Peoria Pundit

Item 4: PRESENTATION by ILLINOIS AMERICAN WATER COMPANY.

Dean Faulkner on IAWC request for water rate increase. ICC will hold hearings with sworn testimony. Process will last 10 months. Showing slides of smiling employees with their awards. S, obviously, it would be WRONG to oppose their huge rate increase.

“Our customers are satisfied.”

“We did notice odor problems created by algae.”

Carla (?) on the rate case: “It’s good for the water company to periodically update the city council. Not sure when we were hear last, but it was too long.” My two cents: This is the biggest line of BS I’ve heard in a long time. Geeze.

Best practice is to review rates every two to three years. Avoid large adjustments after many years go by.

Project H20 helps poor people pay their bills.

Ed Grubb (SP): Manager of Rates and Regulations. 1st rate case we’ve filed in five years. 6th filing in last 15 years. If fully approved, 6,000 gallon user, 17 cents per day. Wants a return on equity. Owners want 11.25 percent. They’ve “invested $16.5 million in Peoria.

Carla: She’s talking now about all the “partnerships” IAWC has with Peoria, like United Way, March Madness, Center for Prevention of Abuse, etc. Annually contribute more than $100,000 to Peoria. Crime Cameras, made a donation.

Council member Barbara Van Auken: I retired from a utility (Cilco). I know something about these rates cases. Costly and complex. Why do it that frequently? Carla: Enormity of the case is not so great. Large rate increases make it hard for customers to budget.

Van Auken: Has any rate increase request every been approved 100 percent. Grubb: Only one out of 35 he’s been involved with.

Van Auken:Current return on equity? Grubb: Authorized, 10.27 percent. Current is less than 5 percent.

Council member Bob Manning: Isn’t the 20 percent request the largest increase in past 27 years. Grubb: Not sure. Manning: It is. Average of those five increase is 11 percent. You are really outdoing yourself. On the heals of Ameren Cilco, you look good. 15th rate hike in 32-33 years.

April 2005, statement was no rate increased planned through 2009. In 11th hour of due diligence, came back with statement made seeking 8 percent in a few years. So such a big difference

The 20 is base rate. Residential comments would be less, closer to 15. Since then there have been significant improvements and paying more for power and chemicals. Slow decline is use of residential customers, has an impact on billing.

The rate change will be in 2008.

Manning: “$4.5 million sounds like a lot but with your revenues it’s not really that significant an investment.” Also, older mains tends to be those lines that work better.

Carla: “This will be scrutinized very closely by the ICC .. This is not a slam dunk by any circumstance. “

Last hike, was about 13.3 percent. Was due to homeland security expenses. If that still an ongoing expense for you.”

Still ongoing. Still some technology invesgments in security. Labor costs lower through.

Manning: Wouldn’t added security costs level off after ramp up?

Manning gets them to admit roll back on security costs was 1 percent.

Peoria is still in a single tariff group? Peoria combined with Pontiac, Alton, etc. which means everyone is paying same rates. Is it not true Peoria is subsidizing other areas? Answer: Yes. It’s designed to spread out costs.

Manning: We have many other corporate citizens who do what IA has done and more.

Nichting: You cannot unilaterally raise rates without permission, correct? Also asks if the annual rate increases out to 3 percent. Also asks them how much their labor and and health care costs. My two cents: Nichting is carrying their water for them? Who’s side is this guy on? He ought to get a paycheck from them.

“I don’t want to put words in your mouth …”

But that’s exactly what he’s doing.

Sandberg: When did IA go from quarterly to monthly bill? Not sure charts IAWC are using correct charts.

Sandberg: Other cities in our tariff area are less dense. It costs less dense to provide water service to denser communities where homes are closer. More customers per mile of water main. IAWC isn’t relay sure.

Sandberg: Did IAWC secure from ICC a qualifies infrastructure pipe program. Added $1.35 surcharge. That was added to bills. Already charging guests, and pays for some other things they just claimed they need to rate increase to pay for. Surcharge will go back to zero is base rate increased. If we get 20 percent, take off the 4.5 percent surcharge. What prevents IAWC from unilaterally adding surcharge again. They would need to go back to ask for new surcharge.

Spears: We are using less water per household? Because of people per household, or people using less water domestic use? Answer: Number per household is dropping. Significant impact from low flow fixtures.

Mayor Ardis: “We are not the ICC … But some of these questions may be tougher than you would get from the ICC.”