Cumberland County Water District Purchased Water Adjustment Filing Approved

COMMONWEALTH OF KENTUCKY BEFORE THE PUBLIC SERVICE COMMISSION In the Matter of: ELECTRONIC PURCHASED WATER ADJUSTMENT FILING OF CUMBERLAND COUNTY WATER DISTRICT ) ) ) CASE NO. 2026-00037 O R D E R On February 13, 2026, Cumberland County Water District (Cumberland District) tendered an application requesting approval to adjust its rates pursuant to the purchased water adjustment procedure set forth in KRS 278.015 and 807 KAR 5:068. On February 18, 2026, Cumberland District submitted further documentation to correct certain filing deficiencies, and the application was deemed filed as of February 18, 2026. Cumberland District proposed an effective date of February 12, 2026 for its updated rates. LEGAL STANDARD In accordance with KRS 278.015, when a wholesale supplier selling water to a water district increases its rates, the water district has the authority to increase its rate commensurate with the wholesale supplier. The water district must file, within the statutory and regulatory deadlines, a copy of the notice from the wholesale supplier showing the increase in the wholesale rate, and a statement of the volume of purchased Amended Application (filed Feb. 18, 2026). Amended Application (filed Feb. 18, 2026).

-2- Case No. 2026-00037 water used to calculate the rate adjustment. The Commission shall approve the filing by order after the above documents are filed. DISCUSSION AND FINDINGS Cumberland District purchases water from the city of Albany (Albany), the city of Burkesville (Burkesville) and Columbia-Adair Water District (Columbia-Adair District). Albany notified Cumberland District that its wholesale rate would increase by $0.82 per 1,000 gallons from $2.10 per 1,000 gallons to $2.92 per 1,000 gallons, effective February 12, 2026. Cumberland District proposes to increase the water rates to its customers effective February 12, 2026, to reflect the increased cost of purchased water from Albany. Neither Burkesville nor Columbia-Adair District proposed a change in rates. Unaccounted-for Water Loss Commission regulation 807 KAR 5:066, Section 6(3), states that for ratemaking purposes a utility's unaccounted-for water loss shall not exceed 15 percent of the total water produced and purchased, excluding water consumed by a utility in its own operations. In its 2022 Annual Report filed with the Commission, Cumberland District reported a water loss of 39.0535 percent. In its 2023 Annual Report filed with the Commission, Cumberland District reported a water loss of 38.1290 percent. In its 2024 Annual Report filed with the Commission, Cumberland District reported a water loss of TFS2026-00012 (Ky. PSC Jan. 8, 2026); Albany submitted the tariff on January 8, 2026, and the tariff was accepted for filing by the Commission by letter dated February 11, 2026, with an effective date of February 12, 2026. Annual Report of Cumberland District to the Public Service Commission for the Year Ended December 31, 2022 at 57. Annual Report of Cumberland District to the Public Service Commission for the Year Ended December 31, 2023 at 57.

-3- Case No. 2026-00037 34.0803 percent. Cumberland District’s three-year water loss average is 37.0876. The approximate cost of Cumberland District’s total water loss using a three-year average is $211,694.40. In Case No. 2022-00291, the Commission approved a monthly water loss reduction surcharge of $2.85 per customer for 48 months, or until $386,460 has been assessed, whichever occurs first, to help lower system losses to more acceptable levels for Cumberland District. On October 5, 2023, Case No. 2023-00228 was established in order for the Commission to monitor the progress of the water loss reduction surcharge plan established by Cumberland District. The Commission encourages Cumberland District to continue to work within Case No. 2023-00228 to develop an infrastructure plan, identify particular projects and, following approval by the Commission, undertake those projects to reduce its water loss. Financial Condition and Rates Cumberland District’s financial snapshot for 2020 through a 2024 pro forma year as used in the last rate case is presented below. Based on a review of Commission records, Cumberland District adjusted base rates twice during the review period, in Case Annual Report of Cumberland District to the Public Service Commission for the Year Ended December 31, 2024 at 58. 39.0535% + 38.1290% + 34.0803% = 109.2628 / 3 years = 37.0876 percent. Total water cost at new wholesale rate of $570,795.64 times 37.0876% water loss equals $211,694.40. Case No. 2022-00291, Electronic Application of Cumberland County Water District for a Rate Adjustment Pursuant to 807 KAR 5:076 (Ky. PSC Oct. 5, 2023), final Order. Case No. 2022-00291, Electronic Application of Cumberland County Water District for a Rate Adjustment Pursuant to 807 KAR 5:076 (Ky. PSC Oct. 5, 2023), final Order at 25. Case No. 2023-00228, Electronic Cumberland County Water District Unaccounted-For Water Loss Reduction Plan, Surcharge and Monitoring (Ky. PSC Oct. 5, 2023), opening Order.

