Trafalgar officials are looking into selling the town’s water and wastewater utilities, after receiving backlash from residents last month on a sewer rate hike.
Jason Ramey, a Trafalgar Town Council member, said during the council meeting on Sept. 15 that he and another council member, Kyle Siegfred, started looking into the idea of selling the town’s utilities.
The idea of selling the utility started after residents packed the council chamber in August to protest against the town increasing sewer rates by 43% to fund a necessary $7.2 million wastewater system expansion.
“After last month’s meeting with the rate increase that was mentioned, I threw out, you know, there are alternatives and one of those is to sell our utilities,” Ramey said. “There was some interest from the public to get more information on that topic.”
Ramey invited officials from Indiana American Water to the Thursday meeting to introduce themselves to the town council and answer questions about potentially buying Trafalgar’s utilities.
This discussion was a starting point, and the council has not made a formal decision to sell, or not sell, the town’s utilities.
Indiana American Water, headquartered in Greenwood, provides water services to most of Johnson County, covering Greenwood, Franklin, New Whiteland and Whiteland. Statewide, the company provides water and wastewater to 1.3 million Hoosiers in 55 communities.
A problem Trafalgar is facing now is keeping up with its growth. The town has grown by 67% in the past two decades, according to town officials. Hence, the need for the town to come up with funds to pay for a $7 million sewer expansion.
If Trafalgar sold its utilities, that burden would be taken off of the town and would be taken care of by Indiana American Water.
In his remarks to the council, Indiana American Water President Matt Prine said their parent company, American Water, invests capital to pay for projects. He said, for example, the company is currently investing $160 million into service line replacements and aged infrastructure in its service areas.
“I think you are weighing the challenges of aging infrastructure right here in your community. But I can tell you that every community in Indiana and across the country are doing very much the same thing,” Prine said.
He added that Indiana American Water analyzes investments like this to see where they can get the “best bang for our customers’ budget.”
Another benefit Prine mentioned is Indiana American Water’s method of spreading costs among all ratepayers in the state. That helps prevent significant hikes in bills for a large improvement project, such as what Trafalgar saw with its 43% sewer rate increase.
Prine gave an example of a new $40 million treatment plant the company built in Richmond, where the costs were absorbed into the general rates. All Indiana American Water customers pay the same rate statewide, whether they live in Greenwood, Muncie or in Jeffersonville.
“Now, one might say, ‘Well, we’re paying for someone else’s investments,’ and there is truth to that,” Prine said. “But the reality is, is that the average customer out there, they can understand increases. But what they can’t understand is those big spikes in a rate impact, and I think you’re all looking at that right now.”
Trafalgar does not own its own water utility, as it purchases water from Prince’s Lakes. Jessica Jones, council president, questioned how that would work, and Prine said it would not be an issue because they have purchased town utilities before that bought water from another town.
Indiana American Water would also take over bulk water sales — another issue the town has been working on.
Town council members did not discuss the idea of selling the utility further at the Thursday meeting after hearing the presentation. But Jones said the council “should really consider” this option.