Illinois American Water seeks rate hike that would add $24 a month to average bill
Illinois American Water, which serves several Northwest suburbs, has filed a request with the Illinois Commerce Commission to increase rates by $152.4 million.
Authorities say the hike would increase residential monthly water service bills by about $24 per month depending on a customer’s service area, while the average residential wastewater bill would increase by about $5 per month. Illinois American Water is one of just two private water utilities in the state, providing water and wastewater services to approximately 1.3 million customers.
While consumer advocacy group Citizens Utility Board says the potential hike is “excessive and severe,” the utility said the rate increase request reflects $557 million in water and wastewater system investments to be made through 2025.
The breakdown includes $421 million in water system infrastructure improvements and $136 million in wastewater system infrastructure improvements to be made over the next two years.
“Investment in water-wastewater infrastructure is the main driver of this request that reinforces Illinois American Water’s commitment to investing in its water and wastewater systems to replace aging infrastructure, provide reliable service, enhance water quality, and comply with environmental regulations,” Illinois American Water spokesperson Anna Kubas said in an email.
Those investments include the replacement of approximately 44 miles of aging water and wastewater pipelines and the upgrading of storage tanks, wells, pumping stations, hydrants, meters, wastewater plants, and more across the state. The request further accounts for ongoing replacement of lead water service lines as well as improvements to water treatment facilities in several areas including Peoria.
Bryan McDaniel, director of governmental affairs for Citizens Utility Board, said while there are investments that need to be made, the primary concern lies in the utility’s return on equity — which represents the profit rate for the company’s shareholders.
Illinois American Water’s rate hike request proposes increasing that number from 9.78% to 10.75%.
“When you look at the profit rate for shareholders that they’re gunning for, that seems excessive and inappropriate,” said Citizens Utility Board Communications Director Jim Chilsen. “Of course, everybody’s for a company maintaining its system, but they don’t get a blank check. That’s why we’re getting involved in this case and we’re going to try to reduce it as much as possible.”
Chilsen added the company has employed an “aggressive” acquisition model over the years, buying up municipal systems across the state. Under state law, the utility is allowed to charge their customers 100% of the cost for those acquisitions. The company now has service to portions of Arlington Heights, Mount Prospect, Wheeling, Prospect Heights and other towns in Cook County, as well as numerous communities in DuPage and Kane counties, including portions of Wheaton, Lombard, Glen Ellyn, St. Charles and more.
Since 2013, Illinois American Water and the state’s other private water utility Aqua Illinois have bought 53 systems totaling $303 million.
The two companies also typically charge more compared to publicly managed water: Prices are 20% to 70% higher than the cost a resident under a public water system would pay for the same Lake Michigan water, according to a 2017 Chicago Tribune investigation.
“All of these things have come together to create a perfect storm of bad news for Illinois American Water customers that makes their bills excessive and high,” Chilsen said. “And now on top of it, the company is proposing $152 million increase.”
Residents can make a public comment on rate cases on the Illinois Commerce Commission website or by calling 800-524-0795. The Illinois American Water public comment page can be found at tinyurl.com/IAW2024RateCase.
• Jenny Whidden, jwhidden@dailyherald.com, is a climate change and environment writer working with the Daily Herald through a partnership with Report For America supported by The Nature Conservancy. To help support her work with a tax-deductible donation, see dailyherald.com/rfa.