An Indiana American Water tower

Consumer watchdog recommends denial of Indiana American Water rate request

Contributed By:The 411 News

Agency doesn't have final word, another round of hearings in February 2019

A request for a $38.8 million rate increase for its customers by Indiana American Water Company has been denied by the state’s consumer utility watchdog.

Friday night, the Indiana Office of Utility Consumer Counselor (OUCC) reported its findings after hearing witnesses and testimony from the water utility’s customers in the 50 communities it serves in Indiana.

OUCC’s recommendation to deny the increase is not the final determination for the IAWC rate hike request. That will be the responsibility of the Indiana Utility Regulatory Commission when it begins an evidentiary hearing on February 14, 2019.

The IURC will consider but is not bound to the OUCC’s recommendations in its decision. The hearing may last several days, if necessary, with a Commission order expected in the following months.

The consumer counselor objected to the overall request for a $38.8 million rate increase (or 17.5 percent over current revenues). The OUCC suggested a decrease of $16.9 million (or 7.6 percent) is more appropriate, instead.

Regarding IAWC’s desires to raise shareholder revenues to 10.8% from the current 9.75, OUCC favored an 8.5% return on investment.

OUCC objected to cost recovery for numerous proposed infrastructure improvements, on the basis that the utility has overstated the costs on certain items and not provided detailed cost estimates on certain additional items in Richmond and Muncie.

The OUCC said it supports the need for utilities to replace aging infrastructure, but utilities must provide sufficient evidence justifying the proposed costs before charging them to customers.

The OUCC disagrees with the IAWC proposal to raise its flat, monthly residential customer charge from $14.23 to $22.35 in 2020. The OUCC states that such an increase to the portion of the bill not varying by usage is unnecessary, and is contrary to effective conservation efforts.

IAWC has until January 22, 2019 to respond to the OUCC recommendations.

Story Posted:12/22/2018

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