Cost of water varies widely throughout Calumet Region

2013-01-27T00:00:00Z 2013-01-27T23:09:06Z Cost of water varies widely throughout Calumet RegionChelsea Schneider Kirk and Marisa Kwiatkowski Times Staff Writers nwitimes.com

The amount region residents pay for water flowing from their faucets varies widely between communities, a Times analysis shows.

The Times' analysis of municipal water rates in Northwest Indiana and Chicago's south suburbs found vast differences in the amount residents pay for water, the way those rates are calculated and whether the rates are state-regulated.

The cost of water has been a matter of debate in recent months.

Chicago Heights sued Hammond, its Board of Works and the Board of Trustees for the Hammond Water Works Department in October after the two municipalities failed to come to an agreement on the rate Chicago Heights would pay to buy its water from Hammond.

Hammond wanted the Illinois community to pay $2.20 per 1,000 gallons of water, up from the 57.5 cents per 1,000 gallons Chicago Heights had paid for the past 30 years. Chicago Heights, in turn, also provides some of the water it gets from Hammond to other Illinois communities.

Chicago Heights argued the new rate was unreasonable, while Hammond officials contended it was fair and still was less than the amount Chicago Heights charged its own water users.

Hammond Mayor Thomas McDermott Jr. said the communities reached a settlement in principle earlier this month in which the Illinois community verbally agreed to pay the increased rate of $2.20 per 1,000 gallons.

 

The cost of doing business

Several region officials told The Times the variance in water rates is based on the cost to get it to the consumer.

Highland, which purchases water from Hammond, approved the first water rate increase for its residents in 20 years in 2012. The town pays Hammond .50 cents per 1,000 gallons for water and, in turn, sells it to its residents. The base charge for a typical residential user is $11.50 per month, and the town also charges $1.61 for each 1,000 gallons of water consumed, said John Bach, Highland's public works director.

He said the base charge is meant to cover the fixed cost of providing water.

Crown Point purchases its water from Indiana American Water Co. and uses a financial consultant to study the city's water rate. The city raised water rates last year to $9.92 per 1,000 gallons in response to an increase by Indiana American Water Co., said Crown Point Clerk Treasurer Patti Olson.

A typical residential user in Crown Point pays at least $14.88 per month for water.

"It's not just paying for water," Olson said. "It's paying for the distribution and transmission of that water. We have to pay for maintenance."

Cedar Lake residents pay three different water rates depending on where they live, a Times analysis shows.

Residents on the west side of Cedar Lake pay the most — $9.01 per 1,000 gallons. Residents in the Crystal Oak area pay $7.49 per 1,000 gallons, while those in Robin's Nest pay $5.34 per 1,000 gallons.

Town Manager Ian Nicolini said the town took over rates that already had been established by water companies that owned the utilities in those areas. All three utilities have separate infrastructure, and some residents still have private wells, he added.

Nicolini said the town uses water as an economic development incentive. As the town continues to develop, the extension of water follows.

Schneider, on the other hand, is the only region municipality to charge its residents a flat rate per household — regardless of the number of gallons used.

Schneider Clerk-Treasurer Jenny Beier said the town is working with the state to secure funds to install water meters so officials can charge residents based on their actual use instead of charging a flat fee.

"We've found that without limits, people use whatever they want," she said.

In the meantime, Beier said town officials likely will increase the flat fee within the next few months. The current rate of $38.33 per month is based on a 2006 rate study and has not changed since 2007. Other similar-sized municipalities are charging their residents more than $100 per month, she added.

Beier said the council has not voted on the increase, but she expects it will go up by at least $10 per month.

The Schneider Town Council determines its own water rates, but some region municipalities must get approval from the state for their rates.

 

Optional rate regulation

Municipalities operating their own water utilities can choose to withdraw from state regulation and set rates locally, said Danielle McGrath, spokeswoman for Indiana Utility Regulatory Commission. The majority of the municipal water utilities — 359 statewide — have made that choice.

In Northwest Indiana, the two latest communities to withdraw from state regulation were Munster in 2005 and Highland in 2008, state commission records show.

"The opportunity to withdraw is written into statue," McGrath said. "Utilities have the opportunity to do that if they so wish."

Thirty-four municipal water utilities have chosen to look to the commission to set rates and charges — including Cedar Lake, East Chicago, Hammond, Michigan City, Ogden Dunes and Schererville, according to commission records. The Valparaiso Lakes Area Conservancy District also is under the commission's regulation.

Investor-owned companies, such as Indiana American Water Co., are required to go before the commission for rate changes unless the company serves fewer than 300 customers.

Ogden Dunes Water Manager Jim Kopp said the town may -- in the future -- withdraw from the commission and decide rates on a local level. Kopp said the last time the town went for a rate increase it cost about $50,000.  

"It would be much more cost-efficient to save the money we pay the IURC and just have the Town Council approve a small rate increase of 1 or 2 percent every year," Kopp said. "It doesn't hurt people so much."

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