Chesterton Tribune

27 percent water company rate hike in effect

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On May 3 residents of Northwest Indiana began paying more for their water.

Nearly 30 percent more, after the Indiana Utility Regulatory Commission (IURC) approved on April 30 a new rate order for Indiana-American Water Company (IAWC).

Although that rate order provides for an overall statewide rate hike of 19.72 percent—significantly less than the overall hike of 26.43 percent requested by IAWC and significantly more than the 11.66 percent recommended by the Office of Utility Consumer Counselor—the actual hike for folks in Northwest Indiana is 27.06 percent, IAWC spokesman Joe Loughmiller told the Chesterton Tribune today.

That’s because, of the nearly $201 million which the company invested in infrastructure statewide in the two and half years between January 2007 and June 2009, fully $55 million was spent in Northwest Indiana.

“The rate study we did includes a cost of service study,” Loughmiller explained. “In that cost of service study we look at how much it costs to provide water to a particular community. We look at geography, infrastructure, capital investments. And we’ve made significant investments in Northwest Indiana.”

The 27.06-percent rate hike amounts to around 23 cents per day more, Loughmiller said, or $6.81 per month. Prior to the IURC order, the typical residential household using 4,800 gallons of water per month paid $25.17 per month. Now it’s paying $31.98 per month.

The rate hike will result in approximately $31.5 million in additional revenue for the company, IAWC said in a statement released on April 30. The company attributed the need for the increase to “ongoing infrastructure investments, rising expenses related to water treatment and delivery systems, and increased operating costs.”

“Water is a critical part of everyday life and a strong economy,” IAWC President Alan DeBoy said in that statement. “We work with communities all across the state to make sure we are providing high quality water service that meets their needs and, at the same time, controlling our costs wherever possible.”

“Water is still a great value at about a penny per gallon,” DeBoy added. “Indiana-American Water is focused on making sure customers are getting good service, with more than 90 percent reporting that they are satisfied or extremely satisfied in their dealings with our customer service in the field.”

Previous Hikes

The IURC’s April 30 order represents the fifth rate hike for IAWC in the last eight years. Those five hikes have cumulatively raised the average Northwest Indiana residential customer’s monthly bill from $18.02 in 2002 to $31.98 now, an increase of $13.96 per month or nearly 75 percent.

•In November 2002 IAWC enacted an increase of 18.25 percent to recover costs of a number of improvements, including the construction of a second main to cover the Chesterton area.

•In June 2003 IAWC enacted a second 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 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 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.


Posted 6/10/2010