IUB Approves Iowa-American Water’s Acquisition of Sanitary Sewer and Wastewater Utility System from City of Blue Grass
IUB order requires revised sanitary sewer tariff, additional filings
(Des Moines) – The Iowa Utilities Board (IUB) today issued an order approving Iowa-American Water Company’s (Iowa-American) acquisition of the sanitary sewer and wastewater utility owned and operated by the City of Blue Grass, Iowa. The order also sets rates for sanitary sewer and wastewater utility service and addresses legal issues regarding the implementation of Iowa Code section 476.84.
The acquisition of the Blue Grass sewer system would be the first filed by a rate-regulated utility to acquire a municipal sanitary sewer and wastewater utility system under the statutory requirements in Iowa Code section 476.84, enacted in 2018. With today’s order, Blue Grass and Iowa-American will now have to decide whether to complete the sale of the utility based upon the decisions made by the IUB.
Iowa-American filed its application for approval of the acquisition with the IUB on September 24, 2021, in Docket No. SPU-2021-0014. Iowa-American also filed a proposed sanitary sewer tariff with the rates that would be charged to sanitary sewer and wastewater utility customers if the IUB approves the application. The proposed sanitary sewer tariff was identified as Docket No. TF-2021-0098.
Iowa Code section 476.84 authorizes a rate-regulated utility to acquire a municipal water, sanitary sewer, and storm water utility with a fair market value of $500,000 or more with approval of the IUB. The statute also allows the rate-regulated utility to request advance ratemaking principles as part of the application and requires the IUB to determine that proposed rates are just and reasonable.
Under Iowa Code section 476.84, the IUB was required to conduct a contested case proceeding to review the application and proposed tariff. The IUB conducted a public hearing on March 24, 2022, and the Office of Consumer Advocate, a division of the Iowa Department of Justice, and the Iowa Association of Municipal Utilities were parties to this case.
Today’s IUB order approves the purchase price of $2 million as the value of the city utility for setting rates based upon the evidence presented in the case. The order also requires Iowa-American to file a revised customer sewer tariff and various annual reports and approves customer monthly fixed charge rates for sanitary sewer service of $39.48 for all meter sizes and a variable charge of $0.74124 for each 100 gallons after the first 2,500 gallons.