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Officials: $40 per month sewer rate hike request doesn't smell right

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American Suburban Utilities

American Suburban Utilities customers will soon see higher bills, but opponents of the rate hike are still claiming victory.

WEST LAFAYETTE, Ind. (WLFI) — American Suburban Utilities customers will soon see higher bills, but opponents of the rate hike are still claiming victory.

A recent 55-page order by the Indiana Utility Regulatory Commission slashes the private utility company's rate request from an increase of $40 per month to $7 per month.

"Now we're going with a $7 rather than a $40 increase," says David Tate, a Wabash Township board member who started a petition last year against the rate request. "What did the other $33 get? What would we have gotten for that that we're not getting now?"

But it's not the dollar amount that's raising eyebrows; instead, it's revelations about the company's business practices and its president, Scott Lods. 

The commission affirmed some of the most concerning findings by a state watchdog, which dug into the company's finances from 2020 as part of its review of the rate request.

"The commission found in our favor on a number of issues, and that dramatically reduced the rates that consumers will pay," says Olivia Rivera, a spokesperson for the Indiana Office of the Utility Consumer Counselor. 

The commission, for example, agreed many of the company's expenses shouldn't be footed by customers. Those include thousands of dollars spent on a lavish Christmas party, holiday bonuses, out-of-state conferences and penalty fees to the Indiana Department of Environmental Management. 

"Christmas parties, that's out of his pocket," Tate says, referring to Lods. "I don't know how many people here in the unincorporated area were invited to the Christmas party. I know we weren't."

The commission also sided with state consumer advocates about a rental arrangement between American Suburban Utilities and Lods, who is also the company's landlord. 

Officials say Lods charges the company rent for more building space and land than needed. As part of the deal, the company pays property taxes on a 17-acre plot in rural western Tippecanoe County while occupying only a fraction of the parcel.

In 2020, Lods collected nearly $60,000 in rent and, in November of that year, entered into a new lease raising rent to nearly $78,000, according to public documents filed in the rate case.

"The utility doesn't need all of the space that they have," Rivera says.

The commission and consumer counselor also agree: Nearly $1.4 million in specialized construction equipment shouldn't count toward higher rates.

"Despite the fact that it owns this equipment, (American Suburban Utilities) used various construction contractors, including its own affiliate, to perform this work, as has been its practice in prior years," Margaret Stull, chief technical adviser for the consumer counselor, wrote as part of the agency's rate hike review.

"We find the construction equipment at issue is indeed specialized, more oriented toward general construction activities, and seldom utilized by a wastewater utility," members of the regulatory commission wrote in their order.

Longtime customer Tate says Lods bit off more than he could chew.

"I thought it was kind of an arrogant movement on his part," Tate says. "He really pushed the limit."

Property records confirm Lods also owns the largest and most expensive home in Tippecanoe County.

News 18 reached out to him several times for comment but haven't heard back.

American Suburban Utilities' service area includes many homes on the outskirts of West Lafayette.

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