Water rate increase: Bloomington reaches settlement “in principle” with IU, other rate case opponents

CBU drinking water station set up on 6th Street in connection with the Lotus Festival last weekend.

A planned water rate increase for Bloomington utilities (CBU) customers will likely be put in place as planned on Jan. 1, 2022.

That was the big news out of Monday’s regular meeting of Bloomington’s utilities service board (USB).

At Monday’s meeting, CBU director Vic Kelson told the board that a settlement in principle had been reached last week with all the interveners in the case, which include Indiana University and Washington Township Water Authority.

Kelson told the USB he could not discuss any details, but the filing of the settlement with the Indiana Utility Regulatory Commission (IURC) is supposed to be done by Oct. 6, with a hearing set for Oct. 22.

The case for increased water rates is currently going through the IURC review process, after the Bloomington city council’s mid-March approval  of the higher rates, which are to be phased in, with increases in 2022 and 2024.

Residential CBU customers will pay a total of 22 percent more over the course of four years.

Other customers like Indiana University, will see higher increases under the proposal, around double what residential customers will see.

The 22-percent increase brings the residential customer rate to $4.54 for every 1,000 gallons.

The difference in rate increases for different customer classes was based on a cost of service study, done by a CBU consultant, which concluded that residential customers have been subsidizing other classes of customers, like IU.

At the mid-March city council meeting, when the 9–0 vote was taken, IU assistant vice president for utilities Keith Thompson said IU intended to intervene with the IURC.

Thompson told the city council, “IU strongly objects to the large rate increase on the assumption that Indiana University is not currently paying our fair share of CBU water infrastructure costs.”

Until the settlement agreement is filed with the IURC, it won’t be clear what rate Indiana University will pay for its water. In some recent skirmishing between CBU and IU during the IURC review, CBU’s hoped-for timeline for the enactment of the increased rates appeared to be somewhat in jeopardy.

CBU filed an objection to a proposed settlement that included “less than all the parties” because CBU itself was not one of the parties.

CBU objected that a two-month delay would deprive it of about $250,000 in additional revenues.

From CBU’s brief in opposition to that settlement: “If relief were delayed by two months, that would be nearly a quarter of a million dollars that Petitioner [CBU] would lose by the [IURC] presiding officers allowing the procedural schedule to be disrupted.”

The brief continues: “That quarter of a million dollars could fund several capital projects proposed in this case, which in itself demonstrates the prejudice to Petitioner [CBU] of modifying the procedural schedule.”

The settlement that’s now been reached includes all the parties, which means it includes CBU.

At Monday’s USB meeting, Kelson updated the board on the recent bad taste and odor problem with Bloomington’s tap water.

There’s no danger to human health, and the problem appears to be subsiding—due to a natural change in conditions at Lake Monroe and the effect of adding more powdered activated carbon (PAC) to the water, according to Kelson.

The B Square intends to provide a separate report of Monday’s USB discussion about Bloomington water’s recent bad taste and odor.