-4- Case No. 2026-00037 No. 2022-00291 and in Case No. 2025-00226. Case No. 2025-00226 became final on December 23, 2025, and reflected an increase of $292,740 or 14.95 percent. Cumberland District’s other rate increases during the review period were due to purchased water adjustment cases. In Case No. 2025-00226, the Commission reduced expenses by approximately $275,000 based on various factors. The disallowance of these items contributed to the Rate Based Loss shown in the Pro Forma year. Case No. 2022-00291, Oct. 5, 2023 final Order Case No. 2025-00226, Electronic Application of Cumberland County Water District for an Adjustment of Rates Pursuant to 807 KAR 5:076 (Ky. PSC Dec. 23, 2025), final Order. Case No. 2025-00226, Dec. 23, 2025 final Order at 10. 2022-00291; 2021 Test Year2025-00226; 2024 Test YearAudited Audited Audited Audited AuditedDescription / Year2020 2021 2022 2023 2024 Pro Forma Adjusted Net Income Case No. 2025-00226 F.O 12/23/25 (Test Year 2024) Net Income / (Loss) (79,114)$ (13,989)$ (241,251)$ (11,783)$ (106,857)$ (106,857)$ Other Non-recurring Items ( ) (211,029) (28,971) 0 0 (184,289) (184,289)Water Loss Surcharge ( ) 0 0 0 (7,940) (89,515) (92,073)Revenue Increase 2025-2026 0 0 0 0 0 292,740Adjusted Net Income / (Loss) (290,143)$ (42,960)$ (241,251)$ (19,723)$ (380,661)$ (90,479)$ Subtract: Principal Payments ( ) (109,473) (109,157) (140,413) (212,728) (204,278) (204,278)Rate Based Income (399,616)$ (152,117)$ (381,664)$ (232,451)$ (584,939)$ (294,757)$ Add: Depreciation Expense 329,605 325,017 312,656 308,351 312,498 312,498Cash Basis Income (70,011)$ 172,900$ (69,008)$ 75,900$ (272,441)$ 17,741$ Cash Basis Income as Percent of Depreciation -21% 53% -22% 25% -87% 6% Capital Spending 837,420$ 110,264$ 29,588$ -$ 48,252$ Cash and InvestmentsUnrestricted Cash and Investments 97,077$ 266,192$ 130,356$ 197,409$ 204,648$ Restricted Funds 516,937 175,252 100,020 28,777 91,707Adjusted Cash Balances 614,014 441,444 230,376 226,186 296,355 Net Increase (Decrease) in Cash (20,921)$ (172,570)$ (211,068)$ (4,190)$ 70,169$ Selected Statistical Information (PSC Annual Reports) Customer Count 2,801 2,910 2,723 2,919 2,896Gallons Purchased 201,777 197,902 228,461 226,675 217,645Gallons Sold 116,275 120,195 132,894 137,697 140,462Gallons Used for Internal Use 3,386 8,028 6,345 2,549 3,009Water Loss Gallons 82,116 69,679 89,222 86,429 74,174System Use Percentage 1.6781% 4.0566% 2.7773% 1.1245% 1.3825%Water Loss Percentage 40.6964% 35.2088% 39.0535% 38.1290% 34.0803%Gallons Sold Per Customer Per Month 3,459 3,442 4,067 3,931 4,042 Revenues from the Sale of Water 1,373,185$ 1,393,165$ 1,498,158$ 1,607,246$ 1,805,877$ Purchased Water Expense 471,708 403,015 509,420 483,574 584,741Purchased Water Expense Over 15% Water Loss 121,212 81,445 122,533 111,846 111,570Water Loss Expense Over 15% as Percentage of Water Revenue 8.83% 5.85% 8.18% 6.96% 6.18%

-5- Case No. 2026-00037 In Case No. 2019-00041, the Commission discussed the problems that can occur when utilities intentionally avoid a review of their financial records by relying solely on financing cases to increase rates. A key recommendation from that proceeding was that water districts should monitor the sufficiency of their base rates closely and, in general, apply for base rate adjustments on a more frequent basis. Given this information, the Commission finds that Cumberland District should continue to monitor its operating performance annually to determine whether a rate adjustment application should be submitted. Future rate cases should be filed every three to five years depending on financial performance. Purchased Water Adjustment Factor In its application, Cumberland District proposed a purchased water adjustment factor of $0.25 per 1,000 gallons. During the 12 months ended December 31, 2025, Cumberland District purchased 45,414,500 gallons of water from Albany, 176,482,600 gallons of water from Burkesville and 6,756,828 gallons of water from Columbia-Adair District. Cumberland District sold 133,179,000 gallons of water to its customers. The increase in the cost of purchased water from Albany is $33,231.89, resulting in a purchased water adjustment factor of $0.25 per 1,000 gallons. No rate changes occurred from Burkesville or Columbia-Adair District. See Case No. 2019-00041, Electronic Investigation into Excessive Water Loss by Kentucky's Jurisdictional Water Utilities (Ky. PSC Nov. 22, 2019), final Order. See Case No. 2019-00041, Nov. 22, 2019 final Order. Amended Application at 2. Amended Application at 2. Amended Application at 1.

