Tom Kacich: With water company's rate hikes, when it rains, it pours

Feb. 11—Submit a Letter to the Editor here

It's a little late now — about 15 years late — but I am prepared to admit that Laurel Prussing, a three-term Urbana mayor and pain in the patoot to many other politicians and institutions, was absolutely right.

Champaign and Urbana should have bought and operated the local water system.

Around 2006 — about eight years after utility giant American Water Co. bought the local water system from Northern Illinois Water Corp. — Prussing started making noise about municipal ownership of the water company. She especially disliked the idea that American Water at the time was owned by the German super-utility RWE. Prussing even traveled to Germany to offer company execs her opinion.

"I fired a diplomatic shot across the bow," she told the Chicago Tribune at the time. "I was there to show the flag and to let them know that Americans are offended by foreign intervention and corporate bullying. After all, it's our water, not theirs."

RWE eventually sold American Water, and Prussing's municipal-ownership idea died a peaceful death, which is too bad. She didn't like the non-German owners, either.

"What we're afraid of is if this particular company runs the show, they're going to raise our rates a lot," Prussing told the Daily Illini in 2007. "That's what they did in other places, and they're planning a new plant west of Champaign and they are talking about raising the rates."

Seventeen years later and American Water's subsidiary, Illinois American Water, last month asked for another one of those rate increases that Prussing predicted. It's on top of the $67 million rate increase it got from the Illinois Commerce Commission just 15 months ago.

Calling this a mere rate increase isn't enough. It's a super-sized rate increase: 38.9 percent on Jan. 1, 2025, and 3.5 percent more a year later. It will bring the company about $420 million in revenue that it said it needs to undertake infrastructure improvements.

And it will take the money from customers in Champaign, Urbana, Savoy, St. Joseph, Villa Grove, Fisher, Sidney and a host of small towns in East Central Illinois. A typical customer who uses 3,500 gallons of water a month would see their bill increase from about $58 a month now to $81.19 a month and then $83.56 a month — if the full rate increase is approved.

That's $24 more per month or $288 more a year going to the company to treat and distribute the water that was in the Mahomet Aquifer long before Illinois American got here.

"Illinois American's rate-hike request is severe and greedy," said Sarah Moskowitz, executive director of the publicly funded Citizens Utility Board, "and CUB will do everything it can to reduce it. We often hear complaints from Illinois American customers about painfully high bills, fueled by the utility's aggressive strategy of buying up municipal systems across Illinois, along with winning legislative approval to add a 'Qualifying Infrastructure Plant' surcharge to bills.

"While water customers struggle, Illinois American's parent company has pulled in $1.6 billion in profits over the last two years. This punishing rate hike will be a hardship to consumers who depend on the utility for a vital service — and that's why we're challenging the company's money grab."

CUB may not be alone. In the past, the cities of Champaign and Urbana have opposed rate-increase cases before the commerce commission. Both mayors say they're looking at this one.

"The city of Champaign's attorney has contacted the outside attorney who represented us the last time we intervened in a water-rate case before the ICC," said Champaign Mayor Deborah Frank Feinen. "That attorney is reviewing the filings and will make a recommendation to us about intervention."

"We're reviewing the IAW proposal and potential impact now," said Urbana Mayor Diane Marlin.

The water company says the higher rates are needed to finance regional infrastructure improvements including replacing an elevated water tank in Sidney, pump improvements at the water-treatment plant serving Champaign, filtration improvements at the wastewater-treatment facility in Fisher, and replacing aging water and wastewater pipelines in Champaign.

"The request reinforces our commitment to investing in our water and wastewater systems to replace aging infrastructure, provide reliable service, enhance water quality and comply with environmental regulations," said Illinois American spokeswoman Anna Kubas. "We can't ignore the infrastructure needs of our water and wastewater systems. That would be a disservice to our communities and customers."

In Illinois American's case, however, the list of infrastructure needs is virtually never-ending. The utility keeps buying up small water systems — Tolono and Broadlands last year, Villa Grove the year before — that often need facility upgrades. Ratepayers end up financing the improvements, not Illinois American investors.

If this rate case follows form, the commerce commission will take 11 months to decide how much to give Illinois American, meaning that this one, filed Jan. 25, will be decided shortly before Christmas. Happy holidays.

In the meantime, according to CUB spokesman Jim Chilsen, water company customers can register opposition to the rate increase by calling the commerce commission at 800-524-0795. They can also sign an online petition opposing rate hikes at the CUBActionCenter.com. Further, they can make a donation to CUB, which this year is marking its 40th anniversary of fighting utility rate increases.

Mayor Prussing, you were right.