Illinois Water Customers Face New Rate Requests as Utility Merger Advances (Chicago, IL) — Customers of Illinois’ two largest private water utilities could face another round of higher bills as regulators weigh separate rate requests and a merger moves closer to placing the companies under the same corporate parent.
The Citizens Utility Board is challenging proposed increases from Illinois American Water and Aqua Illinois, arguing that customers are being asked to shoulder excessive costs and shareholder returns. The utilities say their requests support investments needed to maintain reliable service, replace aging equipment and meet water-quality requirements.
The affordability concerns extend beyond what customers might pay next year. In September, more than 53,000 customers of the two utilities were more than 30 days behind on their bills, owing approximately $8.5 million, according to utility filings cited by CUB.
“Illinois’ private water customers are under siege,” CUB Communications Director Jim Chilsen said in a statement.
Neither pending rate request has received final approval. The merger proceeding is a separate case, and Illinois’ approval of that transaction does not resolve how much either utility may charge customers.
Illinois American’s rate case is approaching a decision. American Water’s latest quarterly filing describes its Illinois subsidiary’s revised request as approximately $104 million in additional annual revenue beginning Jan. 1, 2027, followed by approximately $16 million in additional annual revenue beginning Jan. 1, 2028.
An administrative law judge issued a proposed order Oct. 23 recommending a 9.67 percent return on equity, below the company’s requested 10.75 percent, and rejection of the second-stage increase. The commission can accept, modify or reject those recommendations. A final order is expected no later than Dec. 18, according to the company’s filing.
CUB said its testimony challenged at least $54.4 million in costs and returns included in the utility’s request. Those objections are arguments in the proceeding, rather than a final determination that customers have been overcharged.
Illinois American says the case reflects approximately $577 million in water and wastewater infrastructure investments from January 2026 through December 2027. The work includes pipeline replacement, treatment improvements, upgrades to pumps and storage facilities, and replacement of lead service lines.
The company also points to assistance programs, payment arrangements and an income-based discount program for customers struggling with their bills.
Aqua Illinois, meanwhile, is seeking approximately $26.5 million in additional annual revenue, split between water and wastewater service. CUB and the Illinois Attorney General’s Office have submitted testimony challenging at least $13 million of that request, according to CUB.
An updated customer notice issued by Aqua on Aug. 4 estimates that, if its request is approved in full, a residential customer using 4,000 gallons monthly would see a $15.35 increase for water service. Wastewater collection and treatment would increase by $14.90 monthly, while collection-only service would increase by $9.60. Actual changes would depend on usage, meter size, location and the services a customer receives.
Aqua says its request reflects nearly $171 million in infrastructure projects completed or planned from 2025 through the end of 2027. The company identifies water-main replacements, treatment improvements, lead service line work and cybersecurity protections among the needs driving the filing.
CUB expects a final decision in Aqua’s case no later than April 19, 2027. Aqua’s customer notice identifies April 26 as the approximate effective date for approved changes, with timing potentially differing for some systems.
The watchdog also disputes Aqua’s requested 10.8 percent return on equity, saying its expert recommends no more than 9.4 percent. Return on equity concerns the return allowed on the shareholder-financed portion of utility investment; it is not the percentage by which customers’ bills would increase.
The rate cases are unfolding alongside American Water’s proposed acquisition of Essential Utilities, Aqua’s parent company. The ICC approved the transaction Nov. 5 despite CUB’s opposition. American Water and Essential announced the Illinois approval in a Nov. 6 statement, saying they continue to expect the transaction to close by the end of the first quarter of 2027, subject to remaining regulatory approvals and other closing conditions.
CUB argues that the combination would concentrate more than 99.9 percent of Illinois’ regulated water and wastewater utility customers under American Water affiliates. That figure concerns the investor-owned utilities subject to state regulation, rather than all water customers in Illinois. Municipally owned systems fall outside that category.
Beyond the pending cases, CUB is pressing lawmakers to revisit policies governing infrastructure surcharges and the recovery of costs associated with acquiring municipal water systems. The organization estimates that Illinois American and Aqua have purchased 61 systems since 2013 and passed more than $411 million in acquisition costs to customers.
The utilities’ position is that infrastructure spending supports safe and dependable service. The dispute before regulators centers on how much of the requested spending and investor return customers should be required to fund.
Customers can submit comments through the ICC’s public-comment system for Illinois American’s case, Docket 26-0127, and Aqua Illinois’ case, Docket 26-0495. CUB is also collecting petitions opposing the increases through its online action center.
Illinois Water Customers Face New Rate Requests as Utility Merger Advances
