Indiana American Water accepts lower customer rate hikes

Contributed By:The 411 News

Indiana American Water and the state agency representing customers’ interest, the Indiana Office of Utility Consumers Counselor announced a tentative agreement in the water utility’s request to increase rates.

The agreement was filed Monday with the Indiana Utility Regulatory Commission (IURC), the final arbiter of both customers’ and utility’s proposals and may accept, deny, or modify it.

If approved by the IURC, the increases to water rates will be implemented in steps, with the first increase this summer of 1.73 percent and a second increase in mid-2020 of 6.07 percent. The water utility had asked for nearly a 15 percent increase over two years.

The impact for most residential customers using 4,000 gallons of water each month would be about 15 cents per month (0.4 percent) after step 1 goes into effect and an additional $2.26 per month (6.4 percent) when the second step is implemented. Details on specific rate impacts by district, rate group and customer class will be included in the IURC’s final rate order.

Overall, IAWC will see a revenue increase of $17.5 million annually, to be implemented in two phases. By comparison, the utility had requested $38.8 million yearly.

The agreement’s term includes a 9.8 percent return on investments instead of 10.8 percent.

Customers will get a one-time refund to be distributed over a twelve-month period starting in July 2020 related to the Tax Cuts and Jobs Act (TCJA) of 2017. The refund for the typical residential customer will total approximately $19.26, or approximately $1.60 per month for one year. Indiana American Water already reduced its rates by 4.4 percent on August 1, 2018 as a result of the impact of the TCJA.

The settlement agreement provides for a low-income pilot program in three communities (Gary, Muncie, and Terre Haute) served by Indiana American Water to evaluate the effectiveness, interest and impact of the program before considering a statewide program. If approved as submitted, qualified residential customers with a 5/8-inch meter in the pilot communities will receive a discount of 80 percent of the fixed 5/8-inch meter charge every month.

The pilot program will be funded equally between ratepayer and shareholder dollars.

An IURC settlement hearing is scheduled for April 11, 2019, with an order expected in the following weeks.

Story Posted:03/21/2019