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Utility Withdrawal from IURC Jurisdiction

A Consumer Fact Sheet from the
Indiana Office of Utility Consumer Counselor
Quick Facts
  • Statutes approved by the Indiana General Assembly allow certain types of utilities to withdraw from state-level jurisdiction over rates, charges or issuance of debt.
  • Consumers should know the advantages and disadvantages of having their utilities withdraw from IURC jurisdiction.
  • The state regulatory process offers options that can help utilities save time and money (including rate case expenses ultimately borne by customers).


Most Indiana utilities must receive Indiana Utility Regulatory Commission (IURC) approval to change their rates, charges and finances. The IURC regulates approximately 700 Indiana utilities, while the Indiana Office of Utility Consumer Counselor (OUCC) provides legal and technical representation for consumer interests as a whole in all cases before the IURC.

However, state law also allows the following types of utilities to remove themselves from – or "opt out" of – IURC jurisdiction:

  • Municipal electric, natural gas and water utilities
  • Member-owned cooperative electric utilities (REMCs)
  • Utilities operated by not-for-profit corporations
  • Privately owned water and sewer utilities serving fewer than 300 customers
  • Water utilities operated by conservancy districts and serving fewer than 2,000 customers

To withdraw from IURC jurisdiction, utilities must follow specific processes as provided by state law. The process typically involves a vote by an elected body and/or a utility’s members, depending on the type of utility.

This publication is a general guide to the advantages and disadvantages of utility withdrawal from IURC jurisdiction. Specific legal language is in the Indiana Code:

Under a 2018 law, a new water or sewer utility that is created after June 30, 2018 may not withdraw from IURC oversight for 10 years. This does not apply to utilities listed below that are exempt from IURC jurisdiction.

Certain types of utilities are automatically exempt from IURC jurisdiction under state law, including:

  • Municipal sewer utilities
  • Conservancy district sewer utilities
  • Regional sewer districts
  • Regional water districts

Ratemaking jurisdiction for those utilities is handled at the local level.

Rates and service quality matters for telephone, video and other telecommunications services are also exempt from IURC jurisdiction. The Indiana General Assembly deregulated telecommunications services in 2006, declaring that telecommunications service providers are competitive entities. Wireless telephone, Internet, and most other telecommunications services have been considered competitive entities from their inception.

When Indiana statutes are silent on rate setting of utilities that have withdrawn from IURC jurisdiction, then common law applies (in other words, precedents set by previous court decisions). The general common law standard that the court applies is that rates must be "nondiscriminatory, reasonable and just." IN re City of Clinton Water Works Rate Schedule, adopted 9/9/97. 707 N.E.2d 807. In such a situation, customers wanting to contest rates must do so before the utility or the utility’s rate setting body, or a state court in the county in which they receive service.

What You Should Know If Your Utility Considers Withdrawal

In most cases, the decision to “opt out” of state-level utility regulation is made at the local level. Consumers should note that:

  • It is a local decision.
  • There are advantages and disadvantages.
  • Without IURC oversight, a utility’s governing board (such as a city council or REMC board of directors) or owners will make all final decisions (subject to applicable law).
  • The proper operation of a utility is complicated and requires particular expertise.
  • A utility’s board or owners must have the knowledge and desire to provide quality service, charge reasonable rates, and provide appropriate oversight of consultants.
  • Most municipal and not-for-profit utility rate cases before the IURC are settled (not litigated), reflecting a mutual desire to be as cost effective as possible.

Advantages and Disadvantages of Withdrawn Utilities


1. Utilities may be able to change rates, issue debt, and start new construction and capital improvements more quickly if the decisions require local approval only.

2. Withdrawal avoids the expense of justifying rate changes to the IURC. A case that is fully litigated, rather than settled, typically requires expert witness testimony that may include consultants, accountants, engineers and attorneys. Fees that pay for the use of expert witnesses are normally recovered through customer rates.

3. Responsibility for reviewing the utility’s decisions regarding rates and finances is fully assumed at the local level.

4. Customers with voting rights can replace members of the governing council or board, if unhappy with a municipal or cooperative utility’s service or rates. While customers have this right regardless of withdrawal, they may have more incentive to exercise it if the utility has withdrawn.


1. The OUCC and IURC have experienced experts (including accountants, economists and engineers) that sometimes propose less expensive or better alternatives that result in lower rates or better service. A utility loses access to these recommendations if it withdraws from Commission jurisdiction.

2. Customers challenging the legality of an action by a utility or its governing board must take action in a local court and bear the burden of proof to show a violation of the law. This is likely to include the need to hire a private attorney.

3. As the cost of regulation is sometimes exaggerated, a utility may not realize “promised” savings as a result of withdrawing. Proper utility rates and operation will still require much of the same work and cost otherwise involved with IURC proceedings.

4. Customers of a withdrawn investor-owned (for-profit) utility who do not own the utility’s stock have no direct control over the company’s management. The OUCC can provide a voice for the interests of customers of an IURC-regulated utility when it presents its case to the IURC. In addition, customers who have no control over the utility’s management have an opportunity to address concerns with the IURC, which has been established as an impartial body.

5. Customers of a municipal utility who live outside the city or town limits are unable to vote in municipal elections.

State Regulation: Assistance and Options

Utilities and their customers benefit from the savings when the time and costs associated with IURC cases are reduced. With this in mind, the OUCC attempts to negotiate a fair and equitable settlement in each IURC case. The majority of cases involving municipal and not-for-profit utilities are settled.

Utilities with fewer than 8,000 customers can also save time and money through the state’s “Small Utility Filing Procedure.”

Certain issues can be addressed through 30-day filings before the IURC and other cost-saving procedures such as wholesale water purchase trackers.

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.

Indiana Office of Utility Consumer Counselor
115 W. Washington St., Suite 1500 South
Indianapolis, Indiana 46204

Toll-free: 1-888-441-2494
Voice/TDD: (317) 232-2494
Fax: (317) 232-5923