IAWC files surcharge request

MOORESVILLE – Indiana American Water Company has filed a distribution system improvement charge request with the Indiana Utility Regulatory Commission. The 3.19 percent surcharge will cost average residential users $1.14 a month. According to IAWC president Alan DeBoy, this is an effort to capture investments that were made across the state by the water company from July, 2011 to Aug. 12, 2012. DeBoy said only water customers are affected by the charge, and its roughly 500 or more sewer customers will not have the charge on their bills.

The IAWC is currently in litigation with the Town of Mooresville, which is attempting to purchase its water system. The Mooresville Town Council and its attorney, J. Christopher Janak have moved the case from the Morgan County Circuit Court to the U.S. District Court for the Southern District.

The DSIC is different from a rate order, which was approved earlier in the year and included improvements made from January 2010 to June 30, 2011, DeBoy said. That general rate increase was filed in May 2011 and was not granted until June 2012. The DSIC can be made automatically with only a commission hearing and approval within 60 days. Rate increase requests can take one or two years. Public notice of the request is not necessary with the DSIC, but the utility can’t impose a surcharge in the same year it has filed for a general rate increase, according to Indiana Code 8-1-31-8.

In the Mooresville area, IAWC has invested about $221,000 in the local distribution system, including work-related to the rehabilitation of the Morningstar-elevated water storage tank and the replacement of water meters, hydrants, mains, valves and service lines.

The Indiana Legislature, recognizing the critical need for water and wastewater infrastructure replacement, enacted legislation several years ago allowing water utilities to make periodic adjustments to their rates and charges to recover costs associated with these types of improvements — without the expense of filing a general rate case, IAWC external affairs manager Joe Loughmiller explained in a press release. The DSIC mechanism encourages water utilities to continue to invest in their distribution systems by reducing regulatory lag — the time between when system improvements are made and recognition of those investments in rates.

By statute, a utility may not produce revenues in excess of 5 percent of the public utility’s base revenue level approved in its most recent general rate proceeding. So DeBoy said there is history standing behind the request for the surcharge.“Indiana American Water is dedicated to maintaining and improving the quality and reliability of our local water systems in Mooresville and across the state,” said DeBoy. “Part of that responsibility is making ongoing investments to our water distribution system. Our strategy is to invest in our systems before there are problems. Otherwise, it will cost the company, inconvenience the customers in a disruption of service or put us in a non-compliance situation.”DeBoy said the DSIC helps accelerate the replacement of certain types of aging water infrastructure, which need to be upgraded to meet service requirements and standards.

Projects typically covered by DSIC are replacements, relocations and reinforcement of existing water mains, valves, hydrants, customer service lines, meters and tank rehabilitation and painting projects. Reinforcement infrastructure consists of new mains required to increase flow capacity to improve service where existing mains could not meet demands for fire service flows.

IAWC, a subsidiary of American Water, is the largest investor-owned water utility in the state and provides water and/or wastewater services to more than 15 million people in more than 30 states and parts of Canada. For more information, go to www.amwater.com.

By Amy Hillenburg | Reporter | Published October 27th, 2012 in The Reporter Times