Bill boosting “distressed” wastewater infrastructure draws mixed testimony

Indiana is billions behind on maintenance, but some say the bill’s strategy is flawed

By: - February 17, 2023 6:30 am

Lawmakers are considering ways to help with wastewater improvement costs in a bill that passed committee Thursday. (Getty Images)

A Senate panel on Thursday approved a bill that would let utility companies ask the state for permission to pass some wastewater infrastructure costs to regular water ratepayers.

“Senate Bill 180 … creates a tool for the [Indiana Utility Regulatory Commission] to use as, essentially, a last resort option when all other solutions won’t work relative to a distressed wastewater utility,” author Sen. Eric Koch, R-Bedford, told his committee.

Under the bill, utility companies that provide both water and wastewater services — if they’ve acquired wastewater infrastructure and want to fix it up — could ask regulators to let them pin some of the costs on water ratepayers, not just wastewater customers.

Lawmakers first made a smattering of changes before advancing the measure.

A 2016 Indiana University Public Policy Institute report found that the state and local communities will need to spend $15.6-$17.5 billion on water and wastewater by 2034, but is on track for a funding gap of $6.5-$8.5 billion.

Koch said larger utilities acquiring smaller ones could foster “sustainable economies of scale,” adding, “These public-private partnerships can benefit failing systems and their customers by bringing them under IURC jurisdiction and into environmental compliance.”

List of guardrails augmented in amendments

Utilities would have to send regulators a list of required items, used in decision-making. Several items were made stricter or were added Thursday in a flurry of amendments.

  • The estimated rate hike on wastewater customers without approval to spread costs more, especially if some customers would need financial assistance to pay the higher bills;
  • What 2% of total authorized revenues are, so regulators could make sure approval wouldn’t inflate revenue beyond that amount;
  • A description of the company’s efforts to get federal or state grants, low-interest loans or other financial assistance;
  • Proof that the company has established an asset management program;
  • An estimate of maintenance costs throughout the infrastructure’s life cycle;
  • And whether the infrastructure was subject to any enforcement orders before it was acquired.

Companies would also have to get a copy of the requests to each interested party on their most recent rate cases — often utility consumer advocates, other utility companies, and so on.

Boosting infrastructure efforts …

Proponents said the bill would help poorer communities struggling to get old infrastructure fixed up, and help growing ones add more capacity to maxed-out systems.

“I regularly field calls from communities who have not been able to address the challenges in their systems and are seeking assistance in a way that will keep the rates affordable and allow the communities to grow,” said Justin Schneider. He’s director of consumer affairs for Indiana American Water, a Greenwood-based utility company.

Schneider said the bill had enough controls built in to ensure that utilities wouldn’t abuse it, and that no classes of water customers would see their bills explode.

Sen. Eric Koch, R-Bedford (Monroe Bush for Indiana Capital Chronicle)

“The longer problems are allowed to go unaddressed, we are increasing the likelihood of more expensive remediation of environmental harm and health issues, with more expensive construction projects,” Schneider said.

Residential utility consumer supporters and local government advocates also spoke in support, particularly of the safeguards added in amendments. The Indiana Chamber of Commerce was neutral.

… at a cost

But manufacturers and industrial energy consumer supporters said water customers should not subsidize costs for wastewater customers.

Joe Rompala, who spoke on behalf of Indiana Industrial Energy Consumers, said his group believes rates should be based on how much it costs a utility to provide service.

“If you use a service, you should be paying for that service, and if you don’t, you shouldn’t,” Rompala said. “This particular bill deviates from that, and in a very significant way.”

Even Indiana American Water, he told lawmakers, has a water system covering much of the state, but a “relatively confined” wastewater system mostly around Muncie.

“I find it difficult to understand — except at a very, very high level — how customers … are necessarily served by having a bill increase in order to fund wastewater improvements in areas which they are not located, where they will not be served, and [in] which they will not ever utilize those wastewater services,” Rompala said.

Another utility company, Aqua Indiana, came out against the bill because only 5% of its Hoosier customers are for water — the rest are for wastewater.

“It’s very challenging to be able to use this legislation,” President Bob Ervin said, adding that he didn’t want wastewater-heavy utilities to be at a “disadvantage” for growth.

The committee voted 8-1 to advance the legislation, with only Sen. Andrea Hunley, D-Indianapolis, voting against.

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Leslie Bonilla Muñiz
Leslie Bonilla Muñiz

Leslie covers state government for the Indiana Capital Chronicle with emphases on elections, infrastructure and transportation. She previously covered city-county government for the Indianapolis Business Journal. She has also reported on local, national and international news for the Chicago Tribune, Voice of America and more. She holds an undergraduate degree in journalism from Northwestern University.

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