Indiana-American Water Company (IAWC) had asked the Indiana Utility
Regulatory Commission (IURC) for an increase in overall revenues of 8.64
percent or $16.9 million.
What it got: a mere 1 percent increase, amounting to an annual $1.95
How that 1 percent increase will actually affect Northwest Indiana
customers’ rates remains to be seen. IURC has ordered IAWC to file a
cost-of-service study indicating how the authorized $1.95 million in
additional revenues will be allocated among the company’s customers.
“Once a new tariff is filed with the IURC, it will become clear how customer
rates will be affected” by the order,” the IURC. “IURC must then review and
approve a tariff detailing these rates and charges.”
IAWC is expected to file those documents in the next 30 days.
Meanwhile, Indiana Utility Consumer Counselor David Stippler—who represents
Hoosier consumer interests before state and federal regulators—applauded
Wednesday’s ruling by the IURC. “On behalf of IAWC ratepayers, I am very
pleased with today’s outcome, which reflects the efforts of OUCC staff who
have worked diligently on this case over the last 13 months. Today’s
decision means Indiana American Water’s customers will pay nearly $15
million less in annual rates than they otherwise could have paid.”
“More importantly,” Stippler added, “the commission’s order sends a clear
message that while utilities are entitled to a fair return on their
investments, rate requests will continue to be more closely scrutinized.
Difficult economic times make it even more imperative that rate reviews be
conducted in a thorough, comprehensive manner.”
A couple of “significant issues” played into its order, the IURC said. IAWC
had proposed “capturing” in its rates declining residential usage. The IURC
denied that proposal.
The IURC also slashed IAWC’s proposed return on equity of 11.5 percent to
9.7 percent. That adjustment alone, the IURC said, reduced by 60 percent
IAWC’s petition for $16.9 million in additional annual revenues.
The IURC noted that it also approved the OUCC’s proposal on deferred income
IAWC’s approved 1 percent increase is the sixth such hike since 2002
authorized by the IURC. The five previous ones:
• 18.25 percent in November 2002.
• 26.2 percent in June 2003.
• 1.67 percent in November 2004.
• 9.9 percent in October 2007.
• 19.72 percent in April 2010.
Right now, IAWC’s Northwest Indiana customers pay the second highest average
monthly bill: $38.94. The average monthly bills of customers in other of the
company’s districts: Terre Haute, $42.53; Muncie, $38.73; Winchester and
Warsaw, $31.70; and West Lafayette, $27.90.
The IURC did say that IAWC is gradually moving toward a “single-tariff
pricing” schedule, under which customers in different districts pay
different rates. Single-tariff pricing will provide “more consistent rates
from district to district due to the costs being spread out over the entire
service territory,” the IURC said.