Columbus City Utilities is close to reaching a formal settlement in its water rate case. Under a recently proposed agreement, customers would see an overall rate increase of almost 75% over the next three years.
On Jan. 13, the CCU filed a stipulation and settlement agreement as part of the rate case. The proposed settlement is an agreement between the utility, the Indiana Office of Utility Consumer Counselor (OUCC) and the Southwestern Bartholomew Water Corp. (who is an intervenor in the case and one of the city’s wholesale customers).
“We’re very pleased," said CCU executive director Scott Dompke. "We got most of what we asked for, and they agreed with most of our assumptions and our testimony. And it came together more quickly than we had anticipated.”
According to the OUCC’s website, the settlement is pending before the IURC, which can approve, deny or modify any agreement.
The settlement proposes an overall rate increase of 74.85% in the following phases:
- Phase 1: 44.30% increase (which would go into effect once the IURC issues an order in the case)
- Phase 2: 12.99% increase (which would go into effect on Jan. 1, 2023)
- Phase 3: 7.21% increase (which would go into effect on Jan. 1, 2024)
In earlier testimony, the OUCC had previously recommended a 43.66% increase for Phase 1, a 12.99% increase for Phase 2 and a 7.21% increase for Phase 3, for an overall revenue increase of 74.02%. The city utilities initially requested a 79.46% increase over three phases.
The settlement also maintains that while the rate of increase varies by customer class, no customer class should receive more than an approximate revenue increase of 113%.
Residential customers would see an increase of 70.52% under the proposed settlement. Large commercial customers would see the largest rate of increase at 112.90%. The total rate of increase across customer classes is 74.85%, according to the settlement.
Utility analyst Thomas Malan wrote in his settlement testimony that while the OUCC’s case-in-chief included a revenue adjustment to its recommended cost of service findings, the office "neglected to include this adjustment in our accounting schedules." After correcting this oversight, the recommended rate increase would be 74.85% rather than 74.02%.
The settlement also includes other items, such as proposing that Columbus be authorized to issue $22.2 million of long-term debt in two tranches at interest rates of 2.5% and 2.8%.
“Because Petitioner (the City of Columbus) proposed limiting its Phase I rate increase, any adjustment in debt service would not likely affect Phase I rates and, as such, no true-up on Phase I is required," wrote Doug Baldessari in his settlement testimony. "The Phase II rates and charges effective Jan. 1, 2023 and the Phase III rates effective Jan. 1, 2024 will be adjusted for a true-up."
Baldessari is a certified public accountant and partner in the firm of Baker Tilly Municipal Advisors, LLC, which has been retained by city utilities for services related to its current water and sewer rate cases.
While the water rate case will be decided by the IURC, the city’s sewer utility is not regulated by the commission and therefore does not have to go through the same approval process for its rate increase proposal.
According to a docket entry filed by the IURC, there will be a settlement hearing for the water rate case at 9:30 a.m. Jan. 27. The hearing will be conducted via video conference and will be accessible to the public. Details on how to access the hearing will be made available in an upcoming docket entry.
“A settlement hearing is an opportunity for the IURC to ask questions of the settling parties if it wishes," said OUCC director of External Affairs Anthony Swinger. "If the commission has no questions, then the settlement hearing only involves the legal, perfunctory steps of formally putting the agreement and supporting testimony into the official record.”
He said that the IURC will take the agreement under advisement at the end of the hearing. Then, in a few weeks, the commission will issue an order that either approves, denies or modifies the agreement. The settlement agreement states that if the commission’s modifications are "unacceptable" to any party, the settlement can be withdrawn and nullified.
Swinger said that he does not make predictions as to the outcomes of rate cases. However, he did note that, "Most rate cases with municipal utilities are settled, with the agreements being approved.”
“The agreement is a fair resolution to the case," he said. "It ensures that customers will pay a reasonable rate while the utility will have the funding needed to provide safe, reliable service to all customers.”
According to the OUCC’s website, the city “cites increases in operating and maintenance costs as reasons for its request, along with infrastructure improvements for which it seeks IURC approval to issue up to $22.2 million in bonds.” Projects planned include new wells, a new storage tank and distribution mains, lab and treatment plant improvements, new meters and more.
In most cases where the state commission approves an increase, the rate hike is less than what is originally requested. Dompke has said in the past that if the state approves an amended rate increase, city council will have to vote to adopt the revised rate ordinance.
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More information about Columbus City Utilities’ water rate case is available at www.in.gov/oucc/2781.htm.
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There will be a settlement hearing for the water rate case on Jan. 27 at 9:30 a.m. The hearing will be conducted via video conference and will be accessible to the public. Details on how to access the hearing will be made available in an upcoming docket entry.
A link to the IURC’s online case file, which includes documents and docket entries, is available at www.in.gov/oucc/2781.htm.
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