Indiana American Water Implements Step Two Increase for Water Customers

Investments enhance water quality & system reliability, capacity and safety

GREENWOOD, Ind.--(BUSINESS WIRE)--Indiana American Water today announced it has implemented the second step of a two-step rate increase approved by the Indiana Utility Regulatory Commission in June 2019 for the company’s water customers across the state. The new rates are effective for all water service provided to Indiana American Water customers after May 1, 2020.

Indiana American Water’s ongoing infrastructure investments are the primary driver behind the increase. The company included more than $542 million of water infrastructure investments in a request filed in September 2018 to increase its water rates. Of that amount, approximately $79 million was invested at three Indiana American Water treatment facilities to, among other things, add ultraviolet disinfection to the existing treatment process, adding an extra layer of protection against chlorine-resistant microbes, viruses and pathogens that may be present in surface water sources.

“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 Matt Prine. “We are proud of our record of success in providing affordable water while making investments that are critical to the public’s health and safety and the economic vitality of the communities we serve.”

The investments, which have all been placed in service, help maintain and enhance service, water quality, system reliability and capacity, 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.

“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 Prine. “During the period covered in our rate request, our O&M expenses increased 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.”

Major projects that have been completed and were included in current rates 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 adding ultraviolet disinfection to the existing treatment process.
• 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 more than 13,000 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 replaced nearly 120 miles of aging water mains.

Indiana American Water’s rates are based on the true costs of providing water service as reviewed by the IURC. The impact for most of the company’s residential customers using 4,000 gallons of water each month was approximately 34 cents per month (0.96 percent) after step 1 went into effect in July 2019, and an additional $2.22 per month (6.3 percent) with the step 2 increase now in effect. Details on specific rate impacts by district, rate group and customer class have been posted on the company’s website at https://amwater.com/inaw/customer-service-billing/your-water-rates.

The phased approach to implementing new rates results in a 7.9 percent overall increase in operating water revenues for the company. The increases approved by the IURC were implemented in two steps, with the first increase of 1.99 percent effective July 1, 2019, and a second increase that became effective on May 1, 2020 of 5.79 percent.

Prior to this request, 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.

The rate change also includes a one-time adjustment to customers reflecting the amount collected in revenues after the Tax Cuts and Job Acts (TCJA) of 2017. The adjustment will be spread out over a twelve-month period as a detailed credit to any amounts due each month. The credit for the typical residential customer will total $19.26, or approximately $1.60 per month for one year. The actual amount of the credit depends on number of factors, including meter size, whether the customer was paying a fire protection surcharge during the time the tax was collected, and current usage. The TCJA also resulted in a previous rate decrease of 4.4 percent effective on August 1, 2018.

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 1.34 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 6,800 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to 15 million people in 46 states. 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.