By KEVIN NEVERS

The fourth rate hike sought and obtained by Indiana-American Water Company (IAWC) in five years has taken effect.

This one for 9.9 percent.

“Starting on Oct. 10, 2007, an average residential customer using 6,000 gallons of water per month will see his or her water bill increase by $5.42 bimonthly,” IAWC said in a statement released on Friday, and the average residential customer will now pay a total of around $57.18 per bill.

IAWC—which cited “higher operating costs and investment in water system improvements” as the “primary drivers behind the rate increase”—had originally sought an 18.1 percent increase. The Indiana Office of Utility Consumer Counselor (OUCC), however, recommended instead an increase of only 3 percent. In August IAWC and OUCC reached a settlement agreement which provided for a 9.9 percent increase, and last week the Indiana Utility Regulatory Commission issued an order enacting that increase per the agreement.

From December 2003 to December 2006, IAWC invested more than $89 million in water system improvements, from upgrading water mains to replacing hydrants, the company said. “We are committed to a program of ongoing system improvements to maintain quality water service delivery, support local economic development, and help secure the future of water service in Northwest Indiana,” said Terry Atherton, network superintendent for IAWC.

“Water remains a good value to our customers,” Atherton added. “Customers will continue to receive a gallon of water delivered to their homes for less than one penny.”

“With few exceptions,” the statement said, “water service remains the lowest utility bill that consumers pay each month.”

Previous rate hikes:

•In November 2002 IAWC implemented an increase of 18.25 percent, to recover the costs of a number of improvements, including new pumps and automation enhancements at the Ogden Dunes water filtration plant and the construction of a second main to serve the Chesterton area.

•In June 2003 IAWC implemented a second increase of 26.2 percent, to recover the costs of the $52.4 million supply tunnel which brings Lake Michigan water to the Gary water filtration plant.

•In November 2004 the IURC granted IAWC a third increase of 1.67 percent, after the company had trimmed its original request for a 14.7 percent hike to 10 percent. IAWC had sought this hike to recover a number of costs, including the expense of acquiring Northwest Indiana Water Company in the first place as well as the expense of moving a customer service center from Indiana to Illinois and its financial and processing functions from Indiana to New Jersey. IAWC had also wanted to use the 10 percent hike to generate higher return on shareholders’ investment and to provide additional incentive pay for management.

Posted 10/15/2007