Indiana American Water Seeks Recovery for Investment of More Than $542 Million in Infrastructure Upgrades

GREENWOOD, Ind.--(BUSINESS WIRE)--Indiana American Water today filed a petition with the Indiana Utility Regulatory Commission (IURC) to adjust its rates for water service in the communities it serves across the state.

Indiana American Water’s ongoing infrastructure investments are the primary driver behind the request. The company is including more than $542 million of water infrastructure investments in its request. The investments are necessary to maintain and enhance service, water quality, system reliability, and fire protection capabilities for customers while keeping the cost of water service for most households their most affordable utility bill at about a penny per gallon.

The company last filed for new rates through a general rate filing in January 2014 and received an order from the IURC in January 2015.

“Indiana American Water has made significant investments in aging infrastructure and its treatment and distribution facilities to ensure service reliability, water quality and fire protection for the more than 1.3 million people who depend on us every day,” said Indiana American Water President Deborah Dewey. “We are proud of our record of success in providing affordable water. These investments are critical to the public’s health and safety and the economic health of the communities we serve and will also contribute to the creation of nearly 9,000 jobs across the state.

“We have also worked hard to hold our operating and maintenance expenses relatively flat by implementing efficiencies and leveraging technology and innovation throughout the workplace,” said Dewey. “Our O&M expenses have risen at a rate below the inflation rate over the last decade. Our successes represent more than $10 million of savings for our customers over what our expenses would have been if allowed to grow with inflation.

“At the same time,” said Dewey, “we have been able to maintain top-quartile customer satisfaction and efficiency levels, enhance our water quality and environmental compliance record, reduce water loss in our distribution system, and significantly improve safety for our employees by reducing and improving our OSHA recordable incident rate, a measure of workplace health and safety, by 77 percent since our last rate filing.”

Major projects in the rate request include:

• Significant system upgrades at three water treatment facilities located in Kokomo, Richmond and Muncie to meet more stringent water quality regulations associated with the Environmental Protection Agency’s Long Term 2 Enhanced Surface Water Treatment Rule. These projects include replacing and upgrading aging and obsolete treatment facilities and equipment and, among other things, adding ultraviolet disinfection to the existing treatment process. When used to treat drinking water, UV disinfection provides an additional layer of protection against chlorine-resistant pathogens and microorganisms that could be present in surface water sources.
• Building a new water treatment facility in Noblesville, one of the company’s fastest growing service areas.
• Converting nine facilities from chlorine gas to liquid sodium hypochlorite disinfection systems to improve safety.
• Replacing or upgrading more than a dozen wells, several pumping stations, water filters, large diameter water mains, and other critical facilities serving customers in service areas throughout the state.
• Replacing and/or retiring from service nearly 6,700 lead service lines.
• Building a solar energy project in Newburgh that generates enough electricity to power the company’s water treatment facilities there.

In addition to these major projects, Indiana American Water is including the replacement of nearly 36 miles of aging water mains in this request.

Nationally, much of the nation’s critical water infrastructure is aging and is well past its useful life. The American Society of Civil Engineers’ (ASCE) latest Report Card for America’s Infrastructure, issued every four years since 2001, earlier this year gave the nation’s water systems a D grade, and wastewater systems a D+ grade. This remains in line with the last few reports, and heightens the sense of urgency to take actions that will turn around the condition of the nation’s water and wastewater infrastructure.

A 2016 study by the Indiana Finance Authority echoed the ASCE’s recommendations for significant investment in water infrastructure. The report evaluated Indiana’s water infrastructure and estimated more than $2.3 billion in infrastructure needs for drinking water systems across the state, and found that an additional $815 million is needed annually to maintain the systems into the future.

A breakdown of water systems can result in water disruptions, impediments to emergency response, and damage to other types of infrastructure. The price tag for the critical upkeep and replacement of the nation’s outdated water systems is at least $1 trillion over the next 25 years, according to estimates by the American Water Works Association.

Indiana American Water’s rates are based on the true costs of providing water service as reviewed by the IURC. No rates will change until the IURC completes a comprehensive review of the request and determines it is reasonable and justified. By statute, the IURC is required to return an order regarding the company’s rate request within 300 days of the filing.

The company is proposing a phased approach to implementing the new rates that includes an increase of total revenues of 8.22 percent in July 2019, and a second increase of 8.57 percent in July 2020. Public hearings and opportunities for public comment are part of the process, under the direction of the IURC.

If approved as requested, the typical residential customer bill would increase approximately $5.60 per month or 18 cents per day from the August 1, 2018 rate. The monthly bill for most Indiana American Water customers using 4,000 gallons of water per month would increase by 16 percent when fully implemented in July 2020, after having just decreased on August 1, 2018, by 4.4 percent because of the federal Tax Cuts and Jobs Act of 2017.

About Indiana American Water

Indiana American Water, a subsidiary of American Water (NYSE: AWK), is the largest investor-owned water utility in the state, providing high-quality and reliable water and/or wastewater services to approximately 1.3 million people. With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly traded water and wastewater utility company. The company employs more than 7,100 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to over 14 million people in 45 states and Ontario, Canada. American Water provides safe, clean, affordable and reliable water services to our customers to make sure we keep their lives flowing. For more information, visit amwater.com and follow American Water on Twitter, Facebook and LinkedIn.