Chesterton Tribune

For Chesterton families the monthly cost of utilities, services rising faster than inflation

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Analysis

By KEVIN NEVERS

What could you do with $60 a month?

Fill up your gas tank. Take the family to a Rail Cats game and have a pretty good time. Get yourself a few Porterhouses and a case of your favorite beer and invite some friends over for a cookout.

Or you could simply sock the cash away and at the end of a year count $720 toward your vacation next summer.

Too bad.

These $60 a month are in the wind, down the drain, gone forever. Because by year’s end--and dependent on IURC orders in two pending rate cases--$60 would be roughly equal to the accumulated monthly increases since 2002 in the rates paid by the average Chesterton household for electricity, water, sanitary sewer, stormwater quality enforcement, and refuse and recycling collection.

As near as the Chesterton Tribune has been able to calculate, after a search in the archives, the average Chesterton household paid a total of $130.23 per month in 2002 for those services. A stormwater fee had not yet been established. The 2002 monthly breakdown:

*Electricity (Northern Indiana Public Service Company or NIPSCO): $81.68. Note: The bulk of a NIPSCO customer’s monthly bill--particularly during the winter heating season--is comprised of natural gas costs, which fluctuate from month to month in response to market conditions.

*Water (Indiana-American Water Company or IAWC): $18.30.

*Sanitary sewer (Chesterton Utility): $22.15.

*Refuse and recycling (under private contract with the Town of Chesterton): $8.10.

*For a grand monthly total of $130.23.

By the end of this year, however, that monthly total could balloon to $188.35 if the Indiana Utility Regulatory Commission were to approve rate increases sought by NIPSCO and IAWC, for an increase in only seven years of $58.11 per month or fully 45 percent. The new monthly breakdown pending IURC action:

*Electricity: $94.44, an increase since 2002 of $12.75 per month or 16 percent.

*Water: $34.68, an increase since 2002 of $16.38 per month or 90 percent.

*Sanitary sewer: $38.63, an increase since 2002 of $16.48 per month or 74 percent.

*Stormwater or the so-called MS4 fee first enacted by the Chesterton Town Council in 2005: currently at $6.10.

*Refuse and recycling: $14.50, an increase since 2002 of $6.40 per month or 79 percent.

*For a grand monthly total of $188.35, an increase of $58.11 per month or 45 percent.

Overview

NIPSCO, IAWC, the Chesterton Utility, and Able Disposal--the town’s current and past trash contractor--have variously attributed rate increases to the exploding cost of health insurance, of purchased power, and of fuel, on the one hand, and to the need to maintain, repair, and upgrade critical infrastructure, on the other. With the exception of NIPSCO--which has not had a new electric rate order from the IURC since 1987 but does have one pending now--IAWC, the Chesterton sanitary sewer and stormwater utilities, and the town’s trash contractor have all implemented rate increases since 2002.

*IAWC: if the IURC were to approve the company’s latest request for a rate increase, it would be the fifth since 2002.

*Sanitary sewer: four rate increases since 2002.

*Stormwater: a provisional monthly rate of $5 when originally established, quickly increased to $6.10.

*Refuse and recycling: Able Disposal, under its three-year contracts, gets an annual increase in the per home per month fee which it charges. That fee is passed directly to residents with an additional markup by the town for brush and leaf service. The town awards trash contracts to the lowest responsive and responsible bidder.

Inflation?

Using figures compiled by InflationData.com--which runs inflation rates to the hundredth of a percentage point for a slightly more refined result than the one provided to a tenth of a point by the U.S. Bureau of Labor Statistics--the Tribune has calculated what the $130.23 monthly household expense for utilities and municipal services in base year 2002 should have been at year’s end 2008 had it been subject to simple inflationary pressure:

*At year’s end 2003, with an inflation rate of 2.27 percent: $133.19.

*At year’s end 2004, with an inflation rate of 2.68 percent: $136.76.

*At year’s end 2005, with an inflation rate of 3.39 percent: $141.40.

*At year’s end 2006, with an inflation rate of 3.24 percent: $145.98.

*At year’s end 2007, with an inflation rate of 2.85 percent: $150.14.

*At year’s end 2008, with an inflation rate of 3.85 percent: $155.92.

(*In September 2009, with an average deflation rate through July of -0.81 percent: $154.56.)

In short, under nothing but inflationary pressure, that monthly household expense should have risen at year’s end 2008 by only $25.69 or 20 percent and over the first seven months of this year should actually have dipped marginally. In fact, the monthly household expense at year’s end 2009--pending IURC action--could well have increased by fully $58.12 or 45 percent: more than double the aggregate inflation rate since 2002.

Of course, utilities and municipal services--locked in by contract or ordinance, in some cases regulated by the state, and unresponsive in the short term to market forces--don’t work in quite the same way as do consumer prices, which fluctuate constantly.

Nevertheless, it remains the fact that the average Chesterton household could be seeing, going into 2010, a much bigger chunk of its monthly income consumed by utilities and municipal services than was the case only a few years ago.

 

 

 

Posted 9/18/2009