Recent proposal by Corps of Engineers to charge for water usage has officials concerned

Posted March 9, 2016 at 6:02 pm

Several Lake Cumberland area municipalities, including Albany, and businesses that currently are drawing water free from that lake may eventually be paying fees for the use of that water if the U.S. Army Corps of Engineers has its way.

Although the Corps sites several reasons for such a move, it still has many area officials concerned that the charges will have to be passed on to water customers.

According to a recent article in the Lexington Herald-Leader by Bill Estep, cities and businesses that have long used Lake Cumberland as a free water source will have to begin paying the federal agency (Corps of Engineers) that controls the reservoir once they have completed a study of the issue.

The price of using the lake as a water source has not been established, but local officials said water systems would likely have to raise rates to cover the additional costs.

According to the published report, the bigger concern for some is a proposed requirement under which users would have to pay a share of any future repairs on Wolf Creek Dam, which impounds the lake.

The $600 million price tag of a project completed in 2013 to seal leaks at the dam is fresh on their minds and although it is not clear if the dam would ever need such repairs again, if it did, the share required of water users would be less than one percent of the total.

Still, even a small fraction of the cost of a major repair project could be difficult for small cities to manage, according to some officials.

The issue apparently came up because supplying water was not an authorized purpose of the Wolf Creek Dam project when it was authorized by Congress in the 1930s. The authorized purposes were to control damaging flooding on the Cumberland River and to generate hydroelectricity.

In the decades after the dam was finished in 1951, however, the lake became increasingly important as a water source for water systems as the population in the region grew.

Congress said the Corps could accommodate that need, but only if it didn’t have a significant impact on the authorized purposes of the dam and lake, said Loren McDonald, an engineer heading the agency’s study of allocating water for municipal systems. That is what the Corps is now studying, the feasibility of reallocating storage capacity in the lake from hydropower to water supply, and the amount to be assigned to each user over the next 20 years.

Once the study is done, municipal water systems and industrial users will have to begin paying for their share of water storage in the lake if they continue using it as their water source, with that being apparently the only feasible water source that current users now have.

The study will determine the amount for each user, but that is not scheduled to happen until December of 2018.

According to the published report, each user would have to pay a one-time fee for their portion of the storage space. That would be based on the amount of hydropower capacity lost to water supply or the original construction cost of the dam in today’s dollars, whichever is higher, according to a letter the Corps sent to users.

The City of Albany received that letter, which was given to city legal advisor Norb Sohm to research.

Apparently each user would have to pay an annual fee for their share of the cost of operating and maintaining the dam and lake.

McDonald said there are 11 users affected by the study, including the water systems operated by Albany, Somerset, Burnside, Monticello, Jamestown and McCreary County; a federal fish hatchery in Russell County; and General Burnside Island State Park, Woodson Bend Resort, Kingsford Charcoal and a power plant operated by East Kentucky Power Cooperative in Pulaski County.

The initial one-time fee is a worry around Lake Cumberland.

Somerset Mayor Eddie Girdler was quoted as saying he understood there could be a $1 million fee for Somerset, which provides over 20,000 households in Pulaski and other counties, adding he was very concerned about the Corps’ proposal.

The water users will be able to spread the initial fee over 30 years, but some feel even at that rate, they would have to obtain a bond issue to pay the fee up front, which could also lead to eventually passing the cost on to each city’s water customers.

The coming fees on Lake Cumberland irk some local officials because they don’t think their systems withdraw enough water to have much of an impact on the lake and are concerned about larger bills in the future. Further, Girdler said he felt the federal government should be responsible for paying any further repairs or replacement of the dam. “They should never put dam replacement or dam repairs on a small city,” he said. “What if they decide a new dam is $2 or $3 million.”

Corps officials said the agency is required under federal law to charge water systems for storage and a share of what it costs to operate and maintain dams.

Lt. Col. Stephen Murphy, commander of the Corps’ Nashville District, noted in a recent commentary that the benefits of Lake Cumberland are undeniable, “but they are also not free.”

Lake Cumberland is the only long-term storage reservoir on the Cumberland River basin where municipal and private water users don’t yet pay a fee for storage, according to the agency. Such fees are common at Corps’ lakes across the country, McDonald said, adding, “Lake Cumberland truly is an anomaly across the country.”

The corps started a study more than a decade ago that would have led to water-storage fees for Lake Cumberland, but Congress used budget language to block the Corps from finishing the study. The language was not renewed after 2011, McDonald said.

Republican U.S. Rep. Hal Rogers, whose district includes some Lake Cumberland counties, opposed the earlier reallocation study, according to his office. However, the Corps of Engineers told Rogers other potential users were showing interest in the lake as a water source.

The Corps is required by law to do a reallocation study to clear the way for that, and Rogers, according to his office, did not want to stand in the way. The long-term Congressman has announced he is not seeking re-election to his Congressional seat this year.

“Improving access to sanitary water has been one of Congressman Rogers’ main goals,” the statement said.

Despite the Corps’ reasons, most local officials, all of which are already financially strapped, aren’t buying into the idea, including City of Albany officials and Mayor Nicky Smith.

At the most recent meeting of Albany City Council, council members expressed concern over the new proposed fees for water storage and what it may mean in future years to the city itself, and the cost it may eventually mean to city water customers.

Mayor Smith, who was absent at the meeting and is still recovering from recent eye surgery, is also not pleased with the Corps’ decision.

The mayor acknowledged receiving the Corps’ letter a few months ago and said he turned it over to the city attorney back in December.

Mayor Smith feels the responsibility of maintaining repairs, present and future on Wolf Creek Dam should lie on the shoulders of the federal government and Corps of Engineers, not smaller cities that are already struggling to provide water without having to raise rates.

“It’s a tax on the people by a regulatory agency,” Smith said. “They shouldn’t pass it on to smaller cities.”

Smith said he didn’t know that much about the Corps’ plans to this point, but did say if there was a one-time fee that would have to be paid over some many years, cities would be forced to obtain a bond and pay it off over time, which may mean passing the cost onto water customers.

The mayor also said he would like to see all of the mayors affected by the proposal to get together in opposition and indicated he was going to do that (talk with mayors in affected cities) after he gets through recuperating to try and come up with some way to oppose the Corps’ plans.