The Indiana Office of Utility Consumer Counselor (OUCC) is recommending a reduction of approximately $17.6 million to the pending rate increase requested by the Indianapolis Department of Waterworks (DOW). The OUCC - the state agency representing consumer interests in cases before the Indiana Utility Regulatory Commission (IURC) - filed its testimony with the IURC this afternoon.
The DOW is requesting an increase of approximately 35 percent over current rates, which would raise the monthly water charges for a residential customer using 700 cubic feet (approx. 5,200 gallons) from $23.21 to $31.33. In this case, the utility is seeking about $45.8 million in new annual operating revenues.
The OUCC's review demonstrates that an overall increase of approximately 21 percent over current rates is justified and recommends that the increase be implemented in two phases. If the OUCC's recommendations were approved, the monthly residential water charges for 700 cubic feet would rise from $23.21 to $26.64 upon issuance of an IURC order and would then increase to $28.11 once the utility issues additional long-term financing, expected later this year. The OUCC's recommendations would provide the DOW with new annual operating revenues of approximately $28.2 million.
"Our staff has closely scrutinized the testimony and exhibits filed by the DOW in late September," said Indiana Utility Consumer Counselor David Stippler. "Based on our review, we concur that Indianapolis Water needs to make a number of capital improvements that are long overdue, and that it is entitled to recover reasonable costs that will - in turn - ensure safe water and reliable service for customers in the years to come."
Key recommendations in the OUCC's testimony include:
- Approval of rate recovery for specific infrastructure improvements proposed by the utility, including repairs to the Broad Ripple Dam and upgrades at Indianapolis Water's Fall Creek Treatment Plant, White River Treatment Plant, and Riverside pumping station.
- Requirement that capital improvement funds be placed in a dedicated account to ensure they are only spent on infrastructure improvements.
- Reduction of approximately $11 million to the DOW's requested working capital costs.
- Denial of requested rate recovery for certain Veolia management expenses, specifically expenses the DOW and Veolia agreed to in 2007. The OUCC believes the utility's 2007 agreement to pay higher management fees was imprudent.
The DOW will have the opportunity to file rebuttal testimony next month. An IURC evidentiary hearing, scheduled to begin on April 19, will allow for attorney and Commission questioning of technical witnesses that have filed testimony on behalf of this case's formal parties.
The Indianapolis Water rate case, which began in February 2009, is in the second of two stages. The case's first stage concluded in June 2009 with the IURC approving an emergency rate increase primarily to recover debt financing costs.
Indianapolis Water provides service in Marion County and portions of 8 additional counties. Only the utility's water rates and charges are at issue in this case. Indiana law does not give the IURC jurisdiction over municipal sewer and stormwater utility services.
For additional information on this case, including a copy of the OUCC's testimony, please visit the agency's Website at www.in.gov/oucc/2550.htm. The OUCC site also offers a variety of utility consumer publications, including tips for saving money on water and energy bills.
(IURC Cause No. 43645)
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.