Brown County Water Utility is proposing changes to its water rates that could more than double water bills for Nashville Utilities customers, but lower them for BCWU’s direct residential customers.
BCWU, a private, member-owned utility, has filed a request with the Indiana Utility Regulatory Commission to raise the price of the water it sells to its 165 small commercial/industrial customers and to its one wholesale customer: the Town of Nashville.
BCWU’s rate consultant recommended a 14.24 percent rate decrease for the 5,293 residential water customers who are served directly by BCWU.
The consultant recommended a 35.56 percent increase for small commercial/industrial customers.
Nashville Utilities would see a 154 percent rate increase, said Town Attorney James T. Roberts. If the IURC approves it, Nashville’s approximately 1,300 water customers will bear that burden, he said.
The Town of Nashville buys all of the water it resells to Nashville Utilities customers from BCWU.
Rate increases are needed because revenue is insufficient to pay for operations, debt and other expenses required by state law, wrote BCWU attorney Peter Campbell King in his petition to the regulatory commission. Making these changes will raise revenue for the company overall by 8.83 percent, he wrote.
The company submitted more than 100 pages of financial data to the IURC to back up its request.
Water company board President Ben Phillips explained on April 24 that BCWU did a cost of service study earlier this year and determined that Nashville wasn’t paying its “fair share.”
It takes 40 percent of the BCWU water plant’s capacity to serve the town, and Nashville is only providing 11 percent of BCWU’s revenue, he said. That amounts to “subsidizing” water for Nashville customers, Phillips said. Under the proposed rate structure, Nashville Utilities’ part of the revenue would be bumped up to 24 percent.
The study also determined that there was an imbalance in what BCWU direct residential water customers were paying versus other types of users, which is why a rate decrease was suggested for residential customers, he said.
The average residential user of 4,000 gallons will see their bill decrease from $53.12 to $48.25 per month, Phillips said.
At their April 18 meeting, the Nashville Town Council OK’d hiring an expert at an estimated cost of $20,000 to $50,000 to attempt to dissuade the regulatory commission from approving BCWU’s petition. The hearing will include written testimony only, Roberts said.
“They want our customers to suffer and pay the price for a rate decrease for their customers,” he said.
On paying the expert to testify, “we’re going to have to bite the bullet on this, I think, because once this rate goes up, it ain’t ever going to go down,” Roberts said.
In the meantime, the town is again looking into alternate sources of water.
In times of emergency, it can use water from East Monroe Water Corporation, but it doesn’t often do that because of the cost and other factors, said Nashville Utility Coordinator Sean Cassiday. If the rate change takes effect, East Monroe water will be cheaper than BCWU water, he said.
However, East Monroe doesn’t want Nashville to draw more than 9 million gallons a month, Cassiday said. Nashville is buying 13 to 14 million gallons from BCWU now, he said.
Cassiday mentioned another possible source to the town council: looking for a grant to tap into Eastern Bartholomew Water Corporation’s pipes. The council and Roberts didn’t yet know if that would actually be possible.
At the April 18 meeting, the town council also approved spending an estimated $10,000 to $12,000 to prepare for a trial in federal court against Brown County Water Utility, in addition to money it has already spent on the case.
In June 2017, BCWU sued the town council in U.S. Southern District court over the rights to serve a large water customer: Hard Truth Hills, the new distillery owned by the Big Woods family of companies. Nashville later annexed the 300-some acres of land where Hard Truth Hills was being built; it had not previously had any water customers on it.
Nashville and BCWU are both claiming that they have exclusive rights to serve this development because of a 1961 federal act which protects utilities when they are paying back federal loans.
“BCWU’s legal defense of its service area is critical and necessary to its ability to repay existing long-term debt,” says written testimony by consultant Ben Foley in support of BCWU’s proposed rate changes.
Big Woods as a whole is Nashville’s largest water customer by far; in turn, Nashville is BCWU’s biggest customer.
The state utility regulatory commission ruled in February 2018 that Nashville could have Hard Truth Hills as its service territory. BCWU did not try to intervene in that case, according to the state’s ruling. However, the regulatory commission did direct the town to keep it updated on the status of the federal case.
There is still a chance that the federal case could be decided by a judge without a trial, but Roberts told the town council that he did not think that was likely.
Legal expenses on BCWU’s end were $190,505.70 from July 2017 to June 2018, according to IURC paperwork.
Speaking to the council, Roberts called the lawsuit “really predatory” and said that BCWU was “trying to raid one of our customers and make us pay the tab for it.” He said the fact that they are involved in this lawsuit is one point they could make to the IURC in the rate increase argument.
Phillips said on April 24 that the wholesale water rate increase proposed for Nashville Utilities is “absolutely not, in any way, shape or form” in response to the federal lawsuit. “It has nothing to do with Big Woods. It has everything to do with 40 percent (usage) and 11 percent (revenue from the town),” he said.
“We knew we were off balance with the town, we knew they were just about costing us money, but when we did that cost of service study, we confirmed that they were really costing us money.”
Read more in the May 1 issue of the Brown County Democrat.