Illinois American Water files rate increase request

[October 28, 2011]  On Thursday, Illinois American Water filed a rate case with the Illinois Commerce Commission, requesting an increase in rates of approximately $5.34 per month for a typical residential customer using 4,500 gallons of water per month in the Lincoln District service area. Rates will not change until the fall of 2012, following ICC review and approval.

The company's request would increase the monthly bill for a typical residential customer to approximately $36.76 a month (excludes fire protection charges, municipal taxes and franchise fees, which vary by community).

The water company cannot increase rates on its own. The process before the ICC typically lasts 11 months and requires the company to provide thousands of pages of documentation to show that the rate request is needed.

Illinois American Water's ongoing investment in water system improvements and the increasing costs of delivering quality, reliable service to customers are the main drivers behind this rate request according to the compnay. The proposed increase reflects approximately $180 million in investments across the state, including approximately $3.1 million in the Lincoln District, not reflected in current water rates.

"We will continue to make the necessary investments in our local water system to help ensure water quality, service reliability and fire protection for our customers," said David Schonauer, operations superintendent for the Lincoln District.

Schonauer said the $3.1 million in investments includes replacing and installing fire hydrants, valves, meters and more than 2,500 feet of water main.

Upgrades made in the water treatment and delivery systems enhance water quality, water pressure and fire protection. Construction of a new pumping station at the south water treatment plant ensures reliability to customers. The pumping station will use energy-saving technology through the installation of variable frequency drive motors, which ensure motors are operated based on current pumping demands.

There is no immediate impact to customers. Following the filing on Thursday, a comprehensive review process by the ICC is the next step in the rate-making process. Public hearings and opportunities for public comment are part of the process, under the direction of the ICC.

"The regulatory process considers the needs of the customer and the company's ability to reinvest in the community and deliver dependable water service," said Karla Olson Teasley, Illinois American Water president. "Illinois American Water is widely recognized for meeting and even going beyond local, state and federal quality standards. At about a penny per gallon, water service remains a good value for our customers."

Illinois American Water's rates are based on the full cost of providing water service, as reviewed by the ICC.

Many communities are facing the challenges of aging water systems and associated rate increases. The U.S. EPA says the nation's water utilities will need to make more than $335 billion in infrastructure investments -- $15 billion in Illinois -- over the next 20 years to replace thousands of miles of pipe and for upgrades to treatment plants, storage tanks and other assets to ensure public health.

[Text from file received from Illinois American Water; LDN]