FRANKFORT, Ky. — The Kentucky Public Service Commission has denied Southern Water and Sewer District’s request for a 5.28 percent rate increase. Instead, the commission authorized a rate increase of nearly five times that amount.

At the same time, the commission is ordering the utility to work to resolve its longstanding problems with losing massive amounts of water.

Under the PSC’s order, Southern will see rates climb by 23.23 percent, along with the implementation of a $6.83 water loss surcharge. That means the average residential bill will climb 26.12 percent to $68.80, an increase of $14.25.

The commission’s order limits the water loss surcharge to either five years or until the fee generates $2.2 million. That money will be set aside to deal with the utility’s water loss and cannot be spent without prior PSC approval.

The PSC considers water loss of 15 percent or below to be reasonable. But a review of the past four years shows that Southern has been losing nearly 57 percent of its water. That results in Southern spending about $1 million a year to produce water, with about $600,000 of that amount lost.

The PSC plans to monitor Southern’s efforts to resolve its water-loss problems. The commission gave the utility 150 days to obtain the services of an engineering firm that will develop a 15-to-20-year plan to address its water loss. That plan is required to be filed with the PSC 240 days after the engineering firm is procured. Once that plan has been approved by the PSC, Southern will then be required to file an execution plan.

As reported last week, Southern is also under investigation for implementing a “disconnect fee” without prior approval. While the PSC has now given its approval of that fee, the utility’s manager and board members each face up to $2,500 in fines and removal from their positions if the commission determines they willfully circumvented the approval process.

Copies of the PSC’s rate increase and water-loss plan orders are attached below: