Lebanon Utilities backs conditional shift of hydrant costs to water customers

Lebanon Utilities backs conditional shift of hydrant costs to water customersThe Lebanon Utility Service Board has advanced revised LEAP and Civil Water District rate ordinances that would introduce meter-size-based monthly fire-protection charges if the city removes hydrant-rental funding from its 2027 budget. The board approved the recommendation despite dissent over the affordability implications of moving the cost into customer rates.

Resolution 2026-11 recommends ordinances replacing annual hydrant-rental payments with monthly fire-protection charges tied to meter or water-service-line size.

The revised rates would apply only if the Common Council adopts a 2027-and-beyond budget without hydrant-rental fees paid to Lebanon Utilities.

Staff said Baker Tilly calculated the fire-protection rates; all other applicable rates were reviewed by the CFO and, apart from the new fire-protection charges, had not changed.

The resolution passed with one recorded no vote and will proceed to the Common Council for readings.

Lebanon Utilities has endorsed a conditional restructuring of water-rate schedules for its LEAP and Civil Water Districts, opening the way for fire-protection costs currently recovered through city hydrant-rental payments to be charged directly to water customers. At its 7 October meeting, the Utility Service Board approved Resolution 2026-11, recommending that the Common Council adopt amended and restated rate ordinances for both districts. The change would take effect if the council adopts a 2027 budget, and subsequent budgets, without hydrant-rental fees paid to the utility. Under the proposed ordinances, the annual hydrant-rental charge would be replaced by a monthly fire-protection charge based on the size of the meter or water service line serving the fire-protection connection. The resolution states that the purpose is to maintain revenues sufficient for utility operation and maintenance and for necessary system improvements and expansion. Legal counsel told the board that Indiana law provides two routes for recovering public fire-protection or hydrant costs: a hydrant-rental payment from the city, or incorporation of those costs into water customers’ basic rates through a city ordinance. The proposal is framed as an “if-this-then-that” approach: if the city budget removes hydrant rental, the revised district rate schedules would provide the alternative recovery mechanism. Baker Tilly prepared the rate analysis embedded in the proposed LEAP and Civil ordinances, according to the meeting discussion. A board member read a response from the utility’s CFO saying the ordinances had been reviewed and that, while wording changes had been made, the applicable rates appeared accurate; the exception was the new fire-protection rates. The decision prompted disagreement among board members. One member opposed the resolution, arguing that transferring the cost to ratepayers would harm affordability and that the Common Council could consider the ordinances without the board’s endorsement. The member said the city’s current utilities budget included a $518,641 hydrant-rental fee, while the city was also collecting a maximum payment in lieu of taxes of $753,751 from utility bill payments. Other members said the board needed to preserve the utility’s revenue base and follow the statutory framework if the city chose to end hydrant-rental funding. One member described the choice as a “rock versus hard place,” while another said the utility had no choice but to capture the revenues needed to provide reliable service. The motion carried with one no vote. The proposed ordinances will now go to the Common Council for readings.