HAMMOND — Five Northwest Indiana communities have accused the city of Hammond and its water department of breaching their wholesale water contracts when the city council hiked rates earlier this month, according to a Nov. 20 lawsuit.
The 154-page court filing in Lake Superior Court requests a judge to issue a declaratory judgment in favor of the communities — Highland, Whiting, Munster, Griffith and Dyer — and deem the city's rate hike ordinance as invalid.
The Hammond Common Council voted unanimously Nov. 16 to increase Hammond residents’ water bills from 44 cents to $1.90 per 1,000 gallons starting Jan. 1, with increases to $2.10 and $2.30 in 2022 and 2023.
At issue is how the increase automatically triggers increases to Hammond’s wholesale customers in Indiana, including Munster, Griffith, Dyer, Whiting and Highland.
The municipalities contend Hammond and the Hammond Water Works Department were not entitled to raise rates, the lawsuit states.
The filing states the city has no right because contract language requires the rate increases be approved by the Indiana Utility Regulatory Commission.
The Hammond Common Council voted in 2019 to remove the city's water works department from under jurisdiction of the IURC, giving more local control over bond debt and rate increases.
Attorneys for the municipalities are seeking a judge to issue a declaratory judgment in their favor, saying their contract requires rate increases to be approved by the IURC. They've asked a judge to rule in their favor on the differences in interpretations of the contract language, the suit states.
Contracts for Whiting, Highland Munster lay out that any single flat rate increases must be approved by the IURC.
The Highland, Whiting, and Munster Agreements contain no other provisions regarding modification of water rates," the lawsuit states. "As such, in accordance with the Highland, Whiting, and Munster Agreements, the only way that HWWD can modify the rate charged to Highland, Whiting, and Munster is to make a request for a rate increase to the IURC and obtain the approval of same through that process."
Kevin Smith, Hammond attorney, said a compromise is in the works to avoid drawn-out litigation.
“We are working on an agreed stay of the litigation while Hammond and the customer communities continue to negotiate," Smith said.
"The mayor continues to meet with the customer communities to find a solution on the rate increase that will both satisfy the need of Hammond’s waterworks to improve and repair the infrastructure on a system that has not had the benefit of a rate increase since 1985 and the needs of the customer communities to be able to plan for such an increase and the immediate impact the rate increase has on their budgets."
Citing estimates, McDermott said Hammond charges many communities 50 cents per 1,000 gallons. For comparison, Whiting charges $3.02, Griffith $3.78, and Highland $1.61. Munster charges $3.16.
Highland water department attorney Robert Tweedle has said he, like Mayor Thomas McDermott, he would rather see this worked out outside of a courtroom, but filing a petition now preserves their rights to fight this rate increase if negotiations fall flat.
The hike is effective Jan. 1, 2021.
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