Indiana-American Water Company (IAWC) should receive a rate increase of less than half the amount which it has asked the Indiana Utility Regulatory Commission (IURC) to approve, the Indiana Office of Utility Consumer Counselor (OUCC) is saying.

According to a statement released on Wednesday, the OUCC filed its testimony this week before the IURC. The OUCC is the state agency which represents the interests of ratepayers in cases before the IURC.

IAWC has petitioned the IURC for an overall rate increase of 28.8 percent, to increase its annual operating revenues by $46.8 million.

The OUCC, in contrast, is recommending a rate increase of only 14 percent, to increase the company’s revenues by $22.6 million.

“Our staff has worked diligently and thoroughly in reviewing Indiana-American Water’s request since early May,” Indiana Utility Consumer Counselor David Stippler said. “We do not believe the full rate increase requested by Indiana-American Water is justified. However, we do recognize the fact that IAWC has made numerous efforts to modernize its infrastructure and improve the safety and reliability of its systems throughout the state.”

“Based on its review, the OUCC is recommending reductions in IAWC’s requested increases for many of its proposed operating expenses as well as cost allocations,” the statement said. “The OUCC’s testimony focuses on the utility’s proposed total revenue requirement and does not focus on potential impacts by customer service territory at this time.”

“We recognize that the current economic situation may make it appropriate to delay certain capital improvements,” Stippler said. “However, utilities must maintain and improve their infrastructure in a timely manner so to not put the safety and reliability of their distribution systems at risk. The OUCC’s recommendations in this case offer a reasoned approach that advocates for the consumer, while acknowledging IAWC’s responsibility to provide safe, reliable service.”

The IURC has conducted public field hearings in this case in Gary, Muncie, and Jeffersonville, while the OUCC has submitted written consumer comments received over the last six months to the IURC for inclusion in the case’s evidentiary record.

On Dec. 15 in Indianapolis the IURC will hold a technical evidentiary hearing at which IAWC will be allowed to cross-examine witnesses of the OUCC and other witnesses.

In Duneland the rate hike proposed by IAWC would increase the average residential customer’s monthly bill by fully 31.51 percent, from $26.37 to $34.68. The average bimonthly bill for 1.400 cubic feet of usage, accordingly, would increase from $52.74 to $69.36 under the proposed rate hike.

Any rate hike approved by the IURC would be IAWC’s fifth in seven years.

•In November 2002 IAWC enacted an increase of 18.25 percent to recover costs from a number of improvements, including the construction of a second main to serve the Chesterton area.

•In June 2003 IAWC enacted a second increase of 26.2 percent, to recover the cost of the $52.4 million supply tunnel which brings Lake Michigan water to the Gary filtration plant.

•In November 2004 the IURC granted IAWC a third increase of 1.67 percent, after the company had trimmed its original request for a 14.7 percent hike to 10 percent. IAWC had sought this hike to recover the cost, among other things, of acquiring Northwest Indiana Water Company in the first place as well as of moving a customer service center from Indiana to Illinois. IAWC also wanted to use the requested 10 percent hike to generate higher return on shareholders’ investment and to provide additional incentive pay for management.

•In October 2007 IAWC enacted a fourth increase of 9.9 percent, after originally seeking a hike of 18.1 percent, citing higher operating costs and investment in infrastructure.

In short, if the IURC were to grant IAWC the entirety of the proposed rate increase, it would mean that the average customer’s monthly bill, in only seven years, would have increased from $18.30 in 2002 to $34.68, an increase of $16.38 per month or 90 percent.

Posted 10/29/2009