Understanding Sewer Rates

Federal and state regulations require sewer utilities to treat wastewater before discharging it to the receiving stream in an environmentally safe condition. While specific treatment processes may vary, all wastewater utilities use some or all of the following five (5) processes:

• Preliminary treatment: Debris and trash are removed from the wastewater. The water may run through screens and flow into a grit tank that allows sand and heavy particles to settle and then be removed.
• Primary treatment: Sedimentation tanks hold the wastewater for a few hours. This allows grease, oil and other particles that were not removed during preliminary treatment to either sink or float, and then be removed. Settled solids or sludge are removed and further treated in sludge digestion tanks.
• Secondary treatment: Wastewater travels into concrete or steel basins where microbes reduce and eliminate more wastes through a bacteriological process.
• Advanced treatment: Some facilities use filtration after earlier stages of treatment. They may also use other processes to remove nitrogen, phosphorous and other elements so the water is less likely to produce algae or other plant growth in the receiving stream.
• Disinfection: This is the portion of the process where bacteria are destroyed. While chlorine is normally used to kill the bacteria, a growing number of treatment plants use ultraviolet light instead.

After the water has been treated, it is ready for discharge into creeks, rivers, streams or lakes. While the treated wastewater is no longer harmful to the environment and is often the cleanest part of the stream, it is not at drinkable quality either.

Wastewater utilities must maintain their infrastructure (including treatment plants and sanitary sewer mains) in a manner that provides safe, reliable service and complies with (but often exceeds) federal and state environmental requirements. Most notably, the U.S. Environmental Protection Agency (EPA) has implemented rules and procedures under the federal Clean Water Act that wastewater utilities must follow.

Large systems with combined sewer overflows (CSOs) are among those needing infrastructure upgrades and subsequent rate increases. Combined systems are those that collect rainwater, residential wastewater and industrial wastewater in the same pipes, and are designed to overflow or discharge waste into streams and other bodies of water during periods of heavy rain or snowmelt. This discharge of waste is a result of the sewer system’s capacity being exceeded. 105 Indiana communities have been addressing combined sewer collection systems, which were commonly built in the 19th Century and early part of the 20th Century.

Projects to ensure compliance with environmental regulations are generally considered valid utility costs that may be recovered through rates as a cost of doing business. While many utilities have delayed CSO remediation over the long term due to its high costs and resulting impact on rates, federal regulations to force compliance have taken effect in recent years.

While many municipally owned wastewater utilities charge lower rates than investor-owned and not-for-profit utilities, it is important to note that municipal utilities have access to federal and state grants that can be used to pay for utility projects, along with access to low interest loans that are only available to governmental and not-for-profit entities. (The links in the "Additional Resources" section offer more information.) In addition, state law allows investor-owned utilities to earn reasonable rates of return.

Stormwater costs, when applicable, may be assessed and collected separately from sewer utility costs. Stormwater services are regulated locally and not under IURC jurisdiction.

Some wastewater utilities bill customers on a metered or volumetric basis, depending on the amount of water the customer has used. Others charge flat, monthly rates. Consumers frequently ask why those utilities can do so.

• With most sewer utilities, most costs – including the costs of wastewater collection and treatment – do not vary appreciably over time. Any costs that might vary would likely be minimal and would balance out over time. In most cases involving metered wastewater rates, a large portion of the bill is set at a consistent, flat amount.
• If a customer receives water and sewer utility service from different providers and the sewer utility wants to charge based on volume, then the sewer utility must generally purchase metered usage data from the water utility, leading to higher administrative costs that are passed on to customers.