GREENWOOD - Greenwood-based Indiana American Water has reached a settlement agreement with the Indiana Office of Utility Consumer Counselor regarding its proposed rate increase. If approved by the Indiana Utility Regulatory Commission, the deal will raise the average monthly residential water bill by about $2.50.

The utility's original proposal sought an overall annual revenue increase of $38.8 million. The settlement lowers that amount to $17.5 million, or about 7.9 percent. The rate increase will be implemented in two phases, the first of which will take place this summer, followed by the second in mid-2020.

Deborah Dewey, president of Indiana American Water, says the terms of the agreement are reasonable and fair, and represent the best interests of the utility's customers statewide.

"We have made significant investments in aging infrastructure over the last several years to ensure service reliability, water quality and fire protection for our customers across the state, while holding our operating and maintenance expenses relatively flat," Dewey said. "At the same time, we have maintained top-quartile customer service, enhanced our water quality and environmental compliance record, and reduced water loss in our distribution system."

Indiana American Water will also receive a 9.8 percent authorized return on equity, down from the proposed 10.8 percent. The utility will also implement a low-income pilot program, focusing on customers in Gary, Muncie and Terre Haute.

The IURC has a settlement hearing scheduled for April 11. A decision on the agreement is expected in the following weeks.