Chesterton Tribune



6.75 percent water rate hike sought

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Indiana American Water Company (IAWC) is petitioning the Indiana Utility Regulatory Commission (IURC) to increase rates for water service in all of the company’s operating districts.

According to a statement released on Friday, the proposed hike for residential customers would be $5.84 per month or 19 cents per day: an increase of 6.75 percent.

For non-residential customers using 4,600 gallons per month, the hike would be $2.40 per month or 8 cents per day.

“(O)ngoing infrastructure investments are the driver behind today’s rate request,” IAWC said. “The company will have invested nearly $221 million statewide to enhance its water infrastructure between July 1, 2011, and Nov. 30, 2015. All these investments in local infrastructure systems enhance service quality, reliability, and fire protection for customers while keeping the cost of water service for most local households their most affordable utility bill at about a penny per gallon.”

IAWC added that it is currently preparing to switch from a bimonthly to a monthly billing schedule for residential customers in 2015. “The switch to monthly billing will help area customers even out their payments to smaller, more regular amounts, give them a better handle on their usage and help them to more quickly identify leaks in their plumbing system,” IAWC said.

The company last filed for new rates in May 2011 and received an order from the IURC in June 2012 which increased the company’s overall revenues by “just 1 percent and actually decreased rates for most of the company’s residential customers across the state,” the statement said.

“Indiana American Water’s strategy is to make prudent, proactive investments in our infrastructure, 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. “Since our last rate request, we have continued to implement efficiencies and best practices throughout our business to reduce our operating and maintenance expenses over the last four years.”

“Our employees are doing more with less through productivity gains like process improvements, attrition in the labor force and using and deploying new technology,” DeBoy added. “They have also kept their focus on quality service by enhancing overall customer satisfaction during the same time period.”

The net effect is a projected reduction in operating and maintenance (O&M) costs of more than $7 million from 2010 to 2015, DeBoy said. “In contrast, if we had simply allowed these types of expenses to rise at the inflation rate during this time, the result would have been an increase in O&M expense of more than 23 percent, or $16.1 million. These savings are particularly important as we face a growing need to replace much of our infrastructure that is nearing the end of its useful life. For every dollar of O&M expense we are able to cut, we can invest just over six dollars in infrastructure without impacting customer rates.”

In its filing with the IURC, IAWC has detailed nearly $53.3 million of investment: approximately $20 million in water treatment facility projects, including a new $7.2 million filter backwash water recycling and residual management facility placed in service in 2012 at the Borman Park water treatment facility in Gary; $20 million to install, replace, or relocate water mains; and $13 million to install new service lines and water meters throughout the area.

“Many communities across the country are facing a challenge of deteriorating water and wastewater infrastructure and associated rate hikes,” the statement said. “The United States EPA says the nation’s water and wastewater utilities will need to invest approximately $1 trillion in water and wastewater infrastructure over the next two decades to replace thousands of miles of pipe and for upgrades to treatment plants, storage tanks and other assets to ensure public health.”

“The communities we serve rely on us to provide reliable, quality water service to support the local economy and to provide a high quality of life for residents,” DeBoy said. “These investments will help ensure we are able to keep that commitment to the health and prosperity of our customers and community partners in Indiana.”

No rates will change until the IURC completes a comprehensive review of the request and determines it is reasonable and justified. By statute, the IURC is required to return an order regarding the company’s rate request within 300 days of the filing. If approved as requested, the typical residential customer currently being billed on a monthly bill would increase by 6.75 percent. For those customers currently receiving bi-monthly bills, the increase is approximately 17.2 percent. Public hearings and opportunities for public comment are part of the process, under the direction of the IURC.

Previous Rate Hikes

This rate hike would be the seventh since 2002. The six 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.

* An authorized increase in annual revenues of 1 percent, amounting to approximately $1.95 million.


Posted 1/27/2014