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OUCC > News > Indiana American Water should decrease rates Indiana American Water should decrease rates

OUCC testimony recommends a 4.1 percent reduction in annual operating revenues

FOR IMMEDIATE RELEASE
October 6, 2011

Indiana Office of Utility Consumer Counselor
Media Contact: Anthony Swinger, (317) 233-2747 or aswinger@oucc.in.gov

 

The Indiana Office of Utility Consumer Counselor (OUCC) is recommending that Indiana American Water Company’s (IAWC’s) proposed rate increase be rejected. In testimony filed late Wednesday with the Indiana Utility Regulatory Commission (IURC), the OUCC is recommending that IAWC’s annual operating revenues be decreased by $8.02 million (a 4.1 percent decrease from current revenues).

IAWC has requested an $18.95 million (or 9.7 percent) increase over current revenues. Specific rate impact would vary among communities and types of customers.

The OUCC – the state agency representing consumer interests in cases before the IURC – has conducted a technical and legal review of IAWC’s request over the last 5 months.

Key recommendations in the OUCC’s testimony include:

  • Reducing IAWC’s currently authorized cost of equity from 10 percent to 8.6 percent. IAWC is asking that its cost of equity be increased to 11.5 percent in this case.

  • Making numerous adjustments to the utility’s requested operating expenses. Examples include recommended reductions to requested increases in chemical, purchased power and corporate support services costs.

  • Rejecting the utility’s request to include fire protection and hydrant fees in base rates. Fire protection is currently a separate surcharge outside of base rates, which makes it simpler to ensure that such fees are recovered without profit by the utility. Placing those fees in base rates would require customers to pay additional sales tax.

  • Modifying IAWC’s approach to marketing the line protection program offered by one of its unregulated affiliates, to ensure the program and its promotional efforts provide greater transparency.

"A review of the evidence in this case shows that Indiana American Water does not need additional revenue in order to continue providing safe, reliable service to its customers," said Indiana Utility Consumer Counselor David Stippler. "The utility should be fully capable of serving its customers and making any needed infrastructure improvements even with the OUCC’s recommended reduction in operating revenues."

"During these extremely tough economic times in which many Hoosiers are doing more with less, it is imperative to closely scrutinize all costs and expenses for which any utility seeks increased revenues, including IAWC," continued Stippler.

Along with its testimony, the OUCC is filing written comments from more than 180 IAWC customers who have contacted the agency over the last 5 months. Public field hearings in this case were held in August in Gary, West Lafayette and Jeffersonville.

IAWC has until October 28 to file rebuttal testimony. An IURC technical evidentiary hearing, at which IAWC may cross-examine witnesses for the OUCC and other parties, is scheduled to start on December 5 in Indianapolis.

IAWC is a wholly owned subsidiary of New Jersey-based American Water, Inc., providing service to more than 284,000 residential, commercial and industrial customers throughout Indiana. The utility’s current base rates and charges were approved in April 2010.

Wednesday’s OUCC filing does not break down the recommended revenue decrease by service territory, but focuses on the utility’s overall revenue requirement. After the IURC issues its final order in the case, the utility will file a tariff demonstrating how it intends to implement the order’s terms including rates by service territory. The OUCC has the right to object to the proposed tariff if necessary.

For an electronic copy of the OUCC’s testimony, please visit the agency’s Website at www.in.gov/oucc/2654.htm. Tips for managing water bills and more information on the regulatory process can also be found on the OUCC site.

Only the rates and charges of Indiana American Water Company are at issue in this case. Indiana law does not give the IURC jurisdiction over municipal sewer and stormwater utility services.

 

(IURC Cause No. 44022)

The Indiana Office of Utility Consumer Counselor (OUCC) represents Indiana consumer interests before state and federal bodies that regulate utilities. As a state agency, the OUCC's mission is to represent all Indiana consumers to ensure quality, reliable utility services at the most reasonable prices possible through dedicated advocacy, consumer education, and creative problem solving. To learn more, visit www.IN.gov/OUCC.

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