FORTVILLE — Officials in Fortville want to pull the town’s water utility from the jurisdiction of a state regulatory body, pointing to savings and claiming customers’ interests will still be represented.
The town council voted unanimously to pass an ordinance on first reading earlier this month removing the water utility from the Indiana Utility Regulatory Commission’s jurisdiction.
The IURC regulates rates, charges and other matters for utilities across the state. It advocates for neither the public nor utilities, and makes “decisions in the public interest to ensure the utilities provide safe and reliable service at just and reasonable rates,” according to its website.
Lou Savka of Indianapolis-based Triad Associates, Inc., which provides engineering services to Fortville, said at the council meeting that whenever the town’s water utility needed to change rates or borrow money, it had to go before the IURC for a rate case. That requires hiring rate consulting services and legal counsel costing the town tens of thousands of dollars, he continued.
Savka said that public interest outlined in the IURC’s mission can be accomplished though the town council alone.
“I think small-town government like you run here is the most honest form of governance we have left,” he said. “Because if any citizen has something to say, they can get on the agenda and face you directly and you have to answer their questions.”
Fritz Fentz, president of the town council, echoed Savka’s sentiments as his reason for voting in favor of the ordinance. Fentz told the Daily Reporter that it makes sense for larger, for-profit utilities to remain under IURC jurisdiction. He said he has no intention of changing water rates unless town staff come to him with a justified reason. And if town residents disagree with how the council makes decisions regarding the water utility, they can always vote in new members come election time, he added.
Savka said while many larger water utilities remain under IURC jurisdiction, a lot of municipal water utilities have been opting out.
That’s been true for Hancock County. Greenfield’s water utility withdrew in 2002, Cumberland’s in 2011 and Shirley’s in 2003, according to the IURC’s website.
McCordsville and New Palestine are served by Citizens Water, which remains under IURC jurisdiction. NineStar Connect, a Greenfield-based utility co-op that serves Hancock County and the surrounding area, has a water utility that’s within IURC jurisdiction too.
The Indiana Office of Utility Consumer Counselor represents the interests of utility customers in cases before the IURC. The office lists advantages and disadvantages of withdrawing from the IURC on its website. It agrees withdrawal avoids expenses of justifying rate changes to the IURC. One of the drawbacks, the site states, is that customers challenging the legality of a utility’s action must do so in a local court and bear the burden of proof, which would likely require hiring a private attorney.
“However, when a city or town considers withdrawing a municipal utility from IURC oversight, we view and respect it as a local issue that’s appropriately handled by elected officials at the local government level,” Anthony Swinger, director of external communications for the OUCC, told the Daily Reporter in an email.
Fortville’s ordinance states that a petition can be submitted within 60 days of the ordinance’s adoption that would require the water utility’s withdrawal from the IURC to be put up for a public question. Per state law, that petition would have to be signed by registered Fortville voters amounting to at least 2% of the town’s votes cast for Indiana secretary of state in the 2018 election. According to the Hancock County Election Office, the petition would need to have at least 20 signatures.
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Advantages and disadvantages of withdrawing from Indiana Utility Regulatory Commission
Advantages
- 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.
- Withdrawal avoids the expense of justifying rate changes to the Indiana Utility Regulatory Commission, or 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.
- Responsibility for reviewing the utility’s decisions regarding rates and finances is fully assumed at the local level.
- 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
- The Indiana Office of Utility Consumer Counselor, or 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.
- 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.
- 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.
- 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.
- Customers of a municipal utility who live outside the city or town limits are unable to vote in municipal elections.
Source: Indiana Office of Utility Consumer Counselor
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