Indiana-American Water Company’s proposed rate hike of 6 percent for
Northwest Indiana customers should be rejected, the Indiana Office of
Utility Consumer Counselor (OUCC) has recommended to the Indiana Utility
More: IAWC’s rates should actually be decreased, to reduce the
utility’s annual operating revenues by $8.02 million.
So the OUCC concluded in testimony filed before the IURC on Wednesday.
The OUCC is the agency which represents the interests of Hoosier consumers
before state and federal utility regulators.
In May—almost exactly one year after IAWC enacted a rake hike of 27.06
percent for Northwest Indiana residents—the company filed a petition before
the IURC seeking another rate hike, this one of 6.19 percent. If approved as
requested, this most recent rate petition—the sixth in the last nine
years—would increase the bill for the average Northwest Indiana household
using 4,800 gallons per month by $2.58 per month, from $38.94 to $41.52.
The proposed rate hike would increase IAWC’s annual operating revenues by
$18.95 million or an overall 9.7 percent, although the specific rate impact
would vary among communities and classes of customers.
The OUCC’s general position: the proposed rate hike should be rejected; and
rather than issue an order approving the requested 9.7 percent increase
in IAWC’s annual operating revenues, the IURC should in fact slash the
company’s operating revenues by 4.1 percent.
Specific recommendations in the OUCC’s testimony:
•IAWC’s currently authorized cost of equity should be reduced from 10
percent to 8.6 percent. IAWC is seeking an increase to 11.5 percent.
•Adjustments should be made to IAWC’s requested operating expenses,
including “recommended reductions to requested increases in chemical,
purchased power, and corporate support services costs.”
•IAWC’s request to include fire protection and hydrant fees in base rates
should be rejected. “Fire protection is currently a separate surcharge
outside of base rates, which makes it simpler to ensure that such fees are
recovered without profit to the utility. Placing those fees in base rates
would require customers to pay additional sales tax.”
•IAWC’s marketing of the line protection program offered by one of its
unregulated affiliates should be modified, “to ensure the program and its
promotional efforts provide greater transparency.”
“A review of the evidence in this case shows that (IAWC) does not need
additional revenue in order to continue providing safe, reliable service to
its customers,” Indiana Utility Consumer Counselor David Stippler said. “The
utility should be fully capable of servicing its customers and making any
needed infrastructure improvements even with the OUCC’s recommended
reduction in operating revenues.”
“During these extremely tough economic times in which many Hoosiers are
doing more with less, it is imperative to closely scrutinize all costs and
expenses for which any utility seeks increased revenues, including IAWC,”
IAWC has until Oct. 28 to file rebuttal testimony. An evidentiary hearing is
scheduled before the IURC on Dec. 5.
“Wednesday’s OUCC filing does not break down the recommended revenue
decrease by service territory, but focuses on (IAWC’s) overall revenue
requirement,” the OUCC said. “After the IURC issues its final order in the
case, the utility will file a tariff demonstrating how it intends to
implement the order’s terms, including rates by service territory. The OUCC
has the right to object to the proposed tariff if necessary.”
To review the OUCC’s testimony, visit
The IURC authorized an 18.25 percent hike in November 2002; a 26.2 percent
hike in June 2003; a 1.67 percent hike in November 2004; a 9.9 percent hike
in October 2007; and an overall 19.72 percent hike in 2010, the latter
shaking out to a 27.06 percent hike for Northwest Indiana customers.
Right now Northwest Indiana customers pay the second highest average monthly
rate: Terre Haute customers, $42.53; Northwest Indiana customers, $38.94;
Muncie customers, $38.73; Winchester and Warsaw customers, $31.70; and West
Lafayette customers, $27.90.