As reported at a Village Board meeting and in our local newspapers, Illinois American is pursuing a General Rate Increase and a Reconciliation Rate increase before the Illinois Commerce Commission. On behalf of the residents of Homer Glen, the Village has intervened in both cases along with the U. S. Attorney General.

The Village will also be holding a public forum with the objectives of providing information on the status of the cases, circumstances surrounding the public utility and to provide opportunities to hear from residents regarding specific issues and concerns. In the meantime, many residents have been asking what they can do now to express their personal concerns and complaints.

The Illinois Commerce Commission (ICC) does accept public comments on a pending case via its website. Residents wishing to log comments may access the ICC web site at http://www.icc.illinois.gov and clicking on the link “File a Public Comment”.

This will take the individual to a page that lists various pending dockets. Scroll down to 07-0507 and it is the Illinois American Water Docket. By clicking on this link, it will take you to a page that has a filter that requires the viewer to type in a code that finally takes you to the comment page. Once you have made a comment, a confirmation email will be sent. If the individual does not respond to the ICC confirmation e-mail, the comment is purged. If you do not receive a confirmation email, please call the ICC at 800-524-0795.

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2008 Water Rate Increase

Posted February 2008

Staff has received several calls from residents regarding their recent water bills. The bills indicate a new rate, noted as a second line under both the “Basic Service- Use and Supply Charge”.

Illinois American Water purchases its water supply from one of its sister companies. Each year, the rate for water is set based on two factors: (1) the estimated cost for water for the upcoming year and (2) the amount of over or under recovery of the cost for water for the previous year.

The Illinois Commerce Commission (ICC) has determined that Illinois American Water under recovered its purchased water. As a result, Illinois American Water has been authorized by the ICC to increase the rate for 2008 to recover the under recovery.

When reviewing your February water bill, you will notice the additional lines, with the new rate, pro-rated from February 1, 2008. (The billing period for this bill is January 3 – February 2) The first line is the charge based on the rate before February 1st. The second line is the increase for the month based on the customer’s usage prorated by the number of days, including and after February 1, 2008.

The Village has received information from Albert Sturtevant at the Jones, Day law firm in Chicago which represents Illinois American Water Company at the Illinois Commerce Commission stating the following:

The increase now appearing on the bills is the increase by the City of Chicago for Lake Michigan water that is being charged to Bedford Park, from whom Illinois American buys Lake Michigan water. The company made an “informational” tariff filing in January 2008 to allow the increased cost to be passed through immediately rather than waiting for the annual water reconciliation hearing order. In the past, an increase in the water charge from Bedford Park would be part of the reconciliation, but rather than wait for the reconciliation hearing, the Company made the new informational filing in January.. A final order for the purchased water reconciliation hearing is expected either in March or April (the reconciliation is for the year 2006). The reconciliation should result in a slight increase in purchased water charges since the company under recovered its revenues in 2006. A new purchased water reconciliation case will be filed probably this month for the year 2007. In addition, customers can anticipate another rate change in August when the current general revenue rate case is concluded and the rates are put into effect.

The mechanism of the increase, that is charging the rate by apportioning the days between the two months, is the same whether it is a reconciliation, or as in this case, the pass through of an increase in the underlying water charge.

If you have any further questions about your bill or water service, please feel free to contact Illinois American Water’s Customer Service Center. Representatives are available seven days a week, twenty four hours a day, at 1-800-422-2782.

ICC UPHOLDS HOMER GLEN WATER COMPLAINTS

April 25, 2007

The Illinois Commerce Commission [ICC] has issued its final order in the Homer Glen complaint case against Illinois American Water Company [IAW]. The most significant finding is that the rates charged to Homer Glen residents ?are disproportionately high relative to the rates charged in other nearby communities?, resulting in an order for Illinois American Water to file a new rate case within six months. If Illinois American Water Company does not comply, then the ICC will reopen the Company?s 2002 rate case ?to determine if the current rates in the Chicago Metro Service Area are just and reasonable.?

Traditionally, the ICC sets rates based on the utility?s cost of service with no rate comparison in other communities, making this a significant win for Homer Glen.

Included in the complaint case were the issues of high and spiking water bills, the treatment of residents by IAW?s billing department and the inspection of the critical valves and fire hydrants throughout Homer Glen.

