The Indiana Supreme Court has cleared the way for Indiana American Water Co. to purchase the city of Lake Station's water utility in a $20 million deal that's been on hold more than a year.
The Supreme Court on Tuesday unanimously rejected a petition to take the case after the Indiana Court of Appeals had ruled in favor of the sale in June.
Lake Station Mayor Christopher Anderson said the city expects the sale to close on Oct. 22.
The petition to transfer the case to the Supreme Court was made by the town of Schererville, which, along with the city of Crown Point and the state Office of Utility Consumer Counselor, had argued that the $20 million purchase price was too high by more than $7 million, the value of a Lake Station treatment plant included in the sale but that Indiana American would only use in emergencies after it begins supplying Lake Station residents with Lake Michigan water.
The Appeals Court's June decision had upheld a 3-2 vote in August 2018 by the Indiana Utility Regulatory Commission to approve the sale. But the OUCC and the municipalities objected on behalf of current Indiana American customers, arguing that the cost of the Lake Station plant should not be born by existing rate payers.
"Roughly $8 million of the purchase price includes a treatment plant that the consumer parties showed Indiana American would not use and would not be reasonably necessary to provide water service to its customers," the appellants stated in a brief filed before the Appeals Court.
"Rather, the commission found the plant is used and useful to the seller of the plant, an entity that will not operate the plant, will not provide water service to Indiana American's customers, and will not own the plant for which Indiana American customers will be paying a return," the brief stated.
But Indiana American argued that state statute required it to consider property that "is" in use and useful, whether or not it "will be" used and useful after it is purchased. The Appeals Court agreed with the water company's argument.