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State agency critical of ASU 69% sewer rate hike request

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American Suburban Utilities

TIPPECANOE COUNTY, Ind. (WLFI) — A state consumer advocacy agency awaits a response from the president of American Suburban Utilities.

The company serves rural Tippecanoe County near West Lafayette.

In recently released documents, state utility experts say a requested 69% sewer rate hike is too much. After digging into the numbers, they argue monthly sewer rates should instead decrease by 16%.

"The review that we've done shows that this utility has the money it needs to provide safe and reliable service," says Anthony Swinger, spokesperson for the Indiana Office of the Utility Consumer Counselor. "The testimony that we filed shows that, if anything, there should be a reduction in rates."

The OUCC reviews every rate hike request, Swinger says, noting that some are justified, while others aren't.

"And this is one of those cases," he says of ASU's proposal. "We filed about 800 pages of testimony ... that go into a lot of detail about the review that we did."

The documents outline testimony from four state utility experts, who say ASU in 2020 overstated its operating expenses by nearly $1 million, including more than $20,000 on team-building activities, cross-country travel to conferences, Christmas bonuses and a lavish office holiday party.

The review also points to nearly $11,000 to pay a fine from the Indiana Department of Environmental Management.

"There are expenses in here, such as Christmas party expenses and fines to the Department of Environmental Management, that are simply not appropriate for recovery through rates," Swinger says.

The new trove of documents also highlight possible conflicts of interest involving ASU President Scott Lods.

Lods, for example, leases land to ASU for its office, storage and shop spaces, according to the review. As part of the reported deal, ASU pays property taxes on all 17 acres while encompassing a fraction of the footprint.

In 2020, Lods collected nearly $60,000 in rent from ASU and, in November of that year, entered into a new lease raising rent to nearly $78,000, according to the review. 

Utility experts also recommend removing more than $1.1 million worth of heavy construction equipment and machinery from ASU's property.

"Despite the fact that it owns this equipment, ASU used various construction contractors, including its own affiliate, to perform this work, as has been its practice in prior years," writes Margaret Stull, the OUCC's chief technical adviser.

"I'm not particularly pleased with it," says ASU customer DD Ryan.

She's part of a group of residents against the rate hike, many of whom attended a public hearing last month.

Here's her reaction to the state recommendation to lower rates instead of raise them:

"I'm absolutely giddy," she says. "I think that's fantastic. I think more than anything, it was really heartening to see people come together as a community. ... There was a lot more scrutiny than I'm guessing they thought was going to come from this whole thing."

"You are taking a top-to-bottom look at how much money they need to meet their obligation to provide safe, reliable service while earning a reasonable return on their investment," Swinger says of the review process. "The testimony we filed in this case shows the utility already has the money to do that."

Lods wasn't available Monday for comment. His rebuttal is due Wednesday followed by an evidentiary hearing June 2.

Swinger says the Indiana Utility Regulatory Commission will decide on the request this year.

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