Indiana American Water requesting a 31% hike in water rates

MUNCIE, Ind. − Indiana American Water Co. is asking the state for a rate increase that would boost its revenues in three steps by 31% starting in January next year.

The water utility, which serves Muncie, provides water and wastewater services to about 1.4 million people in Indiana and is the largest investor-owned water utility in the state. Indiana American mostly provides water service in Muncie but also provides wastewater service in the Farmington Addition in northwest Muncie.

If the company’s proposed water rates are approved as requested, the utility said, the base rate water bill for a typical residential customer using 4,000 gallons per month in Muncie would increase by about $14.47, or approximately 48 cents per day, when fully implemented in 2025. The residential rates for the typical customer would increase by about 12% in January 2024; by 8% in April 2024; and by 9.5% in April 2025.

In the wastewater service area of Muncie, the request to increase would be about $27.02 when fully implemented in 2025, with residential wastewater rates increasing by about 29% in January 2024; by 4.3% in April 2024; and by 2.27% in April 2025.

According to an Indiana American press release, the utility is seeking $87.7 million more in revenue through the rate hike to enable it to make $875 million in system investments through 2025. The rise in rates will allow the company to "continue providing safe and reliable service as well as (cover) a significant increase in the cost of procuring chemicals, goods and services," the release stated.

The Indiana Office of Utility Consumer Counselor, the state agency representing consumer interests in cases before the IURC, is studying the rate request by Indiana American.

"Capital projects include the replacement of aging infrastructure throughout (Indiana-American's) service territories, main replacements and relocations, new meters and hydrants, proposed new treatment plants in Winchester and Sheridan, a new storage tank in West Lafayette, chlorine conversion for its Northwest Indiana and Shelbyville operations, customer lead service line replacements, security measures, and additional projects," said Olivia Rivera, spokesman for the OUICC. "The utility’s request also includes the recent costs of acquiring smaller utilities throughout Indiana."

Aging infrastructure one reason for water rate increase request

Investments are needed, according to the company.

"Indiana American Water has made significant investments in aging infrastructure and its treatment and distribution facilities to ensure service reliability, water quality, and fire protection capabilities that help protect customers and the communities we serve,” said Indiana American Water President Matt Prine. “We also remain steadfastly committed to addressing the needs of our most vulnerable customers and have included components in our request to keep their rates affordable.”

As part of the filing for the rate increase with the Indiana Utility Regulatory Commission, a study by the utility found the affordability of the company’s water and wastewater services in comparison with monthly bills and monthly household income "has steadily improved over the past decade," according to Indiana American. The company said the cost of service will remain affordable under the company’s proposed rates.

Indiana American last filed for new rates in September 2018 and last implemented new rates in 2019.

"Recognizing that affordability may still be an issue for some customers, the company is proposing a new rate design that provides 1,500 gallons of water usage at no additional cost above the fixed monthly customer charge for all water customers," the company said. "The proposed change would provide relatively low-cost basic water service for customers on fixed incomes that use a lower volume of water than the typical residential customer."

What discounts on your water bill are available?

Indiana American said its filing also includes a proposed Universal Affordability Tariff to provide multiple tiers ofdiscounts to meet affordability needs of different levels of household income. Eligible households would receive monthly bill discounts of between 30 and 80 percent for water service under the request.

Ratepayers will have the opportunity to respond to the proposed rate hike.

The IURC is inviting written consumer comments for the case record through July 5, 2023.

"The OUCC is using its technical and legal resources to review (Indiana American’s) proposal and is scheduled to file testimony with the IURC on July 12, 2023, said Rivera.

She said the specific billing impacts would vary by the company's service area and while Indiana American hasn't had a direct rate increase since 2019, rates have been enhanced since then through the utility’s Distribution System Improvement Charge and Service Enhancement Improvement Rider. These rate tracking mechanisms allow for rate recovery of certain infrastructure projects between rate request cases, subject to OUCC review and IURC approval. The tracker increases were approved in March 2021, March 2022, February 2023, and March 2023.

Consumers are invited to submit letters about the rate proposal for the case record by going to OUCC's Website at www.in.gov/oucc/2361.htm, by email at uccinfo@oucc.IN.gov, or by mail at: Public Comments, Indiana Office of Utility Consumer Counselor, 115 W. Washington St., Suite 1500 SOUTH, Indianapolis, IN 46204.

Communities affected also have the ability to petition to intervene concerning utility rate cases and provide testimony before the IURC. So far, Whiteland, Crown Point and Schererville have filed to intervene in the Indiana American rate increase request.

Muncie mayor responds to proposed water rate hike

Muncie Mayor Dan Ridenour said Thursday that, as of now, he intends to file to intervene on behalf of local ratepayers.

"I will be pursuing all avenues possible, including, but not limited to, attending IURC proceedings on behalf of our city and residents," he said.

Also intervening so far are Sullivan-Vigo Rural Water Corp., the Citizens Action Coalition of Indiana, and industrial customers of Indiana American that include Cleveland Cliffs Steel, General Motors, Haynes International, Linde, and United States Steel Corp. Any testimony they file is due by July 12, 2023.

Updates about the case will be posted online by the OUCC at www.in.gov/oucc/watersewer/key-cases-by-utility/indiana-american-water-co-rates/.

This article originally appeared on Muncie Star Press: Indiana American Water asks to raise Muncie water rates by 31%