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.
By replacing all LSLs in its system, American Water’s proposal standard in contrast to typical industry practice of replacing only the part of the line the utility owns. Research has demonstrated this practice of partial LSL replacement temporarily increase lead exposure and not provide a clear, long-term benefit. The company estimates that fully replacing the entire line at one time with its contractor will average $3,500 per line and save 25 to 30% of the costs if the homeowner were to manage the work. The costs include company representatives flushing interior plumbing and collecting and testing one set of sampling immediately after flushing as well as the occupant collecting and testing a second set of samples a few days later. For comparison, the company’s pilot project on 81 homes had a range of $400 to $3,953 with an average of $2,900.
Assuming LSLs should ultimately be removed, American Water’s approach would both benefit public health and save significant overall costs.
Under the proposed plan, partial replacements would only be done when the customer refuses to allow replacement of the LSL on private property. While the company proposes to cover the cost of “usual replacements” up to $7,000, customers are expected to pay the extra costs associated with “unusual replacements.” The company plans to use directional drilling or pull-through methods that avoid trenching and disruption to the yard to mitigate costs.
Unusual replacements are those where the service line’s path is obstructed; repair to the building would be needed after replacement; site restoration costs take overall costs over $7,000; the property is unsafe; or there are unusual site conditions. As an unusual site condition, the company gives an example from its pilot project involving replacement of 81 LSLs where one customer refused because of concerns about the life of a tree on their property.
To realize the efficiency of a systematic program, American Water would NOT use rate funds to replace single LSLs at a customer’s request – in this situation the customer would bear the cost. The company does acknowledge that special circumstances may arise that will alter priorities and schedules and mentions requests from the Indiana Department of Health or from U.S. Department of Housing and Urban Development. In addition, the customer would be expected to pay for LSL replacement if the service has been disconnected for more than 24 months.
The plan is important for several reasons:
- American Water is the largest private water utility in the country serving more than 15 million people in 47 states and 1,600 communities. If IURC approves the plan, it will likely serve as a model for others systems and other states.
- The proposal highlights American Water as a leader among national private water companies. None of its competitors have articulated a similar commitment.
- If approved, it would eliminate about 25% of the estimated 205,000 LSLs in Indiana, based on a survey of public water systems by the Indiana Department of Environmental Management.
With the filing of the plan on January 29, 2018, the IURC begins the process of considering it for potential approval. Key players in that process are the main utility watchdogs in the state: Indiana Office of Utility Consumer Counselor and the independent Citizens Action Coalition. If you want to track the process, you can subscribe for alerts on IURC’s website.
For our part, EDF supports American Water’s commitment and the framework of the proposal. We will monitor developments and provide you with updates.