Eastern Bartholomew Water Corp. customers will be asked to cast a ballot late this month to determine whether the utility should withdraw from the jurisdiction of the Indiana Utility Regulatory Commission.
In essence, the Taylorsville-based utility is seeking permission to regulate themselves. A withdrawal from IURC jurisdiction means the state commission will no longer have authority to regulate Eastern Bartholomew’s rates, charges, stocks, bonds, notes, rules or other evidence of indebtedness.
Considered an advocate of neither the public nor the utilities, the commission is required by state statute to make decisions in the public interest to ensure the utilities provide safe and reliable service at just and reasonable rates.
In order for the results to be confirmed, it will be necessary for 5% of all Eastern Bartholomew Water members, which is approximately 300 customers, to cast a vote on the question, according to a letter notifying customers of the vote.
Ballots will be cast during a special meeting starting at 6 p.m. on Thursday, May 25, inside the Taylorsville Elementary School cafeteria, 9711 Walnut St., Taylorsville. Members must be at the meeting to cast the ballot. No proxies will be permitted.
In a letter to customers dated April 23, the utility’s board of directors stated they have already conducted a survey of interest involving severing ties with state regulators. The letter states Eastern Bartholomew received “a favorable response” from more than 500 members.
When the survey went out in March, the utility cited the cost of engineering and rate consultants they must pay while being under the jurisdiction of the IURC. Stating that a rate case could cost Eastern Bartholomew $24,500 a year during a typical five-year rate period, the utility claims they could save that money by opting out and repurpose it to potentially reduce the amount of future rate increases.
While the IURC refuses to comment directly on the matter, one item on the commission’s list of disadvantages for utilities to opt out of their control may be related to this issue.
“As the cost of regulation is sometimes exaggerated, a utility may not realize “promised” savings as a result of withdrawing,” the IURC list states. “Proper utility rates and operation will still require much of the same work and cost otherwise involved with IURC proceedings.”
Meanwhile, it is getting harder on another level for average Hoosiers to challenge utilities to prevent rate increases.
This year, Indiana lawmakers pushed through legislation that makes it easier for utilities to charge customers for millions of dollars in “unexpected” costs. Consumer advocates say Senate Enrolled Act 9 essentially gives utilities a blank check to hike bills, while also reducing the ability of state regulators to protect consumers. Gov. Eric Holcomb signed the bill into law March 22.
Pros and cons
Advantages:
1. Utilities may be able to change rates, issue debt, and start new construction and capital improvements more quickly if the decisions require local approval only.
2. Withdrawal avoids the expense of justifying rate changes to the IURC. A case that is fully litigated, rather than settled, typically requires expert witness testimony that may include consultants, accountants, engineers and attorneys. Fees that pay for the use of expert witnesses are normally recovered through customer rates.
3. Responsibility for reviewing the utility’s decisions regarding rates and finances is fully assumed at the local level.
4. Customers with voting rights can replace members of the governing council or board, if unhappy with a municipal or cooperative utility’s service or rates. While customers have this right regardless of withdrawal, they may have more incentive to exercise it if the utility has withdrawn.
Disadvantages:
1. The OUCC and IURC have experienced experts (including accountants, economists and engineers) that sometimes propose less expensive or better alternatives that result in lower rates or better service. A utility loses access to these recommendations if it withdraws from Commission jurisdiction.
2. Customers challenging the legality of an action by a utility or its governing board must take action in a local court and bear the burden of proof to show a violation of the law. This is likely to include the need to hire a private attorney.
3. As the cost of regulation is sometimes exaggerated, a utility may not realize “promised” savings as a result of withdrawing. Proper utility rates and operation will still require much of the same work and cost otherwise involved with IURC proceedings.
4. Customers of a withdrawn investor-owned (for-profit) utility who do not own the utility’s stock have no direct control over the company’s management. The OUCC can provide a voice for the interests of customers of an IURC-regulated utility when it presents its case to the IURC. In addition, customers who have no control over the utility’s management have an opportunity to address concerns with the IURC, which has been established as an impartial body.
