IURC to Investigate Utility Sub-Metering

Submitted by: Scott Miller, Principal

On April 25, 2007, the Indiana Utility Regulatory Commission (IURC) issued an order initiating a formal investigation into the practices of sub-metering regulated water and sewer service in the state of Indiana. Just what is sub-metering? Sub-metering is the practice of property owners charging residents for water or sewer service that was procured by the property owner for the residents' ultimate use. This occurs most often in manufactured home communities, campgrounds and multiple dwelling unit properties.

The IURC has received complaints and inquiries stating that these property owners or their agents may be billing residents at higher rates than have been approved by the IURC. Some sub-metering entities also may be imposing administrative fees, late fees, returned check charges not authorized by statute, meter installation charges, financing charges and charges to connect, disconnect or reconnect services.

The IURC is concerned that these property owners may be operating as a public utility without proper authority or IURC approval of such charges, as required of every public utility pursuant to I.C. 8-1-2-4. The IURC intends to address whether sub-metering in these situations constitutes the provision of "public utility" service; whether the sale of water by a regulated water utility to a sub-metering entity is prohibited by rule or tariff; whether sufficient grounds exist to warrant regulating sub-metering practices; and what, if any, regulatory measures the IURC should take regarding sub-metering of water and sewer service.

A prehearing conference in Cause No. 43269 has been scheduled for June 21, 2007 in Indianapolis. Regulated water and sewer utilities should have received notice of the investigation as well as a request for information regarding their sub-metering practices. We will continue to monitor this case. If you have any questions, please contact us at footnotes@umbaugh.com.