Illinois American wants to raise water rates

Frank Radosevich II

Residents and businesses in Peoria, Pekin and elsewhere across the state would see their water bills increase under a proposal to change Illinois American Water Co.’s rate structure.

Filed Friday with the Illinois Commerce Commission, the state’s utility regulator, the plan seeks a 20 percent water rate increase for the Peoria district and an 26.7 percent increase in rates in Pekin, as well as changes for all other company districts statewide.

The requested increases would not occur until the ICC regulatory hearing process is completed, which could take up to a year, and approved by the commission.

According to the company’s estimate, an average Peoria customer using 6,000 gallons of water a month would pay 17 cents more a day, or $5.24 more a month.

Officials with Illinois American Water say the hikes are necessary because of rising operating costs and pricey infrastructure improvements.

"Our rates are based on the actual cost of providing water service to our customers,"Dean Falkner, network operations manager for the Peoria district, said in a prepared statement. "The price our customers pay also reflects the investment our company has made to ensure our Peoria customers continue to receive the high-quality water and reliable service they have come to expect."

Illinois American Water says it has invested about $16.5 million in Peoria infrastructure since the last rate increase.

Some, however, are crying foul, saying the latest proposal to review water rates — the first since September 2002 — is unwarranted and further proof the city should have purchased the company when it had the chance.

"They’ve been socking it to the people Peoria for some time," said former at-large Peoria City Councilman Chuck Grayeb, an advocate of city ownership of the utility. "I think (not buying the company) was a gross blunder."

Throughout Illinois, the changes range from 5.8 percent in the Chicago-Metro District to 59.83 percent in the Champaign District. Only Lincoln would see a planned decrease in its rate, by 0.76 percent because new security technology has allowed the district to reduce its expenses.

Grayeb and others say local ownership would have provided the city control of an invaluable asset and, with time, a tool for economic growth. Additionally, supporters of the purchase say the city would have been more adept at managing rate hikes.

"Our basic argument was not that rates would be frozen … But I could not imagine the city raising its rates by 20 percent," 2nd District Councilwoman Barbara Van Auken said. "It’s the worst possible thing for people who are struggling."

The issue of pursuing a buyout of the water company is one the city council has debated at length in years past. In late 2005, the council voted 6-5 to end the city’s attempt to purchase the utility for $220 million, saying it was too expensive. The 1889 agreement between the company and Peoria, however, states the city can consider buying the water company every five years. The next chance is 2008.

Mayor Jim Ardis said although no one enjoys seeing a rate increase, the option of running the utility is not more favorable or economical for citizens.

"There’s a lot more work to be done to look into owning an investment like that. … It wasn’t the cash flow they interpreted it to be," he said, adding growing expenditures have obliged businesses across the board to boost prices.

Ardis said ultimately time will be needed to gauge how the proposed changes would affect customers and the city’s daily operations.

Frank Radosevich II can be reached at (309) 686-3142 or fradosevich@pjstar.com.