The Kerr Lake Water Question: Franklin County, KLRWS, and the Path Forward

Table of Contents

Executive Summary

On May 21, 2026, Franklin County Manager Ryan C. Preble sent a formal letter to the managers of Henderson, Oxford, and Warren County - the three member jurisdictions of the Kerr Lake Regional Water System (KLRWS). The letter presented two options for Franklin County to acquire an ownership stake in KLRWS and issued a 30-day deadline for a response: June 21, 2026.

The letter was copied to General Assembly members, Granville County, the South Granville Water and Sewer Authority, legal counsel, and media outlets including WRAL, the Henderson Dispatch, Warren Dispatch, and the Franklin Times. The CC list was not accidental. Franklin County is escalating a dispute that has been ongoing since at least 2007.

This report does three things. First, it lays out every factual claim in the Preble letter alongside the underlying data. Second, it provides a complete picture of KLRWS capacity, Kerr Lake storage, and the regulatory constraints that govern what any deal can actually deliver. Third, it outlines the governance protections that Henderson, Oxford, and Warren County should require before any ownership transfer is considered.

Citizens of Henderson, Oxford, Warren County, and Franklin County all have an interest in how this is resolved. This report is intended to give them the information they need to hold their elected and appointed officials accountable.

The Letter: What Preble Sent and Why It Matters

Who Sent It and Who Received It

The letter was sent by Ryan C. Preble, Franklin County Manager, on May 21, 2026. The primary recipients were:

• Gary Spruill, City Manager, City of Henderson (Vance County)
• W. Brent Taylor, Town Manager, Town of Oxford (Granville County)
• Crystal Smith, County Manager, Warren County

These three are the governing managers of the KLRWS member jurisdictions.

The Two Options

Franklin's Key Claim: "Commensurate With Its Debt"

The letter argues that Franklin County's ownership stake must be proportional to the debt it has taken on or will take on. This framing attempts to tie ownership percentage directly to capital investment - a standard principle in infrastructure co-investment. The challenge is that KLRWS was built with Henderson, Oxford, and Warren County ratepayer dollars over decades. Franklin has paid wholesale rates as a customer, not a partner.

The 30-Day Deadline

Preble's letter set June 21, 2026 as the deadline for a response from Henderson, Oxford, and Warren County. This is a request for a response to the framework - not a contract deadline. However, the CC list signals that Franklin intends to create political and media pressure if no response comes.

The CC List and Its Significance

The letter was copied to General Assembly members representing these counties, Granville County leadership, SGWASA, attorneys, and media: WRAL, Henderson Dispatch, Warren Dispatch, and the Franklin Times. Sending a government letter simultaneously to legislators and press is a deliberate signal. Franklin County is on record, publicly, with a deadline. If Henderson does not respond, that non-response will become the story.

Franklin County's Challenge: 19 Years and Counting

The Current Situation

Franklin County currently has approximately 5.5 MGD of water supply capacity through existing wells, surface water, and wholesale purchases. Its current allocated capacity is 4.082 MGD. As the county grows - driven by residential development, data center expansion, and agricultural demand - this gap between supply and future need becomes increasingly acute.

The 50-Year Master Plan

Franklin County's adopted Water Master Plan projects the following long-term demand:

This is Franklin's stated planning target - the number that drives the entire negotiation.

Why Other Options Have Not Worked

Franklin County explored water supply alternatives before arriving at KLRWS as its primary option. Rocky Mount and Wilson, both of which operate large regional water systems, declined to enter wholesale or partnership agreements with Franklin County. The Tar River, which flows through Franklin County, has limited viable surface water withdrawal potential given existing allocations and dry-season flow constraints.

The 19-Year Timeline

Franklin County's pursuit of a water solution did not begin with the Preble letter. The Preble letter itself documented discussions dating to 2007 - nineteen years of attempts, refusals, legislative maneuvers, and renewed negotiations. Key escalation points in this history include SB 320 in 2019, which passed the Senate 20-17 before Governor Roy Cooper vetoed it, and SB 214 in 2026, which briefly included a provision (Part V) that would have dramatically altered the legal landscape before being removed after public pressure.

The Army Corps Reallocation Study

In August 2025, Franklin County signed a Memorandum of Agreement (MOA) with the U.S. Army Corps of Engineers to fund a $2 million study evaluating whether USACE could reallocate additional Kerr Lake storage to Franklin County for water supply purposes. The study timeline:

This study is significant: it is Franklin County's parallel track. If the Corps reallocates storage directly to Franklin, Franklin could pursue its own intake and treatment plant on Kerr Lake - bypassing KLRWS entirely. This possibility shapes the entire negotiating dynamic.

