Chesterton Tribune

Water company seeks rate hike of 7 percent, would be sixth since 2002

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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 month.

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 per gallon.”

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 expectations.”

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 Five Previous Hikes

•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 infrastructure investments.

•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 management.

•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.

The Cumulative Increase

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.


Posted 5/9/2011