Indiana American Water Co.’s decision to increase water rates recently took effect, to the surprise of some Gary residents. The rate hike, intended to cover operating costs and infrastructure investments, sparked protests and concerns about affordability and quality of service last fall. Residents say that the new increase, while less than the company initially proposed, is still burdensome for those on fixed incomes.
Indiana American Water, the state’s primary utility company, recently readjusted water rates after an 11-month review from the Indiana Utility Regulatory Commission in February. Gary and Northwest Indiana residents using 4,000 gallons per month can expect their monthly bill to increase approximately $5 by May, IAW spokesperson Joel Reuter said.
But Gary residents like Hru Khunaten say more changes are needed.
“What about the water quality?” Khunaten said. “If they raise the rates, they need to raise the water quality too.”
Last fall, Indiana American Water proposed a 31% increase in monthly water rates, which would’ve raised average monthly bills by $14. The proposed increase provoked a wave of opposition from Gary residents and local politicians, including state Rep. Vernon Smith, D-Gary, who said the additional monthly expense is unsustainable for those on fixed incomes or earning minimum wage.
The increase, which will help with water operations and investments, will be implemented through a three-step process through May 2025. The first rate hike, approved last month, raised average customer bills by $1.69. Upcoming increases will add $5.69 in May and $5.14 in May 2025, totaling a $12 increase by next year.
“That’s it?” Gary resident Thomas Payton said, when informed of the incremental increase by Capital B Gary. “Well, I’m still against it. It’s not like we’re getting great water service.”
In Gary, where the median household income is $34,000, even a minor rate hike can pose major challenges. According to the U.S. Government Accountability Office, 1 in 5 customers in Gary had their water services disconnected for nonpayment of bills in 2015, underscoring the city’s vulnerability to financial pressures.
Payton, 70, said he and his wife, 73, are on fixed incomes that have to “put a little rubber” in his checks to stretch between all his price-increasing utilities.
“Me and my wife are on Social Security,” he said. “What’s going to happen after the last increase, and when are they going to come back for another bite of the apple?”
“For a residential customer in our Northwest Indiana Operations, using an average of 4,000 gallons per month, it changes from the February 2024 rate of $46.57 to approximately $52.26 on average per month in May,” said Reuter, the IAW spokesperson.
“The new rates are based on the actual cost of providing service and were reviewed and approved by the IURC,” he said.
The rate adjustment will impact IAW’s estimated 81,000 customers in Northwest Indiana, including Gary, Merrillville, Hobart, and others in Lake County, Reuter said.
The new rates also allow for up to 1,500 gallons a month to be used for a fixed $20 monthly charge.
As far as alternate avenues of financial support, the Low Income Household Water Assistance Program offered through the Indiana Housing and Community Development Authority will end on March 31. The assistance program is designed to provide one-time financial support for households that make 60% of the state median income or less.
The Universal Affordability Tariff, another proposed measure by IAW that would’ve discounted water rates based on household income, was rejected by the IURC.
The tiered tariff, which gained support from customers during the proposal stage, would have provided a 30% discount for customers at 100% to 150% of the federal poverty level, 50% for customers at 50% to 100% of the poverty line, and 80% for customers at 0-50%.
Ben Inskeep, program director of Citizens Action Coalition, said customers would have benefited from programs like the Universal Affordability Tariff.
“We are disappointed that the Commission denied Indiana American’s proposed Universal Affordability Tariff, but hopeful that this low-income program will be redesigned and refiled with the Commission in the near future,” Inskeep said. “Indiana American had proposed this program to provide tiered bill discounts to residential customers based on their income level to help ensure that essential water service was affordable to all of its customers.”
The company’s rate adjustment request, filed on March 31, 2023, was driven primarily by nearly $875 million in water and wastewater improvements.
“They’re killing you like a death by a thousand cuts,” Payton said. “It’s a constant assault on the poor man.”