Sources: franklincountync.gov/649/Future-Water, Preble letter (May 21, 2026), USACE Kerr Lake Reallocation Study page

Know Your Water System: KLRWS Facts

Ownership Structure

System Capacity and Current Draw

The IBT Certificate Breakdown

Expansion Project

KLRWS broke ground in May 2023 on an expansion of the treatment plant from 10 MGD rated capacity to 20 MGD. The project was designed by CDM Smith and is proceeding as a design-build contract. Funding:

• $45.9 million in grants and low-interest state loans
• $15 million in revenue bonds
• Oxford's $10 million state appropriation (October 2023)

The 24-Inch Pipeline Bottleneck

A critical constraint that rarely appears in press coverage: the existing 24-inch transmission pipeline serving the Henderson/Vance/Franklin corridor has a maximum practical throughput of approximately 5 MGD. Even if KLRWS expands to 20 MGD treatment capacity, delivering more than 5 MGD to Franklin County requires new pipeline infrastructure. An engineering study completed in February 2025 estimated this pipeline at $78.9 million.

Communities Served

KLRWS serves over 50,000 customers across a wide footprint. Current service connections include:

• Member owners (direct service): Henderson, Oxford, Warren County
• Wholesale customers: Warrenton, Norlina, Kittrell, Stovall, Middleburg, Vance County, Granville County, Franklin County, and SGWASA

Sources: henderson.nc.gov KLRWS page, NC DEQ IBT certification, NCOneWater, WUNC, Henderson Dispatch

Kerr Lake: The Full Picture

Basic Facts

All Entities With Formal Storage Contracts or Allocations

What the Unallocated Water Does

The approximately 98% of Kerr Lake's pool that carries no formal water supply allocation is not simply "unused." USACE manages that storage for multiple authorized purposes: hydropower generation at Kerr Dam, flood control during storm events, recreation (the lake supports a significant tourism economy for the surrounding counties), fish and wildlife habitat, and low-flow augmentation for the Roanoke River downstream into Virginia. Any reallocation of storage from these purposes to water supply requires USACE analysis of impacts across all authorized uses - and, depending on the magnitude of the change, may require Congressional authorization.

Sources: USACE Kerr Lake Pertinent Data, kerr.uslakes.info, USACE Reallocation Study page, NC DEQ

The Math That Does Not Work

This section presents the demand math that no party in the public debate has addressed directly. It is not an argument against a deal - it is a constraint that any deal must confront honestly.

Why This Matters for the Deal

Any ownership agreement that includes Franklin County's right to expand KLRWS capacity to serve 14.3 MGD faces two regulatory barriers that neither party can resolve through a contract:

• New IBT proceeding: Exceeding the current 14.2 MGD IBT certificate requires a new NC DEQ certification proceeding. This involves a multi-year public process, environmental review, and a finding that the interbasin transfer serves the public interest. There is no guarantee of approval, and the process takes years.
• New USACE allocation: Exceeding the current 20 MGD USACE allocation requires either a reallocation of existing storage (which is what the $2 million study is evaluating) or a new allocation - potentially requiring Congressional authorization under the Water Resources Development Act process.

What Franklin's Parallel Study Could Mean

If the USACE reallocation study (draft September 2027, final May 2028) recommends and Congress approves reallocating storage directly to Franklin County, Franklin could pursue its own intake and treatment plant on Kerr Lake. In that scenario, any KLRWS ownership stake Franklin acquired would become a secondary asset rather than its primary water supply solution. This is the double-deal risk: Henderson could give up ownership percentage today, and Franklin could build its own plant tomorrow.

Any agreement must address this scenario explicitly through a Kerr Lake exclusivity clause - discussed in Section 8.

The Financial Picture: Rates, Revenue, and Protections

What Franklin County Pays Now

The exact wholesale rate Franklin County pays Henderson for KLRWS water is not published in any publicly available document. The rate is contained in the interlocal agreement between Franklin County and the City of Henderson and should be made public as part of any negotiation.

NC Representative Winslow (R-Franklin) stated publicly that Henderson charges Franklin County "four times as much as other customers who receive water from the compact" (WRAL, April 26, 2026). Henderson Mayor Melissa Elliott disputed the framing but did not challenge the numbers.

If KLRWS partner rates are consistent with NC wholesale benchmarks ($2.50-$4.00/1,000 gallons), a 4x markup would put Franklin County's rate at roughly $10-$16 per 1,000 gallons, approaching or exceeding residential retail pricing. The highest wholesale rate we found in North Carolina is $4.62 (Fayetteville PWC to Hoke County). Franklin County's rate, whatever the exact figure, appears to be significantly above every benchmark we reviewed.

