Chesterton Tribune

State IURC slashes Indiana American Water rate hike

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By KEVIN NEVERS

Indiana-American Water Company (IAWC) had asked the Indiana Utility Regulatory Commission (IURC) for an increase in overall revenues of 8.64 percent or $16.9 million.

What it got: a mere 1 percent increase, amounting to an annual $1.95 million.

How that 1 percent increase will actually affect Northwest Indiana customers’ rates remains to be seen. IURC has ordered IAWC to file a cost-of-service study indicating how the authorized $1.95 million in additional revenues will be allocated among the company’s customers.

“Once a new tariff is filed with the IURC, it will become clear how customer rates will be affected” by the order,” the IURC. “IURC must then review and approve a tariff detailing these rates and charges.”

IAWC is expected to file those documents in the next 30 days.

Meanwhile, Indiana Utility Consumer Counselor David Stippler—who represents Hoosier consumer interests before state and federal regulators—applauded Wednesday’s ruling by the IURC. “On behalf of IAWC ratepayers, I am very pleased with today’s outcome, which reflects the efforts of OUCC staff who have worked diligently on this case over the last 13 months. Today’s decision means Indiana American Water’s customers will pay nearly $15 million less in annual rates than they otherwise could have paid.”

“More importantly,” Stippler added, “the commission’s order sends a clear message that while utilities are entitled to a fair return on their investments, rate requests will continue to be more closely scrutinized. Difficult economic times make it even more imperative that rate reviews be conducted in a thorough, comprehensive manner.”

A couple of “significant issues” played into its order, the IURC said. IAWC had proposed “capturing” in its rates declining residential usage. The IURC denied that proposal.

The IURC also slashed IAWC’s proposed return on equity of 11.5 percent to 9.7 percent. That adjustment alone, the IURC said, reduced by 60 percent IAWC’s petition for $16.9 million in additional annual revenues.

The IURC noted that it also approved the OUCC’s proposal on deferred income taxes.

IAWC’s approved 1 percent increase is the sixth such hike since 2002 authorized by the IURC. The five previous ones:

• 18.25 percent in November 2002.

• 26.2 percent in June 2003.

• 1.67 percent in November 2004.

• 9.9 percent in October 2007.

• 19.72 percent in April 2010.

Right now, IAWC’s Northwest Indiana customers pay the second highest average monthly bill: $38.94. The average monthly bills of customers in other of the company’s districts: Terre Haute, $42.53; Muncie, $38.73; Winchester and Warsaw, $31.70; and West Lafayette, $27.90.

The IURC did say that IAWC is gradually moving toward a “single-tariff pricing” schedule, under which customers in different districts pay different rates. Single-tariff pricing will provide “more consistent rates from district to district due to the costs being spread out over the entire service territory,” the IURC said.

 

Posted 6/7/2012