The Indiana Office of Utility Consumer Counselor (OUCC) is recommending that Indiana American Water Company's (IAWC's) proposed rate increase be substantially reduced. The OUCC - the state agency representing residential and business ratepayer interests in proceedings before the Indiana Utility Regulatory Commission (IURC) - filed testimony before the IURC late Thursday.

While IAWC is requesting an 18.1 percent increase in total annual revenues, the OUCC recommends that the proposed increase be limited to no more than 2.94 percent based on evidence pending at this time.

The OUCC's testimony and exhibits total more than 460 pages, are available online, and include the following recommendations:

• An 8.75 percent return on equity, compared to the 11.5 percent IAWC has requested.
  
  
• Denial of IAWC's proposed rate adjustment mechanism, or tracker, to recover changes in electric and natural gas costs at its facilities. The OUCC does not believe potential changes in energy costs are likely to cause significant harm to IAWC's finances; the agency is also concerned that such a tracker may discourage utilities from taking new steps to conserve energy.
  
  
• Inclusion of certain revenue sources to help partially offset the need for increased rates. These include leases of well fields for farming, leases of water tanks for cell phone relays, and sewer and stormwater billing charges to municipal utilities.
  
  
• Denial of IAWC's proposed costs for relocating its customer call center from Richmond, Ind. to Alton, Ill. Those costs were sought and denied in IAWC's last rate case in 2004.
  
  
• Reductions in the utility's proposed maintenance and personnel costs, along with costs for leased vehicles, purchased water, bad debt and postage. The OUCC also recommends reductions in IAWC's requested recovery of costs for federal accounting and reporting requirements under the Sarbanes-Oxley Act of 2002.
  
  
• Denial of several expenses that would more appropriately be borne by shareholders instead of customers, including charitable contributions and advertising costs.
  
  
• Removal of certain facilities costs from IAWC's rate base on the grounds that they do not meet the "used and useful" requirement in the Indiana Administrative Code.
  

The OUCC also recommends that IAWC initiate a formal water conservation program no later than Dec. 31, 2007. Such a plan should follow guidelines established by the American Water Works Association (AWWA) and/or the U.S. Environmental Protection Agency (EPA).

Indiana American Water Co. - whose current base rates and charges were approved in November 2004 - serves approximately 285,000 customers in 21 counties throughout the state. IAWC is an investor-owned utility and a wholly owned subsidiary of American Water and RWE, which are respectively headquartered in Voorhees, New Jersey and Essen, Germany.

The IURC has conducted public field hearings in this case in Gary, Greenwood and Jeffersonville. An additional public field hearing is scheduled for Tuesday, June 5 in Muncie. (The field hearing at the Horizon Convention Center will begin at 6:00 p.m., following an OUCC informational meeting at 5:30 p.m.)

A technical evidentiary hearing - at which IAWC will be able to cross-examine the OUCC's witnesses and the witnesses of other parties in this case - is scheduled for July 17 in Indianapolis. All hearing and filing dates are subject to change; a settlement agreement is possible in any legal proceeding.

The Indiana Office of Utility Consumer Counselor (OUCC) is the state agency that represents utility consumer interests in state and federal regulatory proceedings. To learn more, visit www.IN.gov/OUCC.

(IURC Cause No. 43187)

 

 

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