MARTIN COUNTY, Ky. — Water utility rates are set to increase in Martin County after the Public Service Commission (PSC) in Frankfort approved an emergency rate increase Friday. The interim increase is aimed to "prevent the district from falling into financial and operational distress."

The newly approved rates will increase the bill of a typical residential customer by $5.86, or 11.68%, representatives with PSC said in an email.

Martin County Water District had previously sought a rate adjustment on April 8, 2021, requesting emergency rates be permitted while the Commission conducted a review of its rate adjustment. A formal hearing was conducted on May 27 to determine whether the request met standards established in Kentucky law [KRS 278.190(2)].

In authorizing the emergency rate, the PSC determined Martin District’s financial and operational position will be “materially impaired” without the interim rate increase.

The PSC noted the progress Martin County has made thanks to help from a professional third-party management company. Nevertheless, officials said the district has been in such poor condition from decades of mismanagement, the path to financial and operational viability is as cloudy as some water in Martin County.

PSC Chairman Michael Schmitt, in an email to Spectrum News 1, stated, “Martin County cannot realistically be expected to financially support and adequately maintain an independently operated stand-alone water utility,” given the millions of dollars of investments needed for a water utility that serves a small customer base of about 3,500.

The water district is currently unable to pay its day-to-day operating expenses. Without the emergency rate increase, Martin County Water District would either have to shut down operations or be placed into receivership.

Staring down $1 million in debt with $55 million in estimated essential repairs on the horizon, Martin County is in trouble. Information provided to Spectrum News 1 shows the district's water loss rate is around 65% and the core water treatment plant is in need of replacement, which could cost up to $20 million.

Martin County Water District is not alone — small municipal systems in surrounding counties have similar problems, and state and local officials have long recognized the imperative for regionalization. With federal and state funding availability for municipal system infrastructure upgrades, Chairman Schmitt said an assessment of regional needs and solutions is timely.

The interim base rate increase is subject to refund pending a final determination of the district’s request for rate relief.