NC Wholesale Rate Benchmarks

Revenue Potential for KLRWS

Water sold wholesale to Franklin County represents significant revenue potential for KLRWS and its member owners:

Recommended Rate Structure: Declining Block

A volume-tiered (declining block) wholesale rate structure rewards high-volume customers while ensuring KLRWS recovers costs across all demand levels:

Minimum Rate Protections Required

• Floor rate: A minimum rate per 1,000 gallons regardless of volume, to prevent predatory renegotiation at the margin
• CPI escalator: Annual rate adjustment tied to the Consumer Price Index at 2-3%. For reference, Franklin County proposed a 0.025% escalator in 2021 - a figure so low it would represent a declining real rate over any meaningful period.
• Most-favored-customer clause: If KLRWS offers a lower rate to any other wholesale customer, Franklin receives the same rate automatically
• Minimum purchase commitment: Franklin commits to a minimum annual purchase volume to prevent infrastructure investment without revenue return

Sources: WRAL (April 26, 2026), UNC Environmental Finance Center NC Water Rates Dashboard, Asheville Utilities wholesale rate schedule, Johnston County fee schedule

What a Fair Deal Requires

Why Option 1 Cannot Work

Option 1 - a 51% stake for Franklin County - would transfer majority operational and governance control of KLRWS to a county that has been a wholesale customer for years. Henderson currently holds 60% of KLRWS. Selling 51% to Franklin would reduce Henderson's stake to 9%, with Oxford and Warren County retaining their 20% each. The city that built, financed, and has operated the system for decades would become a minority partner. This is not a governance reconfiguration - it is a transfer of control, and it cannot be undone once executed.

Why Option 2 Can Work - With Protections

A minority ownership stake for Franklin County, combined with contractual expansion rights, can serve both parties' legitimate interests - if and only if the following governance protections are contractually required and legally enforceable.

Eight Required Governance Protections

What Henderson Gives Up

Any honest analysis of this negotiation must include a clear-eyed accounting of what Henderson, Oxford, and Warren County sacrifice if they agree to any ownership transfer. The Preble letter frames this as a water equity issue. It is also a governance and capacity issue for the existing member owners.

Growth Capacity: The Zero-Sum Reality

Every gallon per day allocated to Franklin County through KLRWS is a gallon per day that cannot serve growth within the existing service area. Henderson, Vance County, Oxford, Granville County, Warren County, and the communities they serve are also growing. Development, data centers, and agricultural expansion in Vance and Granville counties create real demand pressure on the same system.

Ownership percentage drives priority in resource allocation. A lower Henderson ownership stake means a weaker position in future disputes over who gets water when the system is under stress.

Ownership Percentage: It Does Not Come Back

If Henderson agrees to transfer ownership percentage to Franklin County, that percentage comes from Henderson's 60% stake. Oxford and Warren County are unlikely to voluntarily dilute their 20% shares to accommodate Franklin. This means Henderson's stake could fall from 60% to somewhere in the 40-50% range, depending on what percentage "lower" means in Option 2.

The Double-Deal Risk

Section 6 of this report documents that Franklin County has a parallel track: the $2 million Army Corps reallocation study (final report expected May 2028). If the study recommends and the federal government authorizes a direct Kerr Lake allocation for Franklin County, Franklin could build its own water plant on the lake.

In that scenario, Henderson would have transferred ownership percentage to Franklin, negotiated expansion rights, and potentially approved additional IBT and capital expenditure - and Franklin would emerge with two Kerr Lake access points instead of one, while Henderson has permanently diluted its stake.

This is why Governance Protection #6 - the Kerr Lake exclusivity clause - is described as non-negotiable. It is the single most important structural protection in any agreement.

The Asymmetry of Risk

Franklin County's risk in this negotiation is continued water scarcity and the cost of the Corps study. Henderson's risk is permanent loss of majority control over the water system that supplies over 50,000 people across the region. These risks are not symmetrical. The negotiating posture of the KLRWS member owners should reflect that asymmetry.

Accountability: Both Sides

Civic journalism requires applying the same standard to all parties. This report is not a document in support of Franklin County's position or in support of Henderson's position. It is an attempt to give citizens of every affected county the information they need to evaluate whether their officials are acting in the public interest.

