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South Harrison Water Corp. |
Our board of directors have decided to hold a special meeting of the members to opt out of regulations from the Indiana Utility Regulatory Commission (IURC). The meeting is scheduled for May 15, 2013 at South Central High School.
Here are some frequently asked questions about withdrawing from the IURC regulations:
1. Who / What is the IURC (Indiana Utility Regulatory Commission)?
The IURC is the Indiana state government agency that regulates a utility’s rates and charges, their ability to borrow money, and their rules and policies.
2. Why does South Harrison Water want out of the IURC?
Bottom line …. It costs us money to stay under their regulation with little or no return on that money spent. Our last rate increase was done in 2010. It cost us about $100,000.00 and took over a year to complete, because of the IURC’s involvement. That cost is also put into the rate increase and ultimately the customers pay for it.
We also spend about $5,000 per year to stay under their regulation in fees and reporting requirements to the state commission.
We feel this money can be better spent doing what we do ….. keeping the water on to our customers and upgrading lines as needed.
3. If South Harrison Water gets out of the commission, aren't you just going to raise our rates sooner?
The decision to raise rates has always been made by our local Board of Directors. They take this decision very seriously. It was nearly 20 years between our rate increase in 1991 and our last increase that was approved in 2010. Rates will not be raised unless our Board of Directors does their due diligence and approves it.
4. Why is South Harrison Water under the Indiana Utility Regulatory Commission now?
Until 1988 all municipal and not-for-profit water utilities fell under the jurisdiction of the IURC. At that time the Indiana legislature changed the law to allow a utility such as South Harrison the ability to “opt out” of the IURC.
5. If South Harrison stays in the IURC, will my cost of water go up?
The rates that you pay for water will increase periodically due to the increase in costs to provide the water to customers. The items used to provide water, such as chemicals, supplies, salaries, electricity, etc.., increase gradually over time, just the same as the items that the normal consumer purchases every day. Therefore, in order to maintain a water facility in good working order, the rates charged to customers must also increase periodically.
A utility that is under IURC regulation must petition to raise the rates charged to customers. The cost of obtaining approval to raise rates is often very high for a small water utility. Those additional costs can significantly raise the customers’ rates.
6. If South Harrison withdraws, will my cost for water go up?
As stated in #5 above, the charges for the water that a utility provides must increase periodically, in order to keep up with the cost of running a water utility. Withdrawal from the IURC does not mean that your rates will not increase. It will, however, lower the cost of raising rates and make that process less time consuming, which will make necessary rate increases less than if the utility had petitioned the IURC.
7. What would result in the lowest rates for me - staying in or withdrawing?
Due to the increased professional costs associated with petitioning the IURC for a rate increase and the fees charged by the IURC, the lowest rates would result from withdrawal from the IURC.
8. What prevents the board of directors from increasing rates in excess of the utility’s needs?
First, the board members are members and customers of the utility, so any increase in rates will also affect them. Secondly, board members are elected annually by you the members, so if you disagree with their actions, you have the power to replace them. Thirdly, funds of the utility cannot be used for other purposes, under state law, so there is no motivation for the board to increase rates beyond what is needed. Fourthly, the utility is audited annually by an independent auditor, who is responsible to report violations of the law. Lastly, state law requires that utility rates be reasonable and just, based upon the costs to provide the water to customers. If a member does not believe the utility has complied with the law, he or she can take the utility to court.
9. Does the IURC insure the financial stability of South Harrison Water Company?
The IURC does not insure the financial stability of your water company. Financial stability is the responsibility of your board of directors. The board monitors the financial situation on an ongoing basis.
The primary purpose of the IURC is to look at the financial impact that raising rates will have on the utility and determine whether the rate requested exceeds the needs of the company. This is a job that the governing body can handle with some professional assistance. The IURC receives an annual report from the utility, but does not monitor the financial position of the utility on a given periodic basis.
10. Does the IURC regulate water quality, cleanliness and safety?
The IURC does not regulate water quality, cleanliness or safety. These items are regulated by the Indiana Department of Environmental Management (IDEM). South Harrison Water will continue to be regulated by IDEM, whether, or not, the utility opts out of regulation by the IURC. There is no “opt out” process for IDEM regulation.
11. Does the IURC care if South Harrison Water withdraws or stays in?
The IURC does not care which not-for-profit water utilities stay within its jurisdiction. They will continue to regulate those that have not “opted out.”
12. Why don’t all utilities opt out of regulation?
The state law allows locally owned and operated utilities such as municipalities, co-ops and not-for-profits to opt out of regulation. All of these types of utilities are governed by a locally elected board of directors. Many of them have already opted out. South Harrison is an Indiana not-for-profit corporation.