Utility watchdog warns of rising water rates as regulators consider requests

Customers across Illinois could be facing higher water and sewage bills as the state’s largest private water utilities seek rate increases and permission to merge.

Illinois American Water, the state’s largest private water utility, is seeking a $142 million rate increase, which would raise typical water costs for its 357,000 residential customers by around $14 per month. Typical wastewater customers would see an additional increase of around $28 per month.

Aqua Illinois, the second-largest private water utility serving over 90,000 customers in the state, has asked regulators to approve a $26.5 million rate increase, which would raise average combined water treatment and supply bills by about $23 per month.

But as the Illinois Commerce Commission weighs those rate cases, it is also evaluating a proposed merger between the two water utilities’ parent companies. The Citizens Utility Board, a watchdog group, is calling on the ICC to reject the merger.

The consumer advocate group warns that approval of the merger between Illinois American’s parent company, American Water, and Aqua’s parent company, Essential Utilities, would allow unprecedented market consolidation.

“Illinois American and Aqua have a long history of consumer complaints about escalating bills and poor service, and our expert testimony shows that there is no reason to believe that the merger will fix these problems,” CUB Executive Director Sarah Moskowitz said in a statement. “That’s why we urge the ICC to reject this deal or set strong guardrails to hold these companies accountable to their long-suffering customers.”

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After Illinois American purchased Prairie Path Water Company last month, which formerly provided water to customers in 15 counties in north and central Illinois, CUB estimates that approving the merger of Illinois American and Aqua Illinois’ parent companies would mean that over 99.99% of regulated water and wastewater utility customers in the state would be served by American Water and its affiliates.

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“The fact that Illinois’ two biggest private water companies are seeking higher rates in 2026, as one parent company tries to purchase another, just proves CUB’s point that the companies are more interested in seeking higher profits than actually serving the public good,” Moskowitz said.

If approved by regulators, the merger would be expected to close in the first quarter of 2027, according to a joint news release from the companies.

What customers can expect

Both water utilities say the rate increases are necessary to pay for critical infrastructure upgrades and upkeep of aging water pipelines, storage tanks and equipment.

If approved in full by the ICC, Aqua Illinois customers can expect to see a rate increase take effect in late April 2027. The increase would be roughly 15% for average residential customers who pay for wastewater collection and treatment in addition to their water bills, bringing monthly bills to around $178, and nearly 30% for residential customers who do not pay for wastewater treatment, bringing their bills to around $102 per month, according to the company’s public notice.

The company said the request also reflects its need to replace lead service lines and defend against cyber security threats.

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CUB objected to Aqua Illinois’ filing, saying it was driven more by shareholder interests and the company’s “outrageous” request to increase its shareholder return on equity from 9.6% to 10.8%, which CUB said would make it the highest of the state’s major utilities.

Rebecca Losli, president of Illinois American, said the company’s $142 million request was driven by approximately $577 million needed to “modernize and strengthen” its water and wastewater systems in 2026 and 2027.

“These investments directly benefit the communities we proudly serve and provide our customers with even more reliable service and improved water quality — from treatment to the tap,” Losli said. “It underscores our employees’ commitment to the health and safety of our customers and the communities we serve.”

Like with Aqua Illinois, CUB called out Illinois American’s request to bump its shareholder return on equity from 9.84% to 10.75%.

The watchdog urged customers of Illinois American to attend or submit comments ahead of a public ICC forum in Bolingbrook on July 14. Customers can submit comments online or by calling the ICC’s Consumer Services Division at 1-800-524-0795 on weekdays between 8:30 a.m. to 5 p.m.

A forum has not been publicly scheduled regarding the Aqua Illinois rate case as it is in an earlier stage, but impacted customers are still able to submit comments on the ICC website.

Gov. JB Pritzker recently signed legislation that requires the ICC to offer public forums for customer feedback on future rate cases, although the bill does not take effect until Jan. 1.

The ICC is expected to rule on the proposed merger in November, on the Illinois American rate case in December and on the Aqua Illinois rate case in May 2027.

If approved, Illinois American’s rate increase would take effect in January 2027 and Aqua Illinois’ in late April 2027.

This story was originally published by Capitol News Illinois and distributed through a partnership with The Associated Press.