Over the Town of Chesterton’s objections, the Indiana Utility Regulatory Commission (IURC) has authorized the Damon Run Conservancy District to provide sanitary sewer service to Porter hospital’s new facility at U.S. Highway 6 and Ind. 49 in unincorporated Liberty Township.

Damon Run was required to petition the IURC for that authority, as Porter hospital and two other “benefited properties” named in the petition—Liberty Intermediate School and Sunset Hill Farm County Park—are located outside the Conservancy District’s boundaries.

Damon Run does not actually treat the wastewater but instead flows it to the City of Portage’s wastewater treatment plant, where the Conservancy District has contracted reserve capacity.

The Chesterton Utility Service Board, backed by the Town Council—both of which had publicly invited Porter hospital to connect to the Chesterton sanitary sewer system—intervened in Damon Run’s petition late last year on a variety of grounds, among them, that it would cost less for the hospital to connect to Chesterton’s infrastructure; that the hospital’s property falls within the town’s future growth area; that Damon Run does not have sufficient capacity to treat wastewater from subsequently developed properties near the hospital; and that Damon Run’s practices constitute unfair competition.

In its 39-page order, issued on Oct. 19, the IURC rejected the Town of Chesterton’s contentions and cited 13 specific rationale in finding for Damon Run.

The fact that the no wastewater treatment plant currently has infrastructure in place to serve the new Porter hospital “favors Damon Run in that service by Damon Run would not interfere with service otherwise being offered by another sewage disposal facility,” the IURC stated.

The signatures of 160 of Damon Run’s existing customers in favor of the petition “supports a finding that the public desires that Damon Run be authorized to provide sewage disposal service” to the new Porter hospital, the IURC stated.

“There was no evidence presented that the three benefited properties”—the new Porter hospital, LIS, or Sunset Hill Farm—“prefer service from a provider other than Damon Run,” the IURC stated.

Although Chesterton indicated that it could run infrastructure to the new Porter hospital by September 2012, and in the meantime “implement interim solutions”—like pumping and hauling sewage, possibly at the hospital’s own expense—“we find this interim solution is not in the best interest of the hospital or the public,” the IURC stated. “We also find Chesterton’s suggestion that it could provide service by September 2012 optimistic.”

The evidence indicates that “the hospital’s need for service is immediate,” the IURC stated.

Testimony indicates that the City of Portage’s wastewater treatment plant averages a flow of 80 percent of its rated capacity and that Damon Run may request additional capacity if it wishes. For that reason “we reject Chesterton’s suggestion that we should deny Damon Run’s request to provide sewer service to Porter hospital because Damon Run does not have the ability to serve” the potentially developable area around the hospital property, the IURC stated. The IURC also took note of 12 combined sewer overflows and five sanitary main collapses experienced by Chesterton since January 2009.

“Chesterton’s claim that service by Damon Run will create a patchwork of utilities is unsupported,” the IURC stated. Moreover, “Chesterton’s closest sewage facilities are much further from Porter hospital than Damon Run,” while between its closest facilities and the hospital “are a railroad, the Indiana Toll Road, and a wetland area.”

The IURC questioned Chesterton’s ability to secure financing for the extension of infrastructure to the new Porter hospital; noted that Damon Run’s estimated cost to extend infrastructure is $2.2 million and Chesterton’s $5.9 million; noted as well that Damon Run’s tap-on will cost the new Porter hospital $100,000—after a waiver of what would be $262,550 of its customary fee—but Chesterton’s would cost it $378,290; added that the waiver is not discriminatory; and while acknowledging that Chesterton’s monthly rate is much lower than Damon Run’s—$6,000 versus $30,000—stated that Chesterton’s rate is likely to increase significantly to pay for a mandated long-term control plan.

“Even if we assume that Chesterton will not raise rates or impose additional taxes by annexing Porter hospital property, a long-term comparison of the combined connection costs and monthly fees shows Porter hospital’s overall cost of service from Damon Run as compared to Chesterton . . . will be similar,” the IURC stated.

“Chesterton’s proposal would result in duplication and abandonment of utility facilities that the hospital has already constructed,” the IURC stated. “We do not believe that the public convenience and necessity would be served by requiring the hospital to abandon its constructed lines or by authoring a duplication of sewage facilities.”

Chesterton produced new evidence establishing that its Comprehensive Plan identifies either the new Porter hospital or surrounding property “for the extension of utility facilities,” the IURC stated. The IURC also rejected “any suggestion by Chesterton . . . that Chesterton has an exclusive right” to serve the new Porter hospital because the hospital is located within 10 miles of the town’s corporate boundary. “We find that neither Chesterton’s planned growth, annexation plans, nor (Indiana Code) support a finding that Chesterton’s extension of sewer service to Porter hospital is required by law,” the IURC stated.

“Our review of the maps provided suggest that Chesterton’s existing facilities are no closer to the hospital property than Damon Run’s existing facilities,” the IURC stated, then added that Chesterton will need to secure a number of permits before installing any infrastructure: three from IDEM; two from INDOT; and one each from CSX, ANR Pipeline, and NIPSCO. “By contrast, the hospital and Damon Run have secured all of the appropriate permits and easements to construct infrastructure.”

Since 2009, Chesterton has experienced 12 combined sewer overflows and five sanitary main collapses, the IURC stated. “Consequently, we find that the environmental compliance factor favors Damon Run.”

“Chesterton seems to suggest that Damon Run has engaged in unfair competition because: (a) Damon Run waived a portion of its connection fee for the hospital; (b) the hospital did not meet with and provide Chesterton with sufficient detail to allow Chesterton to make a sufficiently tailored proposal; and (c) engineers and local counsel hired by Damon Run provided advice to the hospital,” the IURC stated.

Each of those contentions the IURC rejected, with the preliminary observation that Porter hospital “is a sophisticated business customer” and “had ample opportunity to make an informed choice of its supplier.”

Point by point:

•“Damon Run’s waiver of a portion of its connection fee is not unreasonably discriminatory and is proper under the circumstances,” the IURC stated.

•Communications exist “between Chesterton Town Council President Jeff Trout and representatives of Porter hospital regarding a meeting between the parties as well as offers by Porter hospital to discuss Chesterton’s proposals,” the IURC stated.

•“We also do not find sufficient evidence to conclude that Porter hospital’s decision to contract with Damon Run was the result of engineering or legal advice from professionals who also worked for Damon Run,” the IURC stated.

“When viewed as a whole, the record suggests that competition was fair and the customer has simply chosen one utility over another,” the IURC stated.

Posted 11/3/2011