.5% overall in 2009 and nearly 14% 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 (less than 1%); labor expenses are flat, and operations and maintenance expenses are increasing only 1.5% from 2009. “LWC has successfully managed through a challenging year,” said Greg Heitzman, President and CEO of LWC. “As we look ahead, we have prepared a budget that meets the dim economic forecast for 2010 while remaining true to our company’s mission of providing safe, high quality drinking water.”

The 2010 budget does include $4.8 million interest expense for a bond issue in the 4th quarter of 2009. LWC will issue bonds in December for $120 million and refinance $76.5 million of existing bonds at a lower rate to fund the capital program. When the economic downturn began in 2008, LWC delayed issuing the bonds; it is now necessary to proceed and finance infrastructure improvements for the next three years. A portion of the bonds will fund the renovation at the Crescent Hill Filtration Plant in order to meet the EPA’s Enhanced Surface Water Treatment Rule by April 2012.

The Board of Water Works approved a 4.5% rate increase to primarily fund the interest expense on the bond issue. This is at the lower end of a 4.5 to 5.5% increase recommended by LWC staff. The rate increase means an average residential water bill will increase in January by 94 cents a month or about 3 cents a day to $21.81.