Indiana-American Water Company (IAWC) is seeking to increase its rate by 28.86 percent, in what would be--if granted by the Indiana Utility Regulatory Commission (IURC)--the fifth rate hike obtained by the company in seven years.

The proposed hike would increase the monthly bill of the average residential customer using 6,000 gallons of water by $8.36.

On Thursday IAWC filed its petition for the rate hike with the IURC and said in a press release that the regulatory process normally takes a year.

IAWC attributed the need for a fifth rate hike in only seven years to its statewide investment, since January 2007, of $198 million in infrastructure. “All these investments in local water infrastructure systems enhance water quality, service reliability, and fire protection for customers while keeping the cost of water service for most local households at about a penny per gallon,” the company said.

Of that $198 million investment, IAWC spokesman Joe Loughmiller told the Chesterton Tribune today, $55 million was spent in Northwest Indiana.

Loughmiller said that the investment is necessary to upgrade and maintain “a lot of old” infrastructure which he described as “obsolete, falling apart, deteriorating.” He noted that the proposed rate increase is intended to recover the costs of funds already spent on infrastructure, most of which was in place “before the economy went south.”

Loughmiller added that the company’s basic operating costs, for fuel, energy, and chemicals, are also spiking, and said that the expense for chemicals in particular has doubled since the last rate increase in October 2007.

“We do understand that these are challenging times but a lot of things are out of our control,” Loughmiller said. “We still think that water is a pretty good value. At about a penny per gallon it’s a pretty good bargain.”

*In November 2002 IAWC enacted an increase of 18.25 percent, to recover costs of a number of improvements, including new pumps and automation enhancements at the Ogden Dunes facility and 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 costs of the $52.4 million supply tunnel which brings Lake Michigan water to the Gary water 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 had 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. That hike increased the average residential customer’s monthly bill by $5.42.

In short, if the IURC were to grant IAWC the entirety of the proposed rate increase, it would mean that the average residential customer’s monthly bill will, in only seven years, have increased by fully 115 percent or more than doubled.

Posted 5/1/2009