FORT WAYNE – Despite passing easily through the City Council and garnering little public dissent, the 40 percent water rate increase proposed by Fort Wayne City Utilities is likely headed for changes.

Two of the city’s largest water customers, along with the state’s consumer advocate, reached a settlement with the city that could affect how much every city water customer will have to pay.

Late Friday afternoon, an attorney working for City Utilities filed paperwork with the state saying a settlement has been reached with General Motors Co., New Haven and the state consumer advocate. The document does not offer any details of the settlement other than to say the written agreement will be filed by June 26.

Anthony Swinger, spokesman for the Indiana Utility Consumer Counselor, said the four parties have reached an agreement in principle but discussions continue as the terms are finalized.

The agreement and its supporting testimony will then be considered by the Indiana Utility Regulatory Commission – which has ultimate authority on the rate case – at its hearing in mid-July.

The settlement agreement comes after months of sometimes contentious negotiations between the parties. While the sides have declined to discuss the specifics of the negotiations, documents filed with the state show the legal back-and-forth hasn’t always been friendly.

Specifically, Fort Wayne and New Haven attorneys have argued about what information must be provided in discovery, and General Motors filed a motion to dismiss a separate effort by the city to charge utility customers outside the city limits a higher rate.

Before the settlement was filed, New Haven Mayor Terry McDonald said his community got involved with the case to protect its customers. While he said he couldn’t discuss the specifics, he said it was his responsibility to ensure his residents are treated fairly.

“We’re trying to work out the best deal we can for our consumers,” he said.

The Fort Wayne City Council in February voted 7-2 to approve the 40 percent water rate increase, spread over the next three years, which will generate an additional $12 million in revenue after it is fully implemented.

Residential users of 5,000 gallons a month would see their monthly water bills rise from $17.25 to $21.10 in 2013, $22.95 in 2014 and $24.10 in 2015.

The charges, of course, are on a much larger scale for heavy industrial users, like General Motors, and for entire communities. New Haven, which buys its water wholesale from Fort Wayne, uses roughly 1 million gallons of water a day. The smaller city then bills its residents.

Ongoing talks

Within a week of Fort Wayne filing its rate increase in late February, New Haven filed a petition to intervene. A month later, General Motors filed to participate in the case.

Attorneys for the parties spent the next several weeks negotiating to reach a settlement over the water rate proposal. Swinger last week said the efforts to reach a settlement were to avoid costly litigation over the rate case.

“If we can reach a fair agreement, that would be preferable,” Swinger said.

The counselor’s office represents average consumers and its involvement in the negotiations could mean changes for all City Utilities customers.

What the settlement means, however, is not known, at least according to the public filings. No side would say what they were seeking from the negotiations and parties with knowledge of the agreement couldn’t be reached. On Saturday, McDonald said he hadn’t yet seen a copy of the agreement.

The only specific request has come from General Motors, but that was made in a related case before the state regarding Fort Wayne City Utilities’ request to charge utility customers outside the city limits a higher amount. The request is to charge 25 percent more for outside sewer customers and 15 percent to 25 percent more for outside water customers.

On June 7, the auto plant filed a petition with the state to dismiss that request, claiming it didn’t follow state law.

Stephanie Jentgen, local GM plant spokeswoman, said as one of the city’s largest water customers, General Motors is sensitive to any rate increase, “especially one of this size.” She was unsure how many gallons of water the plant used annually.

“We have been actively talking with the other interested parties to come to a fair and amicable solution for everyone,” she said in an email.

Mary Jane Slaton, a spokeswoman for City Utilities, said GM was simply trying to protect its interest, which is expected in any rate case. She said the city will evaluate its options and discuss the issue with the company.

Discovery fights

As the sides were working to reach a settlement, Fort Wayne and New Haven battled over what information was relevant. In fact, New Haven has asked for a protective order against Fort Wayne to keep it from having to share a burdensome amount of information.

While disputes over what information should be permitted during discovery are common, especially in civil cases, the communications between the two municipalities show how at odds they can be.

Attorneys from the two cities exchanged emails in early April regarding the relevancy of Fort Wayne’s request for New Haven to provide numerous details about its water utility.

Attorney Robert Glennon, who represents New Haven, argued in a May filing with the state that such requests were burdensome and unnecessary. Specifically, he said the rate case regards Fort Wayne’s utility, so information about New Haven wasn’t relative – especially because New Haven had not yet filed any formal objection.

“Fort Wayne’s discovery questions appear simply to drive New Haven’s litigation expense up and place a chilling effect on its ability and willingness to participate in this proceeding,” according to Glennon.

J. Christopher Janak, an attorney representing Fort Wayne, responded a week later noting that Fort Wayne has tried to comply with all of New Haven’s information requests – providing 4,538 pages of documentation and a DVD. He also wrote that New Haven asked for a protective order from the state while Fort Wayne was trying to resolve the dispute informally.

Janak argued the requested information was relevant because it could help Fort Wayne respond to any attacks New Haven makes about Fort Wayne’s utility.

“(New Haven) has requested information and made statements which have caused Fort Wayne to anticipate that (New Haven) may use such information to attack the reasonableness of Fort Wayne’s requested relief in this case,” he wrote.

In addition, Janak noted that Fort Wayne asked for similar information in a separate case last year that the state sided with Fort Wayne in compelling New Haven to supply that information. He said New Haven has still not complied with that year-old request.

Before the settlement was reached, Slaton said the utility doesn’t comment on pending litigation, which it considers the rate case to be. She said having New Haven and GM intervene is normal.

“It’s expected we’d be exchanging information to arrive at mutually beneficial terms and conditions,” she said.

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