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American Water demonstrates strong leadership on lead service line replacement

Tom Neltner, J.D.is Chemicals Policy Director

In a landmark decision on July 25, 2018, the Indiana Utility Regulatory Commission (IURC) approved American Water’s plan to fully replace the lead service lines (LSLs) in the communities served by its Indiana subsidiary over the next 10 to 24 years. This represents the replacement of about 50,000 LSLs across 27 community water systems (CWSs). As we highlighted in our blog on the company’s January 2018 proposal, the plan provides a framework that enables the cost of fully replacing LSLs, whether owned by the utility or by customers, to be shared by its 300,000 customers. As far as we know, this is the first comprehensive, voluntary LSL replacement program developed by an investor-owned utility in the country.

In its plan, American Water cited both long-term health and economic benefits that would be realized from avoiding partial replacements when rehabilitating water mains and laterals. The plan showed that having a single contractor handle the entire line reduces the overall cost by 25 to 30%. It also avoids the likely increased risk of consumer’s exposure to lead when only part of the lead pipe is replaced.

IURC’s approval found the plan “to be reasonable and in the public interest.” Even though the customer will continue to own the service line, American Water will be allowed to add the cost to remove and replace the customer-owned portion to the value of the utility’s property. The increase would be considered an infrastructure improvement cost once the new service line is placed into service.

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American Water lays out a plan for replacing lead pipes in its Indiana systems

Tom Neltner, J.D.is Chemicals Policy Director

Updated May 4, 2018: The IURC issued an order on March 7 scheduling an evidentiary hearing for May 7, 2018 at 9:30 am at its offices in Indianapolis.  In advance of the meeting, the Office of Utility Consumer Counselor,  the state agency representing taxpayers interests, filed a brief supporting Indiana American Water’s proposal to replace LSLs using ratepayer funds with six modifications.  No parties opposed the proposal.  In response, Indiana American Water accepted some but not all of the modifications.

The Indiana subsidiary of American Water Company filed a plan in January 2018 with the Indiana Utility Regulatory Commission (IURC) to fully replace lead service lines (LSLs) in the communities it serves within the next 10 to 24 years. The company estimates that 50,000 of its 300,000 customers in the state have lead pipe in a portion of the service line connecting the main under the street with the building.

The plan is the first submitted to the IURC in response to legislation enacted by the Indiana General Assembly in April 2017 and authored by Rep. Heath VanNatter. If the IURC approves the plan, the company can seek Commission approval to include LSL replacement on private property as an eligible infrastructure improvement whose costs can be covered by rates paid by customers.

With the plan, American Water is essentially embracing the goal articulated by EPA’s National Drinking Water Advisory Council and the American Water Works Association that the United States needs to eliminate LSLs. We applaud that goal and American Water’s commitment – while it will take time to achieve, people should not be drinking water through lead pipes, even with optimal corrosion control. Read More »

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