Notice of Proposed Rate Change as of 3/16/10

  In accordance with the requirements of the Public Service Commission of the Commonwealth of Kentucky as set out in 807 KAR 5:069, Section 2, notice is hereby given to the customers of the Laurel County Water District #2 of a change to the District's rate schedule as set forth herein. The proposed rate change is required by USDA, Rural Development in connection with a loan by RD to the District in the amount of $8,385,000 to be evidenced by the issuance by the District of its Waterworks Revenue Bonds in such amount, which RD has agreed to purchase provided the District meets certain conditions of RD, including revising the water rates as set forth below:

Current Monthly Rates

A.     Minimum Water Rates Based on Size of Connection

Size of Meter Connection	Number of Gallons or Less of water per month to be Provided for the Minimum Rate	Monthly Minimum Water Rate Per Connection
5/8 x 3/4 Inch	1,000 gallons	$6.20
1 Inch	5,000 gallons	$16.60
1 1/2 Inch	10,000 gallons	$28.60
2 Inch	20,000 gallons	$50.60
3 Inch	30,000 gallons	$72.60
4 Inch	50,000 gallons	$116.60
6 Inch	100,000 gallons	$226.60

B.     Meter Rates for Water Usage in Addition to Minimum Charge

Subject to the minimum monthly water rates specified above the following metered charges shall be made for each 1,000 gallons of water.

Number of Gallons of Water Per Month	Monthly Charge Per 1,000 Gallons Per Month
First 1,000 Gallons	$6.20  Minimum Bill
Next 4,000 Gallons	$2.60  per 1,000 Gallons
Next 5,000 Gallons	$2.40  per 1,000 Gallons
Over 10,000 Gallons	$2.20  per 1,000 Gallons

Proposed Monthly Rates

A.     Minimum Water Rates Based on Size of Connection

Size of Meter Connection	Number of Gallons or Less of water per month to be Provided for the Minimum Rate	Monthly Minimum Water Rate Per Connection
5/8 x 3/4 Inch	1,000 gallons	$9.95
1 Inch	5,000 gallons	$26.67
1 1/2 Inch	10,000 gallons	$47.57
2 Inch	20,000 gallons	$89.37
3 Inch	30,000 gallons	$131.17
4 Inch	50,000 gallons	$214.77

B.     Meter Rates for Water Usage in Addition to Minimum Charge

Subject to the minimum monthly water rates specified above the following metered charges shall be made for each 1,000 gallons of water.

Number of Gallons of Water Per Month	Monthly Charge Per 1,000 Gallons Per Month
First 1,000 Gallons	$9.95  Minimum Bill
Next 99,000 Gallons	$4.18  per 1,000 Gallons
Over 100,000 Gallons	$3.62  per 1,000 Gallons

The RD loan proceeds will be used in conjunction with a Ky house bill grant in the amount of $1,000,000 and two RD grants in the aggregate amount of $1,500,000 to finance (i) the expansion of the existing water treatment plant from 1.44 MGD to 2.88 MGD; (ii) the construction and installation of approximately 8 miles of raw water main; and (iii) the construction of a new water intake on the Laurel River Lake. Signed: Roy Wayne Jenkins, Chairman, Laurel County Water District #2, London, Kentucky.