Henderson's Record

Henderson and the KLRWS member owners have declined to negotiate a substantive resolution to Franklin County's water supply need for over a decade. Every refusal has been followed by escalation:

• Repeated negotiations declining (2007-2018) led to SB 320 in 2019
• Governor Cooper's veto of SB 320 returned the issue to the table, but no resolution followed
• Further refusals led to the Section 5 insertion into SB 214 in April 2026 - a provision that, if it had become law, would have significantly altered Franklin County's leverage
• The public mobilization that killed Section 5 returned the issue to the table again, and Henderson is now facing the Preble letter with a June 21 deadline

Refusing to negotiate is a position. But it has a cost: it has given Franklin County political momentum, legislative allies, a federal study, and the moral high ground of a county genuinely struggling with a growing water need. Henderson should answer the following question publicly: What is your counteroffer?

Franklin's Record

Franklin County has a legitimate and documented water supply need. The 50-year Master Plan is a real planning document, not a political invention. The growth pressures on Franklin County are real. And Franklin County has borne wholesale rates that may not reflect cost-of-service pricing.

However, Franklin County has also pursued a pattern of legislative escalation every time direct negotiations stall. SB 320 (2019), the Section 5 insertion into SB 214 (April 2026), and the coordination with General Assembly members reflected in the Preble CC list are not neutral postures. They are pressure tactics.

The corps reallocation study - while legitimate as a planning tool - also functions as leverage. Franklin County is saying, in effect: negotiate with us or we will build our own plant. That may be a rational strategy, but citizens of Franklin County should also ask whether their officials are negotiating in good faith or using the threat of litigation and legislation as a substitute for it.

Questions for Elected Officials

Timeline: 2005 - 2026

Sources and References

All sources listed below were consulted in the preparation of this report. Where a claim relies on a single source, that source is cited inline in the relevant section. Where multiple sources corroborate a claim, all are listed here.

henderson.nc.gov - City of Henderson official website, KLRWS system information pages

franklincountync.gov/649/Future-Water - Franklin County Future Water Supply planning page, including Master Plan figures and timeline documentation

Preble letter, May 21, 2026 - Ryan C. Preble, Franklin County Manager, formal letter to Henderson, Oxford, and Warren County managers

ncleg.gov - NC General Assembly, SB 214 conference report, SB 320 bill text and vote records

deq.nc.gov - NC Department of Environmental Quality, IBT certification records for KLRWS, basin transfer certifications

NCOneWater - NC DEQ water system data and allocation records

saw.usace.army.mil - USACE Wilmington District, Kerr Lake project page, pertinent data, storage allocation records

epec.saw.usace.army.mil - USACE Kerr Lake reallocation study information page, MOA documentation, study timeline

NC DEQ IBT Certification - Official interbasin transfer certificate for KLRWS, including basin-by-basin caps (Tar 10.7 MGD, Fishing Creek 1.7 MGD, Neuse 1.8 MGD)

USACE Kerr Lake Pertinent Data - Official USACE reservoir data including conservation pool volume (1,027,000 acre-feet), surface area, shoreline, and full pool elevation (300 ft MSL)

KLRWS storage allocation records - 10,292 acre-feet, 20 MGD annual average day allocation (2005)

NC Administrative Code R.61-58.7C(12) - The 80% Rule governing when water systems must initiate capacity planning

WRAL - Coverage of April 26, 2026 press event; Rep. Winslow quote on Franklin County paying "4x" other KLRWS customers; SB 214 coverage

WUNC - KLRWS system reporting, Kerr Lake water supply coverage

Henderson Dispatch - Local coverage of KLRWS negotiations, expansion project, SB 214

Warren Record - Warren County perspective on KLRWS and Franklin County discussions

Roanoke Rapids Daily Herald - Regional coverage of water supply disputes

Carolina Journal - SB 320 and SB 214 legislative coverage

Carolina Public Press - Investigative coverage of NC water policy and IBT regulatory process

Franklin Times - Franklin County local coverage of water supply negotiations

UNC Environmental Finance Center, NC Water Rates Dashboard - Benchmark wholesale water rates across NC systems

kerr.uslakes.info - Real-time and historical Kerr Lake level data; current level May 22, 2026: 299.30 ft MSL (99.77% of full pool)

Asheville Utilities wholesale rate schedule - Benchmark rates ($2.91/1,000 gal volume, $1.64/1,000 gal capacity-based)

Johnston County fee schedule - Benchmark bulk wholesale rate ($3.95/1,000 gal)

Fayetteville PWC published rates - Benchmark rate to Hoke County ($4.62/1,000 gal)

CDM Smith / KLRWS expansion project documents - Design-build contract, ground broken May 2023, 10 to 20 MGD expansion, $45.9M grants/loans + $15M revenue bonds

February 2025 engineering study - $78.9 million estimated cost for new transmission pipeline to Franklin County