Basic Legal Requirements of Water and Sewer Utilities
________________
November 14, 2002
Bette
J. Dodd
Lewis
& Kappes, P.C.
I. Types of Water and Sewer
Utilities in Indiana
A. Investor Owned
B. Municipal
C. Not-for-Profit
D. Conservancy Districts
E. Regional Water and Sewer Districts
II. Basic Legal Requirements for Rate Setting
A. Just, reasonable, non-discriminatory – per
statute and common law
B. Based on cost-of-service theory – can have
different classes as long as cost justify
C. Application of requirements vary
III. IURC Jurisdiction
A. IOU, not-for-profits, municipal waters
B. Rate Procedures
1. Evidentiary hearing
2.
Standard
ratemaking methods
3.
Utility has
burden of proof
4.
Appellate review
of administrative procedure
5.
IURC given deference because of expertise
C. Removal from IURC
1. Municipal water, not-for-profit utilities
2.
Must follow
statutory procedures
3.
Ratepayer
challenges possible
4.
Eliminates IURC
authority over rates and bonding
IV. Local Regulation
A. Municipal
sewers, regional districts, conservancy districts
B. Utilities removed from IURC jurisdiction
C. Procedures
for municipal water and sewer rates
1.
Notice of
increase
2. Public
hearing v. evidentiary hearing
3. Discretion
v. standard ratemaking methods
4. Burden
of proof shifts
5. Legislative
procedure
6. Limited
review procedures
V. Recent Trends
A. Increased costs
1. CSO and Clean Water Act Regulation
2. Safe drinking water standards – well head
protection
3. Aging infrastructure
B. Desire to keep rates low for voters
1. Shift costs through rate design
2. Outside
surcharges
VI. How to Protect Yourself
A.
Keep informed
B.
Get involved at
the beginning
C.
If large enough
user – may want to contract for service