Almost exactly one year after Indiana-American Water Company (IAWC) enacted
a rate hike of 27.06 percent for Northwest Indiana residents—on May 3, 2010—IAWC
has filed a petition before the Indiana Utility Regulatory Commission (IURC)
seeking another hike, this one of 7.01 percent.
According to a statement released after deadline on Friday, “ongoing
infrastructure investments, rising expenses related to water treatment and
delivery systems, and increased operating costs are all drivers behind
today’s rate request.”
If approved by the IURC as requested, this most recent rate petition—the
sixth in the last nine years—would increase the bill for the average
household using 4,800 gallons per month by 9 cents per day or $2.70 per
The average household is currently paying $31.98 per month. Prior to last
year’s rate hike of 27.06 percent—23 cents per day or $6.81 per month—the
average household had been paying $25.17 per month.
Between June 30, 2009, and June 30, 2011, IAWC will have “invested more than
$115 million statewide to enhance its water infrastructure,” the statement
said. “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
IAWC’s “strategy is to make prudent, proactive infrastructure investments,
which is more cost-effective in the long run and reduces the risk of major
service and water quality issues,” IAWC President Alan DeBoy said. “Much of
this rate request is driven by Indiana-American Water’s investments to
maintain and upgrade infrastructure throughout the state.”
IAWC’s “rate are based on the true costs of providing water service, as
reviewed by the IURC,” DeBoy continued. “The company works hard to operate
efficiently and control operating expenses while, at the same time,
balancing that objective with the continuous need for significant capital
investments to meet increasing state and federal requirements and customer
Terry Atherton, IAWC’s Northwest Indiana operations director, noted that
IAWC has invested more than $17.6 million in local infrastructure over the
last two years: $5.2 million to replace or move water mains and hydrants;
$2.2 million to install new meters and service lines; and $10.1 million to
improve pumping, treatment, storage, and office facilities.
IAWC expects the regulatory review of its petition to take about a year.
Public hearings are part of the process.
•The overall statewide hike authorized last year by the IURC was 19.72
percent but the actual hike for folks in Duneland was 27.06 percent. IAWC
had requested an overall statewide hike of 26.43 percent, while the Indiana
Office of Utility Consumer Counselor—representing the interests of
ratepayers—had recommended a hike of 11.66 percent. IAWC attributed the need
for the hike—which resulted in around $31.5 million in additional revenue—to
“ongoing infrastructure investments, rising expenses related to water
treatment and delivery systems, and increased operating costs,” the same
justification for this most recent hike request.
•In October 2007 IAWC enacted an increase of 9.9 percent, after originally
seeking a hike of 18.1 percent, citing higher operating costs and
•In November 2004 the IURC granted IAWC an 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
•In June 2003 IAWC enacted an 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 2002 IAWC enacted an increase of 18.25 percent to recover the
costs of several improvement, including the construction of a second main to
cover the Chesterton area.
These five hikes have cumulatively raised the average Northwest Indiana
residential customer’s monthly bill—over nine years—from $18.02 in 2002 to
$31.98 now, an increase of $13.96 per month or nearly 75 percent.