BY LISA STAYTON
MOUNTAIN CITIZEN
INEZ — On paper, the numbers point to a sharp water rate hike. In practice, Martin County water officials say they are charting a different course.
The Martin County Water District filed its 2026 Revenue Requirement Report with the Kentucky Public Service Commission on Monday. The filing shows the district would need a 37.55% increase in revenue to satisfy standard regulatory formulas. Yet the district explicitly declines to ask for higher rates in 2026.
“Although the report shows that the district’s current revenue is not sufficient, the district is not seeking a rate adjustment for the budget year 2026,” the filing states. It adds that cost reductions and revenue increases will offset the shortfall.
The report is part of PSC Case No. 2020-00154, the long-running management and operations monitoring case that has kept the troubled water system under heightened state oversight since the beginning of 2020.
The 37.55% figure comes from the PSC’s required debt-coverage method, a standardized calculation used for utilities with long-term debt. Under that formula, regulators begin with projected operating expenses, add average annual principal and interest payments on outstanding loans, and then apply a debt-coverage requirement that forces utilities to collect more than the minimum needed to pay creditors. After subtracting limited non-rate revenue, the remaining amount is compared with the district’s current customer bill collections.
In Martin County’s case that comparison shows a significant gap between existing revenue and what the formula requires.
District officials argue the calculation reflects conditions that are already changing.
In a cover letter included with the filing, the district and its operator, Alliance Water Resources, said several developments would materially improve finances in 2026 without raising rates.
Chief among them is the completion of the raw water intake project, which officials say will eliminate the need to rent diesel pumps. This expense has weighed heavily on operating costs in recent years. The district also reported that it replaced 99% of customer water meters. It said the remaining meters would be complete by February 2026. Most of the new meters came online midyear, and recent billing data shows an estimated 10% increase in revenue.
The district also cited a renegotiated wholesale water agreement for water supplied to the federal prison in Martin County. Officials project that the agreement will bring more than $200,000 in additional revenue in 2026.
In addition, the district reported that it has applied for funding through the Kentucky WWATERS. If awarded, officials said the district will pay off all existing water-district debt, dramatically reducing annual debt obligations.