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Indiana American Water reaches settlement on rate hike request


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Essential Energy Insights - January 2021

Indiana American Water reaches settlement on rate hike request

Indiana American Water Co. filed an all-party settlement agreement with the Indiana Utility Regulatory Commission in support of a 7.9% increase in operating revenues.

The proposed increase is designed to recover more than $542 million in investments that Indiana American Water has made to upgrade its water systems across the state, the company said in a March 19 news release.

"We have made significant investments in aging infrastructure over the last several years to ensure service reliability, water quality and fire protection for our customers across the state, while holding our operating and maintenance expenses relatively flat," Indiana American Water President Deborah Dewey said in the news release.

If approved by Indiana regulators, the rate hike will be implemented in two steps with a 1.73% increase in water rates implemented this summer followed by a raise of 6.07% in mid-2020, Indiana American Water said in the news release. Residential customers using 4,000 gallons of water per month are expected to see an overall increase in their monthly bill of about $2.26 after the two-step rate increase is fully implemented.

The settlement agreement also includes a low-income pilot program in three communities under which residential customers with standard 5/8-inch water meters will receive an 80% discount on the fixed monthly meter charge. The American Water Works Co. Inc. subsidiary will evaluate the effectiveness, interest and impact of the program before launching it statewide.

Customers also will receive a one-time refund tied to the water utility's cost savings from the federal tax overhaul of 2017. Indiana American Water said it will begin implementing the refund in July 2020 with a typical residential customer expected to receive a total of about $19.26 over a 12-month period.

The company already cut its rates by 4.4% on Aug. 1, 2018, as a result of federal tax reform.

A final order from the IURC on the settlement agreement and related refund is expected by mid-2019.