Tax cut prompts local utilities to reduce rates

Some residents will soon see a small reduction in their utility bills as Indiana has removed a special tax applied to utility bills.

Bargersville, Trafalgar and Whiteland have passed or plan to pass adjusted water and other utility rates to account for the state’s elimination of the 1.4% utility receipts tax that was built into their existing utility rates.

During this year’s Indiana legislative session, lawmakers passed and the governor signed a $1.1 billion tax cuts package that included removing this tax on utilities. The law also included gradually reducing the state’s income tax from 3.23% to 2.9% over the next seven years.

The utility receipts tax is a 1.46% charge paid by businesses and consumers on a portion of their various utility bills. Under the law that now eliminates the tax, utility providers and companies are required to remove the tax from what they charge customers.

That could be done by just removing the tax on bills, or adjusting rates if it was built into the rate amount already. Overall, residents should see a roughly 1.4% change in their utility bills.

Trafalgar was first to approve its water rate changes on June 22, which will save customers a few cents per 1,000 gallons. Water rates are set depending how much water is used at a home or business. The more water used, means a lower rate.

The new flow rates in Trafalgar will start at $11.54 per 1,000 gallons at the first 2,000 gallons used, versus the previous rate of $11.69. The rate decreases the more gallons of water used, so the new rate for over 50,000 gallons is $4.03 from $4.08.

A minimum charge per month for metered-users also decreased. For a ⅝ inch meter, which is the average size for a home, the minimum charge dropped to $23.08 from $23.39.

The new rates in Trafalgar went into effect Friday and will be reflected in residents’ August utility bills.

In Bargersville, which manages its own water and electric utilities, the town council is considering rate changes to account for the tax elimination after an increase was passed last year.

Bargersville in October last year approved rate increases for all its utilities to fund millions of dollars worth of infrastructure improvements.

Water rates increased by 14% this year, sewer rates increased by 11%, and electric rates by 11.5%.

The town is now lowering the rate increases in two phases to account for the elimination of the tax. The Bargersville Town Council will have a final vote on the new rates at its next meeting on July 19.

The water metered rate per 1,000 gallons this year would go down to $5.68 from $5.77. The phase two rate increase, set to go into effect next year, would be $6.22 versus $6.29.

Electricity rates would lower to 12.81 cents per kilowatt hour this year and to 13.58 cents per kilowatt hour next year in the phase two increase.

The sewer rate increases are set to remain unchanged, according to town documents.

Whiteland is also planning to reduce its water rates. The town council will hold a final vote on the new rates at its July 12 meeting to go into effect for the next month’s bills.

Rates for a 5/8 inch meter, for example, with a 4,000 gallon volume would decrease to $31.04 from $31.38. A ¾ inch meter rate with a 5,000 gallon volume would go down to $44.68 from $45.31.

Greenwood-based Indiana American Water, which services Greenwood, Franklin and New Whiteland, will not decrease its rates for customers, according to a report filed with the Indiana Utility Regulatory Commissioner (IURC).

The utility said no reduction was needed to its current flat charges for water customers, as the rates “were established by settlement and do not include recovery of the utility receipts tax.”

The IURC has filed an objection to this proposal, claiming the utility has failed to prove the utility receipts tax was recovered in its settlement for the flat rates. The IURC has asked Indiana American Water to resolve this objection for its proposal to be approved.

Duke Energy, which provides electricity for most of the county, said it will remove the 1.4% tax from its billing, saving customers that money, according to its proposal approved by the IURC. However, Duke recently approved raising its rates for Indiana residential customers by 16%, so Hoosiers with the utility company likely won’t see a decrease in their overall bill amount from the elimination of the tax.

In Edinburgh, utility rates will remain the same. The town council already accounted for the elimination of the utility receipts tax when it increased water rates in April to generate $6.4 million to fund a new water plant, said Dan Cartwright, town manager. The maximum increase approved in April was an average of $10.31 each month.