In the final order the commission found the following violations of ICC rules and regulations:

IAW failed to inspect critical valves in Homer Glen
IAW failed to inspect, or even have any records concerning the fire hydrants in Homer Glen
IAW back billed customers for usage beyond a one-year period
IAW failed to provide Homer Glen customers with a consumer information booklet
IAW failed to inform Homer Glen customers who disputed bills that they had a right to a hearing
IAW failed to have personnel on duty authorized to act on behalf of the utility to resolve complaints during business hours
IAW threatened and harassed its customers in Homer Glen (?An IAWC customer received a threat of service cutoff after a complaint was filed with the Commission. This is a clear violation of Commission rules...Threatening a service termination while a dispute is pending is inappropriate behavior.?)

The final order from the Illinois Commerce Commission requires IAW to inspect and repair the critical valves and fire hydrants, file a written report to the ICC to post on the ICC website and the ICC will require IAW to develop and conduct a new training program for all of IAW?s representatives who interact with customers that will ?clearly identify inappropriate and prohibited threatening actions.?

A motion for a rehearing is required if either party wants to appeal the order to the appellate court. These must be filed within 30 days of the final order.

Printable Press Release

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Frequently Asked Questions

Printable FAQs (pdf)

Q. Why is my water bill so high?

A. This is the question the Task Force has addressed for 18 months and it is the reason the Task Force was formed. The information provided by the task force and the answers below provide facts and information to explain the water bill, but do not justify the high rates.

Q. Who sets the water and sewer rates?

A. The water and sewer rates are set by the Illinois Commerce Commission based upon rate increase requests made by Illinois American Water Company.

Q. Does the Village of Homer Glen play any role in the determination of water and sewer rates?

A. No. The Village has no authority under Illinois law to establish water and sewer rates. The role of the Task Force commissioned by the Village has been to investigate the rates and help determine what steps, if any, can be taken to reduce or control these costs.

Q. Does the Village of Homer Glen receive any monies from Illinois American from the water and sewer bills?

A. No. There is no franchise fee or local tax associated with the water and sewer service.

Q. How many customers does Illinois American serve in Homer Glen?

A. Illinois American currently serves about 6,000 homes in Homer Glen, or about 79% of the community.

Q. What is the Village doing about the high cost of water?

A. The Village organized a Sewer and Water Task Force in 2004 to investigate the cost of water in Homer Glen. The Task Force completed its initial investigation in September 2005 and presented its findings to the Village Board. Copies of the Task Force presentation to the Board are available on the website and upon request from the Village offices.

An Information Open House was held on October 12, 2005.

The Village has met with Illinois American Water (IAW) on a continual basis to gather information and identify reasons for high cost of water and sewer. These discussions have included ways to address and work with IAW to resolve issues of poor customer service, unaccounted for water, and cost efficiencies.

The Village is also working with our state representatives, State Senator Christine Radogno and State Representative Renee Kosel to identify legislative measures that will provide improved levels of accountability and local representation.

Village staff and elected officials have been in communication with the ICC to identify options for collective action on behalf of the residents that involve statutory regulations for rate setting.

Residents have been provided with numbers to both the Illinois Commerce Commission (ICC) & IAW for complaint registration. In addition, residents have been asked to inform the Village once a complaint has been registered so a duplicate log can be kept at the Village.

Former Mayor Petrizzo sent a letter to Illinois Attorney General Lisa Madigan asking for an investigation into several of the practices of both IAW and the ICC.

In the upcoming months the Village will be investigating all options available to improve the situation for residents of Homer Glen in relation to the provision of water and sewer service at a reasonable cost. These options must be carefully considered and evaluated based on solid information and research.

Q. What is the difference between a private and a municipal water and sewer utility?

A. A brief summary of the primary differences is presented below.

Private Utilities are For-Profit Corporations. Municipalities are not.
- ICC establishes a reasonable profit margin for private utilities.

Utility Company Profits are Subject to Corporate Income Taxes. Municipalities are non-profit and do not pay income taxes.
- These first two items alone are responsible for ~25% higher rates than a municipal utility.

Private Utilities are Subject to Property Tax.
- Municipalities are not subject to property tax assessments.

Private Utility Purchases are Subject to Sales Tax. Not so with municipal owned utilities.
- This is inclusive of land, equipment and operational purchases.

Private Utilities Must Compensate Developers for New Infrastructure. Municipalities require the dedication of new infrastructure at no cost.
- ICC requires utilities to return 1 1/2 times first year's projected revenue to developers.

Private Utilities Cannot Fully Assess Impact Fees on Developers. Municipal utilities can assess impact fees for off-site improvements necessary to serve development.
- Private utilities have only limited ability to impose fees for wastewater improvements and none for water system improvements.

Public (Municipal) Utilities Can Levy Property Taxes. Private utilities must recover all costs through the rates.
- Private utilities must recover all costs through the rates.