-6- Case No. 2026-00037 The purchased water adjustment factor of $0.25 per 1,000 gallons, as calculated in Appendix A and the rates as set forth in Appendix B to this Order, are fair, just and reasonable and should be approved for water service rendered by Cumberland District on and after February 12, 2026, because the rates are supported by evidence of the increase in rates from Cumberland District’s wholesale water supplier and the volume of purchased water used to calculate the rates in accordance with KRS 278.015. IT IS THEREFORE ORDERED that: 1. The purchased water adjustment factor of $0.25 per 1,000 gallons is approved. 2. The rates proposed by Cumberland District are approved. 3. The rates as set forth in Appendix B to this Order are approved for water service rendered by Cumberland District on and after February 12, 2026. 4. Within 20 days of the date of service of this Order, Cumberland District shall file with the Commission, using the Commission’s electronic Tariff Filing System, revised tariff sheets showing the rates approved herein. 5. This case is closed and removed from the Commission’s docket.

Case No. 2026-00037 PUBLIC SERVICE COMMISSION ___________________________ Chairman ___________________________ Commissioner ___________________________ Commissioner ATTEST: ______________________ Executive Director

Page 1 of 1 APPENDIX A APPENDIX TO AN ORDER OF THE KENTUCKY PUBLIC SERVICE COMMISSION IN CASE NO. 2026-00037 DATED MAR 19 2026 Base Rate New Rate Change Albany First 1.5 million gallons $2,125.00 $3,021.00 Months $25,500.00 $36,252.00 $10,752.00 Purchases in Gallons 27,414,500 27,414,500 Rate per 1,000 Gallons $2.10/1,000 $2.92/1,000 Subtotal $57,570.45 $80,050.34 $22,479.89 Burkesville Purchases in Gallons 176,482,600 176,482,600 Rate per 1,000 Gallons $2.47/1,000 $2.47/1,000 Subtotal $435,912.02 $435,912.02 $0.00 Columbia-Adair District Purchases in Gallons 6,756,828 6,756,828 Rate per 1,000 Gallons $2.75/1,000 $2.75/1,000 Subtotal $18,581.28 $18,581.28 $0.00 Increased water cost $33,231.89 Increased water cost $33,231.89 Divided by Gallons sold/1,000 133,179,000 Purchased water adjustment factor $0.2495 per 1,000 Gallons or $ 0.00025 per Gallon

Page 1 of 1 APPENDIX B APPENDIX TO AN ORDER OF THE KENTUCKY PUBLIC SERVICE COMMISSION IN CASE NO. 2026-00037 DATED MAR 19 2026 The following rates and charges are prescribed for the customers in the area served by Cumberland County Water District. All other rates and charges not specifically mentioned herein shall remain the same as those in effect under the authority of the Commission prior to the effective date of this Order. Monthly Water Rates 5/8 X 3/4-Inch Meter First 2,000 Gallons $40.32 Minimum Bill Next 3,000 Gallons 0.01129 Per Gallon Next 5,000 Gallons 0.01001 Per Gallon Over 10,000 Gallons 0.00870 Per Gallon 1-Inch MeterFirst 5,000 Gallons $74.57 Minimum Bill Next 5,000 Gallons 0.01001 Per Gallon Over 10,000 Gallons 0.00870 Per Gallon 1 1/2-Inch Meter First 12,500 Gallons $145.92 Minimum Bill Over 12,500 Gallons 0.00870 Per Gallon 2-Inch MeterFirst 25,000 Gallons $254.71 Minimum Bill Over 25,000 Gallons 0.00870 Per Gallon Dale Hollow State Park First 300,000 Gallons $2,648.22 Minimum Bill Over 300,000 Gallons 0.00870 Per Gallon

Denotes Served by Email Service List for Case 2026-00037Cumberland County Water District133 Lower River StreetBurkesville, KY 42717-9622Michael BallardGeneral ManagerCumberland County Water District133 Lower River StreetBurkesville, KY 42717-9622Jason PennellKentucky Rural Water AssociationPost Office Box 14241151 Old Porter PikeBowling Green, KY 42102-1424