Advocates Fight $100 Million Illinois American Water Increase

CUB Works to Reduce Fee-hike Request by About 20 P.c

CHICAGO, Aug. 2, 2022 /PRNewswire/ — Illinois’ largest personal water firm is pushing for an exorbitant revenue fee for its shareholders, and its rate-hike request ought to be decreased by about 20 p.c, the nonprofit shopper advocate Residents Utility Board (CUB) mentioned Tuesday, citing professional testimony. 

The CUB-sponsored testimony, from Christopher Walters, an professional on water regulatory points with Brubaker & Associates, Inc., beneficial lowering Illinois American’s proposed water and wastewater enhance by at the least $18.8 million. The testimony was co-sponsored by the Illinois Industrial Water Shoppers (IIWC). 

“Many shoppers are paying their highest gasoline and electrical payments ever, so the very last thing they want is to get hit with a punishing water enhance that offers Illinois American an extravagant revenue fee,” mentioned CUB Govt Director David Kolata. “We’ll work with fellow shopper advocates and do every part we are able to to chop this extreme, pointless fee hike as a lot as potential.” 

In February, Illinois American Water filed for an $87.4 million enhance in charges earlier than the Illinois Commerce Fee (ICC). Now, new testimony filed by Illinois American has up to date sure forecasted prices, and the speed hike has elevated to about $100 million. The corporate desires an extreme 10.25 p.c return on fairness (ROE), or revenue fee for shareholders. 

Underneath the unique rate-hike request, the everyday residential water buyer would see a invoice enhance of $6 to $14 per 30 days and the everyday wastewater buyer $7 to $17 per 30 days. Now that the rate-hike request is greater, the affect might be much more extreme.  

Illinois American’s charges additionally embrace a Qualifying Infrastructure Plant (“QIP”) surcharge, a controversial, legislatively permitted charge that can be utilized by pure gasoline utilities and has sparked anger amongst shoppers paying the very best heating payments in additional than a decade. 

The QIP cost on water and gasoline payments helps cowl sure prices related to infrastructure work. However shopper advocates have tried to get it taken off payments in favor of extra conventional regulatory oversight, arguing that utilities abuse the charge and depend on it to lift payments with out first getting ICC approval. Underneath Illinois American’s rate-hike plan, $18.3 million of fees at present being recovered within the QIP and Variable Earnings Tax (“VIT”) surcharges will likely be shifted to base charges.

In his testimony, considered one of Walters’ main suggestions was to decrease Illinois American’s proposed ROE to 9.35 p.c, saving shoppers $11 million. He additionally beneficial regulators disallow $4.2 million in prices related to incentive compensation as a result of they have been improperly tied to company income, when such compensation is meant to be tied to worker efficiency that advantages ratepayers. 

This fee case is the most recent of a number of battles CUB has had with Illinois American, whose dad or mum firm, American Water, earned $1.26 billion in income in 2021. 

For years, the watchdog has been working to cross state laws that might require communities to first maintain a neighborhood referendum earlier than Illinois American and one other personal firm, Aqua Illinois, can purchase up municipal water and wastewater techniques and lift charges for patrons. 

Underneath a state regulation the corporate supported, Illinois American can truly cost prospects greater charges to cowl 100% of the price of its municipal acquisitions–and, thus, spare shareholders that burden. Illinois and Aqua prospects have now paid greater than $260 million in greater charges to cowl dozens of these purchases. Study extra about water privatization at CUB’s particular web site CUBWaterTracker.com. 

The large measurement of Illinois American’s proposed fee hike is tied to the corporate’s municipal system buying spree in recent times. In truth, within the present fee case, Illinois American is attempting to downplay the value tag of its wastewater purchases by shifting $11.8 million of these extra prices onto water prospects. (There are extra water prospects to soak up such prices.) However CUB argues that permitting this might allow much more extreme system acquisition prices and unfairly saddle water prospects with bills from unrelated wastewater companies. 

An ICC evidentiary listening to within the case is scheduled for Aug. 10. 

CUB is Illinois’ main nonprofit utility watchdog. Created by the Illinois Legislature, CUB opened its doorways in 1984 to signify the pursuits of residential and small-business utility prospects. Since then, it has saved shoppers greater than $20 billion by serving to block fee hikes, safe refunds and combat for clear, low-cost vitality. For extra data, name CUB’s Client Hotline, 1-800-669-5556, or go to its web site, www.CitizensUtilityBoard.org.   

SOURCE Residents Utility Board