A water company serving northern and central Johnson County is asking to increase its rates for the second time in less than three years, and if approved residents will be paying an extra $2 per month by next year.
Indiana American Water is requesting a rate increase that would raise monthly bills by about 7 percent to help pay for upgrades and replacements to water lines, equipment and treatment plants that will lower maintenance costs and make equipment less likely to break down.
The utility serves about 27,000 customers in Greenwood, Franklin and New Whiteland and parts of White River, Franklin and Needham townships. Whiteland also buys water from Indiana American Water and resells it to residents.
The increase is the second requested by the water company since 2011. In June 2012, the state approved a 1 percent increase in revenue statewide, much less than the 8.6 percent increase in revenue the company asked for.
The 2012 change actually led to water rate decreases for most Johnson County customers, except in Whiteland, where the town purchases and resells water from the utility.
The average monthly household bill for Indiana American Water customers is $35.54 for 4,600 gallons of water used. If the increase is approved, water bills would go up by about $2.40 per month and customers would likely start paying more in 2015, Indiana American Water spokesman Joe Loughmiller said.
Utilities can submit a new rate increase request 15 months after their last filing, and Indiana American Water last applied in May 2011, Indiana Utility Regulatory Commission spokeswoman Natalie Derrickson said. The state has 300 days to make a decision on the rate increase request, she said.
The Indiana Office of Utility Consumer Counselor will represent customers and study the utility’s request to determine whether the rate increase is necessary and how much it should be, spokesman Anthony Swinger said. For example, when Indiana American Water last applied for an 8 percent increase in 2011, the advocacy group studied the proposal and determined the utility should instead be decreasing rates by 4 percent. Water customers will be able to submit comments to the state or speak at local hearings regarding the rate increase.
The $221 million worth of projects statewide started in July 2011 and will continue through next year. More than $17 million in projects are being done in Johnson County including drilling two new wells, replacing a booster pump, upgrading treatment facilities and operations center, replacing or relocating water lines and fire hydrants, installing new pipes and meters and rehabilitating storage tanks.
The projects being done between 2010 to 2015 are helping the water company cut operating and maintenance costs by $7 million for it’s 1.2 million customers in Indiana. Without the projects, operating costs would have instead increased by $16.1 million over that same period, according to a company news release.
“That’s basically main replacements we’re doing because they’re at the end of their useful life. And if you don’t start replacing them in a timely manner you’ll have a lot of maintenance costs and main breaks,” Loughmiller said.
The Office of Utility Consumer Counselor’s team of attorneys, accountants, economists and engineers will review the rate request and the company’s income, expenses and facilities and give their opinion to the Indiana Utility Regulatory Commission, which functions like a court, Swinger said.
In some cases the group will agree with the request or can suggest a smaller increase, no increase or even a decrease, Swinger said.
Although the advocacy group suggested a rate decrease the last time Indiana American Water applied to the state, analysts consider each request on its own merits, he said.
“Separate case, separate facts. History may indeed be a factor; obviously we will have to see what the utility has filed and historical perspective does play a role in any rate case,” Swinger said.
All of the additional money generated from the rate increase would help pay off the improvements being made, many of which have already been completed in Johnson County, Loughmiller said.
For example, the utility has spent $4.4 million to replace or move water mains in Johnson County, with another $2 million on tap for this year and 2015, he said. Residents likely won’t notice any changes in water service at their homes on a daily basis but would instead see fewer instances where utility workers have to tear up roads or sidewalks to repair underground breaks and shut off service to homes, he said.
“A lot of this infrastructure is 50 to 100 years old. The materials that these mains are made of are a lot better than they were in that time period,” Loughmiller said.
Upgrades have also included switching to electronic water meters that allow workers to drive by buildings homes and get readings transmitted to equipment in their vehicle, he said. By not having to get out of a truck and walk up to a meter to read it, the utility has been able to reduce staff needed for monthly meter reading, Loughmiller said.
The company has been able to install electronic meters for every Johnson County customer, he said.
Homeowners in almost all parts of the state would see the same increase, but industrial users or areas that purchase water such as Whiteland might see rates increase by a different percentage, Loughmiller said.