The Iowa Utilities Commission (IUC) has issued an order approving new water and wastewater rates for Iowa American Water Company to charge its customers, the IUC and utility announced last week.
On Tuesday, May 21, the IUC approved a rate increase – requested by Iowa American Water in a filing a year ago – but the effective date of the increase and its financial impact on customers requires more data from the utility and another review by the commission.
According to Iowa American Water, headquartered in Davenport, its rate increase request was primarily driven by the more than $157 million in infrastructure investment in treatment and distribution system upgrades it has made since its last rate filing. The company’s rate increase request was first filed May 1, 2024, and interim rates have been in effect since May 11, 2024.
“We are committed to making appropriate investments to continue to provide safe, clean, reliable and affordable services,” Iowa American Water President Brad Nielsen said in the utility’s news release. “Our effective capital planning and consistent focus on efficiently operating our systems keep our water and wastewater services compliant with state and federal regulations for the benefit of the customers and communities we serve in Iowa.”
In a separate news release, the IUC said its order in Docket No. RPU-2024-0002 approves the rate increase request. But the actual increase amount and timing are “dependent on the company filing tariffs that show the new rates and how they were calculated.”
The IUC ultimately approved an annual revenue requirement of approximately $58.7 million for water service and about $1 million for wastewater service.
Rate hike next steps
Iowa American Water said its next step is to prepare and file rates that reflect the latest IUC order. After a review, an effective date for the new rates will be established by the IUC.
Iowa American Water is a subsidiary of American Water, the largest regulated water and wastewater utility company in the nation serving 14 million people in 14 states and on 18 military installations.
It provides water service to approximately 70,000 Iowa retail customers in and around the cities of Clinton, Davenport, Dixon, Bettendorf, LeClaire, Riverdale, Panorama Park, Blue Grass, and Donahue as well as wastewater/sewer service to 825 retail customers in Blue Grass and Donahue.
As part of the rate case proceeding, back in 2024 the IUC accepted written public comments, held two in-person public meetings across its service territory and one virtual customer comment meeting. It also conducted public hearings this year in January.
According to the IUC release, the utility’s application also requested approval of modifications to its qualified infrastructure plant (QIP) mechanism, a surcharge to cover the costs of certain infrastructure investments, as well as a new alternative rate design mechanism known as a Revenue Decoupling Mechanism (RDM). The IUC approved the QIP rider with modifications but denied the RDM proposal.
Order requirements
The IUC order approves a return on equity of 9.6% and denies Iowa-American’s request to shift a portion of its wastewater revenue requirement to water customers.
The order also requires Iowa-American to:
- File an updated cost of service study, revenue allocation, rate calculations, and a proof of revenue to show the percentage of rate increase by customer class.
- Issue a refund of the amount the utility over-collected from customers in interim rates, with interest. Within 20 days, Iowa American Water must file the amount of the interim rates collected and the proposed refund amount each customer class is expected to receive as a bill credit in the future.
- File annually a capital investment plan followed by a stakeholder meeting.
Iowa American Water said it offers customer payment installment plans and budget billing options on the MyWater customer portal at iowaamwater.com. Customers will be notified about the new rates in their water bill.
Information also will be available on Iowa American Water’s website here under Customer Service Billing, Your Water and Wastewater Rates. Additional information also can be found at iuc.iowa.gov.
