Three Jefferson County rural water companies who buy their water from the City of Madison have jointly filed a lawsuit against the city and Mayor Bob Courtney related to a water rate increase adopted by Madison City Council on May 17 and scheduled to be effective on July 15.

The city adopted the rate increase to pay off a proposed bond issue — estimated at $13 million — to fund deferred maintenance and upgrades to a utility that serves all residential, business and commercial customers in Madison and provides bulk water sales to the Canaan, Dupont and Ryker’s Ridge rural water companies for delivery to their customers.

In addition to the deferred maintenance and improvements, the rate hike also seeks to provide ongoing funds for capital improvements and to offset cost of living expenses that in the past have not been passed along to customers. Madison’s water rates are some of the lowest in the state and the city’s water rates have not increased since 2008 and there have been only two rate increases since 1999.

Meanwhile, Madison pumps 800 million gallons of water annually serving thousands of customers in Jefferson County and fringe areas of some neighboring counties and, based on contracts signed in the 1990s, provides Dupont up to 10 million gallons monthly and Canaan up to 12 million gallons monthly as well as an unspecified amount to Ryker’s Ridge Water Company.

The suit, filed in Jefferson Superior Court on May 20, contends, among other grievances, that the rate increase “disproportionately allocates costs to high volume users,

such as Dupont and Canaan” by “increasing the highest volume rate by 95%, while only increasing the lowest volume rate 79%.”

The suit also contends that existing contracts provide that any rate increase or decrease be “based on a demonstrable increase or decrease in the costs of performance hereunder, but such costs shall not include increased capitalization of the Seller’s system.” It also cites Federal mandates that rates must “be raised or lowered proportionately as certain specified rates for the supplier’s regular customers are raised or lowered.”

The suit contends that the rate ordinance “improperly charges Dupont and Canaan payment in lieu of taxes, which is not an expense to serve Dupont and Canaan because they are located outside of Madison and Madison could not tax them or their users.”

The lawsuit asks the court for judgment declaring the rate ordinance “unlawful, unenforceable and void “ and “awarding costs in this action, and providing all other just relief.”

Mayor Courtney on Wednesday said the city has demonstrated the need for the rate increase and he believes the rates are fair for the services being provided to the rural water companies.

“The City of Madison water utility serves thousands of customers across the community and the county,” said Courtney. “We have demonstrated the need to make a material investment to sustain our water system for the future and this is one aspect of the city’s business which is fully supported by user fees. We believe we have offered fair rates to the three county water resellers and on behalf of the City of Madison residents, will work toward a positive resolution, including defending the matter in court if necessary.”

A full listing of the lawsuit and its supporting documents can be viewed online at by searching Case No. 39D01-2205-PL-000379 or Dupont Water Company Inc., Canaan Utilities Corp., Ryker’s Ridge Water Co. v. City of Madison, Indiana.