Q. What are all the charges on the water bill?

A. The Water and Sewer Bill contains six distinct and identified charges. These are:

Basic Service Charge
Basic rates charged by Illinois American and approved by the ICC vary by the size of the water meter installed. Smaller meters result in lower overall charges for the same level of usage. The size of the initial meter installed in a new home or building is based upon a formula in the plumbing code.

Use Charge
Based upon the amount of water used during the billing period. Purpose is to cover cost of providing water, maintaining mains and pumping stations at the local distribution site.

Supply Charge
Cost to purchase water from American Lake Water Company. These costs also incorporate expenses associated with the construction and maintenance of the pipeline.

Sewer Charge
A flat rate charge for management of residential sewage and wastewater.

Fire Protection Fee
Provides for the availability of water in the event of need.

State Recovery Tax
State of Illinois utility tax.

Q. Why is the residential sewer charge a flat fee no matter how much water is used?

A. The flat sewer charge is set by the ICC based upon a request by the private utility. In Illinois the pre-dominate practice in communities served by private utilities is a flat fee. A flat fee is one way to reduce high sewer charges associated with traditional summer water uses such as lawn watering, washing cars, etc. that do not increase sewer usage. If sewer charges were based on water usage, some residents would see a decrease in sewer charges, while others would see an increase in this portion of the bill.

Q. I recently received a notice from Illinois American that my meter needs to be replaced. Do I need to allow them to replace my meter?

A. This is a matter between the customer and IAW. The village can not advise on matters of contractual obligations in which it has no legal standing.

Q. I understand that those residents that have had their meters replaced have seen their water bills increase significantly. What is the reason for this?

A. We believe that in most cases, the significant increases in water bills after meter replacement have been due to back charges levied by Illinois American for previously under billed usage. As a rule, the water company will trust the readings on the meter inside the home over the remote reader on the outside of the structure. When the meter is replaced, if the reading is higher than reflected on the remote reader, the resident is assumed to have been under billed for usage in the past months or years. Illinois American has been assessing a one-time charge to some residents to recover the unbilled water usage.

Residents may see a slight increase in their water bills due to meter replacement if the old meter was reading low. Generally an old meter may be reading low by a slight amount such as 5-10%. This difference would not cause a bill to increase by hundreds of dollars per month.

Q. Is Illinois American supplying solely Lake Michigan water to Homer Glen residents, or is some well water being mixed in?

A. Illinois American has stated to the Task Force that they are not mixing any well water in with the Lake Michigan water. Independent testing is being done to confirm and monitor this claim.

Q. What is unaccounted for water and what role does it play in our rates?

A. Unaccounted for water is the difference between the amount of water that is metered coming into Homer Glen and the sum of the total amount of water measured and billed by each individual meter in the village. There will always be some unaccounted for water due to fire hydrant use, normal system leakage, and un-metered water use at new construction sites

Q. What is being done to lower the unaccounted for water rate?

A. Illinois American is replacing all residential water meters with the hope that the new meters will provide more accurate usage figures than some of the older meters in the system. Additionally, Homer Glen has passed a new ordinance making it illegal to use fire hydrants without proper authorization. The new ordinance provides a means for the village to reduce unauthorized use of hydrants and prosecute offenders.

Q. Who made the determination to bring Lake Michigan water to Homer Glen?

A. This was a decision made by the company with the approval of the Illinois Commerce Commission with significant input by the community. Many local officials at the time encouraged Lake Michigan water to be brought to the area, but there were no local agreements or contracts to implement the decision.

Q. What is the difference between Lake Michigan water and the well water we were provided in the past?

A. The well water provided in the past was harder and contained more iron, sulfate and total dissolved solids than Lake Michigan water. The well water was approximately five times harder and contained about twenty times more iron and four times more total dissolved solids. All of these parameters exceeded the recommended water standards according to the Lake Michigan water feasibility study.

Q. Why are Orland Park's water bills so low and Homer's so high?

A. Orland Park is a municipally or public owned utility while IAW is a private utility. There is difference between the two. A public utility is non profit while a private utility is a business for profit that pays various taxes and is responsible to shareholders or owners. The ICC controls all rate increases for private utilities. In addition, IAW has a flat sewer charge of $45.52 per month whereas Orland Park and a number of other municipalities have a sewer rate based on usage. This makes bills in Homer Glen unusually high for customers who use relatively small amounts of water.

Q. Why have water and sewer rates gone up so much over the past few years?

A. A significant contributing factor was that in 2003 the Illinois Commerce Commission (ICC) granted Illinois American Water a 44% increase in the water rates in Homer Glen. This increase went into effect in August, 2003.

