Bargersville Water – A rational perspective

I have lived in WRT since 1973, and have been a customer of Bargersville Utilities since 1973, and yes, we do have very good water. Having lived in the area for 37 years, I have seen a number of issues and disagreements between Bargersville and the City of Greenwood. However, I do not understand why the Bargersville Town Council would take such financially punitive action against the citizens – customers in WRT, especially during this very difficult economic time of high unemployment, record mortgage foreclosures, and job insecurity.

I am sure that some of you are aware of HB1107 that was proposed this year. One of the sponsors was our own Rep. David Frizzell. In that, our legislators felt that any rate differential greater than 25% between inside and outside customers could trigger a possible review by the IURC. If 25% is the level that our legislators found to be unacceptable, then the rate differences currently proposed by the Bargersville Town Council would clearly cause them concern.

According to the Indiana Utility Regulatory Commission Report to the Regulatory Flexibility Committee of the Indiana General Assembly – 2009

Page  114  -  Outside-City  Customer  Rates

Many municipal utilities provide service to customers outside their corporate boundaries, which can create beneficial economies of scale and rate stability to the Municipality.

However, many municipalities charge outside-city customers higher rates or a surcharge, with premiums ranging from 5% to 50% greater than rates paid by inside city customers for the same service.

Different rates between customers located inside and outside a municipality may raise questions about whether the non-city rate is cost-justified and non-discriminatory.

“A corporate boundary is usually not the same as a natural boundary such as a river or mountain, where crossing to the other side may increase the cost of providing service. With corporate boundaries, the imposition of higher rates or a surcharge may be a device to stimulate support for annexation, or may simply represent revenue enhancement. It may be difficult to support different dollar amounts for inside-city and outside-city water rates since rates approved by the Commission must be cost-justified and nondiscriminatory.

When municipal utilities opt-out of the Commission’s jurisdiction, customer-citizens of that municipality have a voice in how the utility is operated when voting for local leaders. However, customers located outside a municipality’s corporate boundaries cannot participate in the local municipal elections and, therefore, have no input. In effect, they are subject to “taxation” without representation. One possible remedy might be to provide the Commission with limited jurisdiction over municipal water rates charged to outside-city customers where a surcharge is assessed, even when the municipality has opted out of the Commission’s jurisdiction. Another alternative would be for the IURC to obtain oversight authority that has traditionally resided solely with municipalities.”

Finally, I suggest the Bargersville Town Council consider their decision on this rate increase and their options wisely. I understand that the laws allow for differential rates. However, it requires they be reasonable, just, non-discriminatory, and based on the cost of providing that service. None of those criteria are satisfied with the current rate proposal. I am normally not one who is in favor of more government regulations or oversight. However, I have no doubt that if this proposed rate structure is passed as-is, Bargersville Utilities will be a poster child for regulatory reform this next legislative session.