Water Industry News

Water rate increase smaller than expected

Indiana-American customers to pay on average 0.4 percent more for service

By Peter Ciancone/Tribune-Star

November 19, 2004

Indiana-American Water Co.'s first rate increase since 2001 will be significantly smaller than what the company requested.

In a 127-page order issued Thursday by the Indiana Utility Regulatory Commission, a proposed 15.65 percent rate increase request has been lowered to an average increase of 0.4 percent for the water company's 271,000 customers.

"The rate increase will be different for each location in Indiana," said Deron Allen, operations manager for Indiana-American's Terre Haute districts. The company operates in 23 counties, he said, and the rates will vary from district to district.

Allen said the company should have the increase calculated for each district by the early part of next week.

The request for the 15.65 percent increase was filed in September 2003, said Mary Beth Fisher, spokeswoman for the Utility Regulatory Commission. Hearings were conducted in several sites during the first four months of this year. Indiana-American lowered its request to 10 percent, while the Indiana Office of Utility Consumer Counselor recommended an overall rate decrease of 1.67 percent.

The Utility Regulatory Commission's final figure was announced Thursday, Fisher said.

"A 0.4 percent increase isn't much of an increase," Allen said. The company based its request on a number of elements, he said, including increased costs of employee pensions and benefits, insurance, state taxes, declining sales, security costs and capital investment projects. "That involves a lot of costs."

All the projects covered by the increase, Allen said, already have been accomplished.

"The company is disappointed by the decision, but we respect it," he said.

Fisher said the Utility Commission looks at all the company's factors, along with things such as depreciation of assets, returns on investments and operating expenses.

"The short answer is 'everything,'" she said. The result was a 127-page order that company officials were just beginning to digest Thursday late afternoon.

Office of Utility Consumer Counselor officials differed with the company on several elements of the request: Indiana-American's equity, inclusion of the acquisition costs of Northwest Indiana Water Co., and expenses involved in moving the company call center to Illinois and financial records and processing from Indiana to New Jersey.

"Indiana-American will receive a very small overall increase -- one that is significantly less than what the utility had requested," said Anne E. Becker, Indiana Utility Consumer Counselor. "I commend the OUCC staff for this victory and for its hard work on behalf of the more than 260,000 customers served by this utility."

Indiana Office of Utility Consumer Counselor is a state agency that acts as a consumer advocate in utility rate increase cases.

Fisher said the company has an appeal process that it could follow.

Allen said company officials are still studying the order, and haven't made a decision about an appeal.

The rate increase will go into effect after the company has a chance to study the order for each of its districts, and applies to the Utility Regulatory Commission for the individual district rates.

Allen said he couldn't predict how long that process could take.

Peter Ciancone can be reached at (812) 231-4253 or pete.ciancone@tribstar.com