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.