AUBURN — Auburn Councilman Kevin Webb thinks the city may find a windfall from its new water meters.
To take advantage, he believes the city’s water utility should opt out of regulation by the Indiana Utility Regulatory Commission.
Webb explained his idea at Tuesday night’s meeting of the Auburn Common Council at City Hall.
Last year, Auburn replaced approximately 5,000 older water meters with new devices that can be read remotely. Webb said the older meters were under-reporting water usage by an average of 11%.
If the new meters bring in more revenue than expected, Webb would like to consider reducing water rates.
In June 2018, Auburn raised water rates by 43% — the city’s first increase since 1999. The Indiana Utility Regulatory Commission reduced the city council’s original proposal of a 50% increase.
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 said Wednesday.
Webb said Tuesday that the high cost of having a rate increase reviewed by the state commission leads to postponing increases.
Without IURC regulation, the city could look at modest rate increases every couple of years “instead of waiting 19 years to hit everybody with a big raise in the cost of water,” Webb said.
Webb said the state commission plays an appropriate role in overseeing rates for privately owned utilities, but most municipalities are not regulated by the IURC.
“I think the question’s valid. The answer is yet to be determined,” Mayor Mike Ley said about the possibility of reducing water rates. He said it may take a few months to accumulate good data on whether the city is taking in more water revenue than expected.
City Attorney W. Erik Weber said he will prepare information for the council about the process of removing water rates from IURC jurisdiction.
Councilman Mike Walter objected to the idea of ending state regulation of water rates.
“I will not hesitate to do a petition for a referendum if the council attempts to once again opt out of the IURC,” Walter said.
In a May 1998 referendum, Auburn residents voted by a margin of 65%-35% against removing the city water utility from IURC regulation. At the time, city officials favoring deregulation argued that it cost $25,000 to $30,000 to obtain approval for a rate increase from the IURC.
It may be possible to modify Auburn’s current water rates without an expensive IURC rate case, Walter suggested Tuesday night.
“I think we operate much better when someone’s looking over our shoulder,” he added. “I do not think deregulation is good for consumers.”
Webb said the city council serves as the guardian against excessive rates.
“The voters are looking over our shoulders all the time,” Councilman Mike Watson said, agreeing with Webb. Watson said 96% of municipal utilities have opted out of IURC oversight since the state Legislature allowed it.
Webb said he is not proposing to deregulate Auburn’s city-owned electric utility.
“I don’t think I ever would want to get out of the electric, because it’s too complicated,” Councilman Jim Finchum said.
With the water utility, Finchum said, “The more nimble you can be, the more cost-effective you can be” in adjusting rates.
Ley said as he campaigned for mayor throughout city neighborhoods last summer, residents told him they were “disturbed” about the city’s water rates.
“They didn’t like the 42% increase, and they didn’t like the fact we spent $230,000 to get it,” Ley said.
On a separate issue Tuesday night, Webb complained that warning lights for the Auburn-Waterloo Trail’s pedestrian crossing on North Main Street flash for about 10 minutes after a button is pushed.
“Most of the time when they’re flashing, there’s nobody there,” and that leads drivers to stop paying attention to the lights, Webb said.
City officials said the lights can be adjusted to flash for a shorter duration.