Bloomington, Indiana – The City of Bloomington has officially advanced a substantial water-rate increase affecting nearly every customer class, including residents, businesses, irrigation users, Indiana University, and local wholesale utilities. The Bloomington Common Council passed the measure on September 30, 2025, sending the ordinance—Ordinance 2025-35—to the Indiana Utility Regulatory Commission (IURC) for final review and approval. While the city says the increase is necessary to maintain and upgrade aging infrastructure, the move has drawn pushback from major businesses and institutional users concerned about the financial impact.
Under the approved structure, residential customers will see rates rise to $5.31 per 1,000 gallons. Commercial and industrial users, many of whom previously paid rates in the low $3 per 1,000 gallons range, will face $5.83 per 1,000 gallons—an increase of roughly 46%. Indiana University, which relies on a master-metered system and consumes approximately 620 million gallons annually, will see its rate climb to $4.76 per 1,000 gallons, representing a 48% increase. Wholesale utilities, including Southern Monroe Water and Washington Township Water, will pay $4.49 per 1,000 gallons, while irrigation customers face the steepest hike, with rates soaring 122% from $4.92 to $10.92 per 1,000 gallons.
Large commercial and industrial users have been vocal in their criticism. The Bloomington Chamber of Commerce called the increase “dramatic” and recommended that the city implement a more gradual, predictable schedule for rate adjustments. Similarly, Indiana University has expressed concern but has not yet indicated whether it will formally challenge the rate increase during the IURC review process.
“IU, which uses 620 million gallons/year, will see master-metered rates jump 48% to $4.76 per 1,000 gallons,” according to city documentation, illustrating the significant financial impact on institutional users. Local water utilities are also bracing for higher costs, which will likely be passed on to their customers.
City officials argue that the increase is necessary to address an ongoing financial shortfall and support critical infrastructure projects. Studies from Crowe LLP and Stantec included in the rate-case packet indicate that the utility faces an annual revenue gap of $6.6 million. Over the next five years, the city has outlined an $84 million capital improvement plan that requires new debt capacity. Planned improvements include replacing aging water mains, updating electrical systems and chemical lines, repairing pumps, and modernizing the Monroe Water Treatment Plant.
State law mandates that municipal utilities maintain rates that are “nondiscriminatory, reasonable, and just,” ensuring that revenue covers system operations, debt service, maintenance, and equipment replacement. City officials say the ordinance aligns with these requirements and is designed to secure long-term reliability of Bloomington’s water system.
The IURC now takes the lead in reviewing the proposed rates. Under Indiana regulations, the commission has up to 300 days to issue a decision, with a ruling not expected until roughly August 2026. Until that approval is granted, the new rates will not go into effect, giving residents, businesses, and institutional users time to plan for potential adjustments in water costs.
Despite the controversy, city leaders emphasize the long-term benefits of investing in the water system. Officials argue that without the rate increase, the utility cannot meet current operating expenses or fund necessary infrastructure upgrades, which could lead to service disruptions or more costly emergency repairs in the future.
As the IURC review process unfolds over the coming months, stakeholders from across Bloomington will be closely monitoring developments. Businesses, residents, and institutional users are expected to weigh in, highlighting both financial concerns and the city’s responsibility to maintain safe and reliable water service. The debate underscores the challenge municipalities face in balancing fiscal sustainability with affordability for their communities.
