Water and Utility rates and Energy & Environment and Utilities

State office seeks to block Indiana American Water rate hike

May 5, 2014

The state’s agency for utility consumers says a proposed rate hike by Indiana American Water Co. is unwarranted, and that the company should actually lower existing rates.

The Office of the Utility Consumer Counselor’s filing on Friday challenges $19.6 million in new revenue Indiana American is seeking to cover the costs of infrastructure upgrades.

The utility, a subsidiary of Voorhees, N.J.-based American Water Inc., has about 290,000 customers thoughout Indiana, including Noblesville, Greenwood, Shelbyville, Franklin and Mooresville.

The consumer counselor, which represents utility customers in rate cases, asked the Indiana Utility Regulatory Commission to reject Indiana American’s request and instead require the utility to reduce its annual operating revenue by $11.4 million, or 5.5 percent.

“The analysis by our attorneys and technical staff in this case shows that a revenue reduction is warranted,” Indiana Utility Consumer Counselor David Stippler said in a prepared statement. “The revenue requirement the OUCC is recommending will ensure sufficient funds to address IAWC’s operational and infrastructure needs, and to address the utility’s obligation to provide safe and reliable service to all of its customers.”

The state office wants regulators to reduce Indiana American’s cost of equity to 8.6 percent from 9.7 percent. The utility wants to increase those costs to 10.8 percent.

Also, the consumer counselor wants the water utility to use “more realistic projections of customer growth, declining usage, and property tax expenses than those included in the utility’s testimony.”

The state office cites several operating expenses it believes the utility can avoid increasing in areas such as business development, management and marketing, among others.

And the utility should implement industry benchmarking standards more in line with the consumer counselor’s performance recommendations for other water rate cases, the state agency said.

Indiana American has until May 28 to file a rebuttal to the consumer counselor’s filing.

A spokesman for the water company could not be immediately reached for comment Monday morning.

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