City utilities proposing rate increases

Mike Wolanin | The Republic Columbus City Utilities Director Roger Kelso addresses guests during a ribbon cutting ceremony to show off the remodeled and updated area of the Columbus City Utilities building in Columbus, Ind., Thursday, April 20, 2023.

The Columbus City Utilities board discussed increases in city water and sewer rates during a special meeting Monday.

Utilities Director Roger Kelso said the meeting was more of a working session to review the proposed increases. The board will consider adopting or modifying the proposed rates in a subsequent meeting, perhaps as early as their next meeting on July 18.

The potential rate increases were recommended by an outside firm and based on a cost-of-service study done for both utilities. The previous water and sewer rate bumps were approved in 2021 and lasted over three phases with increases in 2021, 2023 and this year. At the time, the increases were the first in more than 27 years for water customers and 12 years for sewer customers.

Doug Baldessari with Baker Tilly said the primary driver for the new round of potential increases is $60 million in planned capital projects identified in the utilities master plan relating to various crucial infrastructure from needed improvements to the city’s lift stations to the city’s water treatment plants.

“It’s been a few years, since you’re currently in your last phase of your rates on both water and sewer, but there is a big capital plan that has to be funded in the future,” Baldessari said. “So these take into account those projects, those changes, and then we allocate the cost to the different customer classes to make sure everyone’s paying their fair share.”

Sewage rates

Sewage rates would be increased over three phases from 2025 to 2027. Rates would see 9% jumps in 2025 and 2026, followed by a 5% increase in 2027.

For example, a residential home using 4,000 gallons of sewer service a month would see an approximate increase in their bill of $2.12 during phase one.

According to a breakdown of what is fueling the sewer increase, 61% is due to capital improvements and 39% is to account for operating expenses, according to Baker Tilly information presented to the board.

This is how the monthly bill of a residential user of 4,000 gallons of sewer compares to other municipalities:

  • Lafayette ($35.11)
  • Columbus current rate ($40.37)
  • Columbus proposed phase one rate ($42.49)
  • Bloomington ($44.97)
  • Columbus proposed phase two rate ($46.32)
  • Columbus proposed phase three rate ($48.65)
  • Greensburg ($48.97)
  • Indianapolis ($55.57)
  • Greenwood ($59.29)
  • Evansville ($70.15)

Baldessari noted the dollar figures were based on the municipalities’ most current rate and it’s likely that by the time Columbus’ phase two and three rates are implemented, rates will have changed for other cities as well.

“Now, of course these other utilities have long term control plans, they have expenses increasing, they’re going to be adjusting their rates also, certainly over that three-year period,” Baldessari said.

In terms of how different customer classes would be impacted by the sewer rate change, there would be more plans for large commercial and industrial users to pay more of their share.

“There has been a subsidization by the residential users, we’re shifting that cost, based on the cost of service study, to the larger users, just like we did last time,” Baldessari said.

While small residential and commercial customers would see a 5% increase during phase one, large commercial users using more than 100,000 gallons of sewer treatment every month would see a 16% increase, per Baker Tilly’s analysis. Industrial users using more than 400,000 gallons of sewer would experience a 10% increase.

Water rates

Water rates would be increased in two phases, beginning with a 23% increase during phase one in January 2026, followed by a 20% increase in January 2027.

Assuming a residential monthly usage of 4,000 gallons per month, a hypothetical customer would see their monthly bill increase from $16.45 to $20.61 in 2026.

Capital projects are most responsible for the proposed increase in water rates as well, officials said.

“The majority of these increases are to fund your master plan projects, 81% of the increase is new capital improvements,” Baldessari said.

The monthly bill of a residential user of 4,000 gallons of water will remain less than other cities:

  • Lafayette ($12.68)
  • Columbus current rate ($16.45)
  • Columbus proposed phase one rate ($18.55)
  • Columbus proposed phase two rate ($20.61)
  • Bloomington ($24.02)
  • Indianapolis ($27.88)
  • Evansville ($39.46)
  • Greensburg ($40.50)
  • Greenwood ($69.11)

Large commercial and industrial users will see higher percentage water rate increases — users with 1 inch meters using 50,000 gallons per month would have their water rate increased 46%.

“No matter what kind of customer class you’re in, you have decent rates, you have rates that even three years down the road are going to be in the middle of everyone’s current rates,” according to Baldessari.

Both rates increases would need to be approved by the Columbus City Council. A tentative schedule has the new rates proposed to council members on Aug. 20, with the first and second readings of ordinances establishing the change on Sept. 3 and Sept. 17.

Sewer rate increases only require approval by the utility board and the city council, whereas water rate increases need sign off from the IURC. Utilities officials will prepare and file the proposed changes with the IURC in September and expect to hear back with IURC’s final order in July of 2025. At that time, the rate increases would go back to city council once again to approve the final changes based on IURC feedback, officials said.