(The Center Square) – Iowa-American Water Company can buy an Iowa city’s sanitary sewer and wastewater utility, the Iowa Utilities Board ruled Tuesday.
The IUB approved the monthly rates the private company proposed for unmetered sanitary sewer service that has been owned and operated by Blue Grass, a city with fewer than 2,000 residents. Those rates are $50.60 for residential service and $109.90 for commercial service.
The IUB said in its ruling that the $2 million acquisition price Blue Grass and Iowa-American Water Company negotiated is reasonable and is the value of the city utility for setting rates. It said Iowa-American must file a revised customer sewer tariff and annual reports and approve customer monthly fixed charge rates of $39.48 for sanitary sewer service and a variable charge of $0.74124 for each 100 gallons after the first 2,500 gallons.
Under Iowa code enacted in 2018, a public utility can’t acquire a utility with fair market value of at least $500,000 from a non-rate-regulated entity unless the IUB approves the acquisition. In the case of city utilities, the city has to first meet the requirements of 388.2A. If those requirements are met, the utility can apply to the board for approval before the sale of a proposed initial tariff for providing service to the utility’s customers. The IUB has to decide whether the proposed rates are just and reasonable.
Iowa-American applied to the IUB for approval of the acquisition in September 2021 and proposed a tariff with the rates charged to utility customers if the IUB approved the application.
The Office of Consumer Advocate and the IUB said this is the first acquisition case following the 2018 code change.