Columbus City Council members finalized a a slight change to water rate increases they approved last year after a state regulatory agency asked for modifications.
City council members passed the second reading of two ordinances by an 8-0 vote, one that establishes the new rates and another that amends municipal code to reflect the changes.
Council member Jerone Wood, D-District 3, was absent.
Council members last year approved water and sewer rate increases that are poised to fund planned capital projects over the next few years to critical Columbus City Utilities (CCU) infrastructure that had been deferred in years past.
The previous water and sewer rate increases were approved in 2021 and lasted over three phases with increases in 2021, 2023 and 2024. At the time, the increases were the first in more than 27 years for water customers and 12 years for sewer customers.
The rates approved in 2024 were recommended by accounting firm Baker Tilly’s recommendations and based on a cost-of-service study done for both utilities. Cost of service rate adjustments ultimately vary based on customer class, but the general trend of the increases shifts the burden more to large commercial and industrial users, whereas previously there was more burden on residential users, Baker Tilly’s Doug Baldessari said last year.
Sewer rates were increased over three phases starting with a 5% increase during phase one this year, a 9% increase during phase two in 2026 and another 5% increase in 2027.
Water rates as originally approved were to be increased over two phases, beginning with an 18% bump in 2026, followed by another 15% increase in 2027 for a typical residential home, assuming usage of 4,000 gallons a month.
But water rates are subject to Indiana Utility Regulatory Commission (IURC) jurisdiction, whereas sewer rates are not. Although the council approved water rate increases, the IURC has the final say.
A settlement agreement between CCU and the IURC was reached in July, calling for the water rate increases to be slightly flattened and stretched over three phases.
The new water rates the council is considering increases rates 13.2% during phase one for a typical residential user, assuming usage of 4,000 gallons a month, effective for Nov. 1. The following two phases won’t be effective until Jan. 1, 2027 and Jan. 1, 2028, respectively.
Between now and phase two, CCU is required to send to the IURC reports demonstrating income and expenditures for the first several months of the rate increase. The IURC will also look at the results of a $29 million State Revolving Fund (SRF) bond CCU is planning to issue later this year, which will inform the IURC’s decision on what exactly the phase two and phase three rates will be.
“In the subsequent years, they want to do what’s called a true-up, and that would be based on what the actual results are for bonding and some of our capital projects,” CCU Director Roger Kelso said during the first reading on Oct. 7. “So they want to take a look at it each year. So we’ll be back to you next year and the subsequent year for a similar thing, much like our budget process, except we’ll also be talking about rates.”
The $29 million SRF loan is to fund more than 10 projects including improvements to CCU’s Water Treatment Plants and storage tanks, along with various water main replacements.
The IURC in the settlement agreement did list tentative increases over the next two phases for a typical residential user, assuming usage of 4,000 gallons per month, of 12.7% effective for Jan. 1, 2027, followed by another 3.4% increase effective for Jan. 1, 2028. However those exact figures could be subject to change, and would still need to be finalized by Columbus City Council members annually.
The following is a breakdown showing what water bills may look like for a typical residential user, assuming usage of 4,000 gallons a month:
- Current: $16.45
- Phase One: $18.63 (effective Nov. 1, 2025)
- Phase Two: $21.00 (effective Jan. 1, 2027) (projected)
- Phase Three: $21.72 (effective Jan. 1, 2028) (projected)
CCU representatives presented to council members a bar graph that reflects how the proposed water rate increase compare to other municipalities, which show they are still lower than other Indiana cities.
“Even though our rates themselves are an increase, we still remain down in the lower quartile as far as we’re very competitive on water rates,” according to Kelso, going on to point out that even with the increases “we still remain down in the lower quartile (compared to other municipal utilities).”
Water volume rate increases were reduced on average between 5% and 6% from water rates approved by the council in 2024; meter rates were reduced 1% on average from rates approved last year; and fire protection charges were reduced on average by 4% from the rates approved last year.
CCU Associate Director of Finance Gavin Harvey said the initial, two-phase rates that were approved last year would’ve increased water rate revenue for the utility by a projected 47.91% in that period. With the new three-phase rate period, projected water revenue increases are expected to be up 40.9%.