Q. When is the next rate hearing with the Illinois Commerce Commission?

A. Either when the IAW files for an increase or someone with standing brings a complaint.

Q. What can I do as a resident to lower my water bills?

A. Incorporate conservation strategies into your daily life. Several strategies include installing water saver toilets, water saving shower heads and promptly repairing leaking plumbing.

Also, you should contact IAW if you feel your bill reflects more water usage than expected. The company will conduct a leak inspection. If you have not done so, register your concern about the water bills with the Illinois Commerce Commission by calling 1-800-524-0795. Please notify the Village of your registered complaints with the ICC. (See Submitting a Complaint)

Finally, State Representative Renee Kosel and State Senator Christine Radogno want to hear from you. Contact information for them is included at the end of this information sheet.

Q. Who do I contact at Illinois American to register complaints or obtain assistance with billing issues?

A. Complaints about high rates or bills should be made to both the Illinois Commerce Commission at 1-800-524-0795 and to Illinois American Water Company at 1-800-538-1125. The Village also requests notification to maintain a local log of complaints. (See Submitting a Complaint)

Q. What actions can I take to register my complaint about water rates or service with the Illinois Commerce Commission?

A. You may file an informal complaint with the Illinois Commerce Commission either by visiting their website at www.icc.illinois.gov or calling them at 1-800-524-0795. The ICC also has a formal complaint process which involves participation in formal hearings with documented evidence. Interested parties need to contact the ICC for the procedure to file a formal complaint.

Q. I've complained to the Village, IAW, and ICC, What good is this doing?

A. Your actions have demonstrated that this issue is not an isolated circumstance. Consequently, being proactive has gotten the attention of the ICC commissioners, our state legislators and IAW.

Q. What actions has Illinois American taken to address the concerns and issues raised by the Village and residents?

A. The President of Illinois American Water Company?s Midwest region recently visited Village officials and outlined a number of items that IAW is willing to address. The Village has created a summary list of these items that is available to the public.

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Contact Information:

Senator Christine Radogno
M-121 State House
Springfield, IL 62706
217-782-9407

410 Main Street
Lemont, IL 60439
630-243-0800

Representative Renee Kosel
2020-H Stratton Bldg.
Springfield IL 62706
217-782-0424

19201 S. LaGrange Rd., Se 204B
Mokena, IL 60448
708-479-4200

Illinois Commerce Commission
527 East Capitol Ave.
Springfield, IL 62701
800-524-0795
www.icc.illinois.gov

Illinois American Water Company
1000 International Parkway
Woodridge, IL 60517-4924
www.amwater.com

Village of Homer Glen
14933 S. Founders Crossing
Homer Glen, IL 60491
Phone 708-301-0632
Fax 708-301-8407

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Submitting Water and Sewer Rate Complaints

The Illinois Commerce Commission has legal authority over the rates that private utility companies, such as Illinois American Water Company, can charge customers. Since the Commission will only investigate complaints that it has on file, the Village requests that you take the following THREE STEPS when making a complaint about water or sewer rates:

Call the Illinois Commerce Commission at (800) 524-0795, and
Call Illinois American Water Company at 1-800-538-1125. and
Notify the Village by Email or by fax

FORM FOR PRINTING

If you do not have access to Email or fax, please call the Village's general phone number.

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Legislation

Local legislators working on behalf of Homer Glen and other Illinois residents sponsored legislation related to water and sewer service.

Senate Bill 3046 and House Bill 5555

Two bills passed both houses of the Illinois General Assembly. SB 3046 and HB 5555 were signed by the Governor. A synopsis and the entire text of each bill is available from the links below:

Senate Bill 3046 (Signed by Governor July 3, 2006)

House Bill 5555 (Signed by Governor June 27, 2006)

House Bill HB4333

House Bill HB4333 was introduced by Representative Renee Kosel in January 2006. A public hearing on the proposed legislation regarding water and sewer was held Wednesday, January 11, 2006 at 2:30 pm in Room C-1 in the Stratton Building adjacent to the Capitol Building in Springfield, IL

A synopsis and the entire text of House Bill 4333 is available from the link below:

House Bill 4333 (Referred to Rules Committee March 3, 2006

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From Illinois American Water June 2007

Illinois American Water asks Chicago Metro customers to help reduce water usage through conservation and water restrictions:

News Release June 2007 (PDF)

Customer Service Center:
(800) 422-2782 (24 hours)

Alice Johnson, local customer advocate:
(630) 739-8855

Email:
ILAW.CustomerComments@amwater.com

Kevin Hillen, Network Operations Manager:
(630) 739-8959

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