AUBURN — It would take votes by four of the seven Auburn Common Council members to start the process of ending state regulation of the city’s water utility.
It would take 276 signatures by city residents to force a ballot referendum on that question.
Auburn City Attorney W. Erik Weber offered those facts this week in a memo to the council on water deregulation.
Councilman Kevin Webb asked Weber for a report on the process of ending regulation of the city’s water rates by the Indiana Utility Regulatory Commission.
In 2018, Auburn raised water rates by 43% — the city’s first increase since 1999.
The total cost of approving Auburn’s 2018 water rates reached $230,828 for consultants, legal counsel, bond counsel, state commission fees and other expenses, Auburn Clerk-Treasurer Patricia Miller told council members in January.
Without the high cost of the state approval process, the city could adjust rates more frequently and by smaller percentages, according to Webb and others who support his idea.
Webb believes the city might be able to adjust its rates downward in the near future, if the council could do so without the expense of IURC approval.
The city installed approximately 5,000 new water meters for customers last year. Webb said they are more accurate than the older meters, which were under-reporting water use by an average of 11%. Correct readings could increase revenue and permit a rate reduction.
Only Councilman Mike Walter has objected to ending IURC regulation. He has vowed to lead a petition campaign against the change, seeking to submit the question to voters.
Walter led a successful petition drive against water deregulation in 1998, and the city’s voters chose to continue state regulation by a margin of 65% to 35%.
To force a ballot referendum, opponents of deregulation would have to collect signatures equal to 2% of the county’s vote for secretary of state in the most recent election. Weber calculated that requirement as 276 signatures.
Arguing for continued state regulation, Walter points to the most recent rate increase. Based on a consultant’s recommendation, the city council initially approved a 50% increase in water rates. The IURC reduced it to 43%.
Weber’s memo advises that without state regulation, the Auburn water utility could change rates, issue debt and start new construction and improvements more quickly. It would avoid the expenses of a state rate review, including witness testimony by consultants, accountants, engineers and attorneys that would be charged to ratepayers.
The responsibility for reviewing rates would lie with the city council, Weber said.
“Customers with voting rights have the oversight over the governing council or board,” Weber added.
Weber said the council could pass an ordinance saying it “is capable of appropriately establishing rates and charges, determining appropriate levels of indebtedness and otherwise operating the city’s water utility without the expense associated with the IURC’s jurisdiction.”
The council would need to conduct two public meetings before taking a final vote to pass a deregulation ordinance. He encouraged the council to schedule those meetings at different times of day, on different days of the week and at different locations.
“It would be appropriate and necessary to present evidence at the public hearings in support of the position of the council,” Weber advised.
More than 30 days before a final vote, the council must mail written notice to every water ratepayer of its intention to deregulate.
If passed, the deregulation ordinance would take effect within 60 days.
Opponents of the change would have 60 days to gather petition signatures seeking a voter referendum.
If a referendum occurs, Weber said the ballot question might read: “Shall the municipally owned utility (Auburn Waterworks) be taken out of the jurisdiction of the Indiana Utility Regulatory Commission for the approval of rates and charges and of the issuance of stocks, bonds, notes or other evidence of indebtedness?”
During Tuesday’s council meeting, Webb said, “The issue of the water meters is just one little point of getting out of the IURC,” among several reasons to do so.
Weber called the IURC review process “a total repetition of what we already do” as a city council. He added, “The voters then can have oversight over the council.”
Councilman Mike Watson said he also favors taking the water utility out of IURC oversight.
Walter objected to a charge from Weber for preparing his report on the topic.
Weber said he wrote the memo at Webb’s request, and no additional authorization is needed.
“If any council member wants an ordinance, all you have to do is ask,” Weber said.