Hru Khuenaten, a longtime Gary resident, is worried about his upcoming water bill. 

He’s far from alone. 

Indiana American Water Co. has proposed a 31% increase in monthly water rates, a move that would raise average monthly bills by $14. This proposed hike has provoked a wave of opposition from Gary residents, many of whom say that the additional monthly expense is unsustainable for those on fixed incomes or earning minimum wage. In Gary, where 78% of the population is Black, the median household income is roughly $34,000 per year, according to census data. 

“I’m fortunate to be working,” Khuenaten said. “But there’s many, many people who are not and who are low wage earners. So how does Indiana Water feel like they can do that to us?” 

Research has shown that Black communities are disproportionately impacted by the rise of water rates in the U.S. A 2010 Environmental Protection Agency report found that lower and higher income households “will find it increasingly more difficult to pay their water and wastewater bills” because of competing utilities such as higher energy and food costs. Additionally, when customers cannot afford their water bills, utilities take in less revenue, which makes it harder to fund needed infrastructure improvements.

“I understand and am well aware that improvements and upgrades need to be made, but it should not be off the backs of the people who can least afford it,” said Corliss Jones, who lives in Gary as a caretaker for her mother.

In addition to drawing backlash from residents, the proposal has also been criticized by residents, local nonprofit organizations, and city and state representatives.

“Water is not a luxury, it’s a necessity,” state Rep. Vernon Smith, D-Gary, told Capital B. “We have no other choice. We have to speak out before it is finalized. Come to hearings, make phone calls, and write letters in opposition.”

Smith, along with a delegation from Gary including state Reps. Earl Harris and Ragen Hatcher and state Sen. Eddie Milton have written an official letter opposing the increase, saying that the move is an attempt to pad the company’s profit margin for shareholders and called for another public hearing.

“It is clear the reason why IAW must come and ask for this rate hike is to maintain their profit margins while ratepayers fund their improvements,” the letter said.

In July, a group of more than three dozen residents from Gary, including Mayor Jerome Prince, shared their grievances with the Indiana Utility Regulatory Commission.

“It is an insult to expect customers to pay for a company’s growth expansion,” said one Gary senior citizen in a two-page, handwritten letter to the commission.

Indiana American Water, the state’s primary public water and wastewater facility, serves more than 1 million residents, including 250,000 customers in Gary and Northwest Indiana. The company’s recent rate hike proposal, if approved, would leave financially strapped residents without access to a more affordable alternative. The first phase of the increase would take effect in January 2024.

A final decision from the IURC is not expected until later this year, according to the Indiana Office of Utility Consumer Counselor.

“Basic necessities such as clean water should not be something that isn’t accessible and affordable for all members of our community, no matter their income level,” Sandra Moseley, a Gary resident, said. “It is crucial that the commission considers the negative impact on customers and ensures that the utility provides high-quality service and addresses customer concerns effectively.”

Should Indiana American Water’s rate proposal receive approval, the company plans to implement the increase in three stages: 12% in January 2024, by 8% in April 2024 and by 9.5% in April 2025.

“Many of the residents in this area are retired elderly persons on fixed incomes,” Jones said. “As one of the most economically depressed areas in this nation, it would not be humane or fiscally responsible to continue with this particular request of a 31% rate increase.”

Looking Ahead

IAW’s proposal added a Universal Service Affordability Tariff, which is designed to give tiered discounted rates to eligible low-income households based on their income. 

Ben Inskeep, program director for consumer and environmental advocacy organization Citizens Action Coalition, said that without programs like the Universal Service Affordability Tariff, inequities in income and payments can occur. 

“Low-income customers are being charged too much money for their water service in a manner that’s subsidizing richer customers, who use a lot of water for discretionary purposes like watering their lawns [and] outdoor water usage, as opposed to just meeting their basic essential needs,” said Inskeep. 

The discount, which may be changed or rejected completely, is for those with household incomes at or below 150% of the federal poverty line. Household incomes 50% or less of the federal poverty line could qualify for an 80% discount. Those with incomes between 51% and 100% could receive a 50% reduction on their water bill, while incomes at 101% or above the poverty line could be eligible for a 30% discount.

IAW estimates that out of nearly 54,000 households that are eligible for the tariff, only 10% of customers will follow through to apply for the program. 

Inskeep said this is because people are unaware of the existing energy and water assistance programs.

“One of the challenges is that you have to proactively apply to get this tariff,” Inskeep said, adding that annual reapplication is required for those who are approved. “So there is a big difference between the folks who are eligible to apply versus the folks that are aware of it, take the time out of their day to apply for it and get accepted.”

The Indiana Office of Utility Consumer Counselor, or OUCC, is the state agency that represents consumers in cases before the Indiana Utility Regulatory Commission. Indiana American Water’s last proposal in 2019 requested an 8.2% rate increase, but settled with the OUCC for 7.9%. This summer, the OUCC recommended limiting the IAW’s 31% increase to about 6.6%.  

For Gary residents already strapped for cash, even a minimal increase can prove to have costly consequences. In 2015, 1 in 5 customers in Gary had their water services disconnected for nonpayment of bills, according to the U.S. Government Accountability Office. 

“Even when you start talking about a $10 difference, or a $5 difference,” said Smith, the state representative. “It affects the whole of the community.”