MSA warns of possible 8% annual rate increases and outlines backup water planning

Charles Allagood, Lexington’s representative to the Morey Service Authority, told the City Council during its March 5 meeting that MSA projects approximately 8% annual rate increases for water and sewer in the coming years.

Allagood said MSA is about halfway through a roughly $4.5 million water loop project and that modernization work identified across the system amounts to about $60,000,000 spread over roughly 15 years. “That number is, estimated currently at 8% annual rate increases for the next quite a few years in there,” he said.

Why it matters: higher MSA rates would likely show up on city utility bills, and the authority is still evaluating how engineering projects and potential new regulatory requirements could change future cost projections. Allagood warned that PFAS removal is not included in the current modernization budgeting and that filtering solutions could cost “multimillions,” which would further raise rates if remediation is required.

MSA has also been studying backup supply options. Allagood said consultants ranked potential sources; Moores Creek Dam came in low on the list because it does not meet projected flow needs and would require many thousands of feet of pipeline to connect to the plant. “The estimates were in the millions,” he said of the cost to connect Moores Creek. Consultants recommended pursuing alternatives (including test wells and resistivity surveys) to identify well sources that could meet average-day flow needs for roughly 30 days.

Allagood described other engineering work under way: preliminary engineering reports (PERs) to support grant applications (about 67% of PER spending complete) and development of a hydraulic model to identify system bottlenecks. He said MSA will hold a public workshop on rate-setting on March 13 at 5:00 p.m. at the MSA water plant and invited residents to attend.

Council members pressed for details about whether the 8% estimate applies to both water and sewer; Allagood confirmed it does. He also cautioned that the city’s new stormwater fee could make actual bills show a higher combined increase even if MSA’s share is 8%.

Next steps: MSA will continue engineering work, complete resistivity measurements and test wells where appropriate, and hold the public workshop for rate discussion on March 13. The council did not take action on rates at this meeting.

Quote: “The 8% is projected; it is not fixed at this point,” Charles Allagood said, urging residents to attend the March 13 workshop.