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Issue Brief · Water Rates

How Illinois American Water's Rates Are Set — and Where the Decisions Actually Get Made

A plain-language, fully sourced explainer for Homer Glen residents: what the Village can and can't do about your water bill.

September 2026  ·  Every factual claim below links to a public source. The numbers in brackets jump to the source list.

Illinois American Water's rates are not set by the Homer Glen Village Board. They are set by the Illinois Commerce Commission (ICC), a state agency, under a state law passed in 2013. The Village cannot cancel a rate increase. What it can do is explain honestly where the increases come from and where public pressure can still make a difference.

01 Who sets the rates

Rates for a private water utility like Illinois American are set by the ICC, not by any municipality[1]. Under the Illinois Water Systems Viability Act, passed in 2013 (Public Act 098-0213), a private water company that buys a local water or sewer system may add that acquisition cost to its rate base and recover it — with a guaranteed rate of return — from its customers[2]. That is the core reason bills keep climbing: every system the company buys becomes a cost that existing customers help repay, plus profit.

02 What Illinois American is asking for now

As of mid-2026, Illinois American is seeking a rate increase of approximately $142 million, and has asked the ICC to raise its guaranteed return on equity from 9.84% to 10.75%[3][4]. Over the past decade the company has already been granted roughly $230 million in increases[5]. The ICC is expected to rule on this rate case in December 2026, with new rates taking effect in January 2027[3].

03 The commissioners are not the story

It is worth being precise about the five ICC commissioners: state law bars them from being employees, officers, or stockholders of the utilities they regulate[6]. They do not own Illinois American, and there is no public record of any of them receiving money from it. Their job is to apply the statute the General Assembly wrote. The point of leverage, therefore, is not the Commission — it is the 2013 law, and the officials who keep it in place.

04 Follow the money — to the legislature, not the regulators

The companies that benefit from that law spend heavily on the elected officials who write and protect it. A 2022 Better Government Association / Illinois Answers investigation found that, since 2010, Aqua America and American Water gave campaign contributions to legislators in both parties and to local officials — for example, $12,500 to then-House Speaker Michael Madigan and $17,500 to then-Senate Republican Leader Christine Radogno — and that the same companies successfully pushed for the 2013 law[7]. That giving continues today: Illinois American operates its own political action committee, registered with the Illinois State Board of Elections (Committee ID 23537), whose recent contributions have gone to legislative leaders of both parties[8]. The PAC's own largest reported contributors are construction, plumbing, and pump companies — the kinds of firms that perform the utility's infrastructure work[8]. All of this spending is legal and publicly disclosed. That is precisely why it deserves attention rather than outrage: the system is working as written.

05 Why the fixes keep failing

Several bills would have changed the underlying law, and each has stalled. Senate Bill 75, the Water Affordability & Accountability Act, would require shareholders — rather than customers — to absorb the majority of acquisition costs and would repeal the surcharge that lets utilities raise rates between rate cases; it cleared committee but has not reached a floor vote. Senate Bill 3889 would require a public referendum before a municipality sells its system to a private operator; it remains in the Assignments Committee. Senate Bill 3178, the Municipal Water System Purchase Act, would give municipalities a legal path to buy a system back; it, too, was sent to Assignments. None has become law[9].

06 Homer Glen already tested the alternative

“Just buy the system” is not a free vote, and Homer Glen has the receipts. Through the Northern Will County Water Agency — Bolingbrook, Homer Glen, Lemont, Romeoville, and Woodridge — the Village pursued a takeover of the Lake Michigan transmission pipeline by eminent domain and won the right to proceed. But the estimated cost rose from about $43 million at the start of the litigation to roughly $200 million by 2022. Rather than commit to a nine-figure obligation that would fall on residents for decades, the Agency settled with Illinois American, effective January 31, 2023[10].

07 What is about to change — and why it matters now

Illinois American's parent company, American Water, and Aqua Illinois's parent company, Essential Utilities, announced an all-stock, tax-free merger in October 2025. The transaction is before the ICC as Docket 25-1057; if approved, Essential would become a subsidiary of American Water, combining into a company serving about 4.7 million customers across 17 states[11]. The Citizens Utility Board estimates that, following the merger and Illinois American's separate purchase of Prairie Path Water, more than 99.99% of Illinois' regulated private water and wastewater customers would be served by American Water and its affiliates[13]. The ICC is required to rule on the merger by November 5, 2026, and the companies expect to close by the first quarter of 2027[11][12].

Where your voice still counts

The Village Board does not set these rates, but residents can be heard where the decisions are actually made. The ICC accepts public comments at icc.illinois.gov — both on the proposed merger (Docket 25-1057) and on Illinois American's pending rate case. And because the 2013 law is what makes all of this possible, the officials who can change it are state legislators — particularly the leaders of both chambers who decide which bills receive a vote. That is where sustained pressure belongs.

08 How to verify this yourself

Campaign-finance figures can be searched at the Illinois State Board of Elections and through Reform for Illinois' Illinois Sunshine tool. The rate cases and the merger are on the ICC's docket system. Bill status is at the Illinois General Assembly. Federal contributions are at the Federal Election Commission.

Sources

Every claim above is keyed to the numbered sources below. Where a figure may shift as filings update, the underlying record is public and can be checked directly.

  1. Illinois Commerce Commission, “About the ICC” — the ICC regulates investor-owned water utilities and sets their rates. icc.illinois.gov/about
  2. Citizens Utility Board, “Tracking Illinois' Water Privatization” — the 2013 Illinois Water Systems Viability Act (P.A. 098-0213) lets private utilities pass acquisition costs to customers; 61 systems and $411.5 million and counting since 2013. citizensutilityboard.org/water-privatization-in-illinois
  3. Capitol News Illinois, “Utility watchdog warns of rising water rates as regulators consider requests,” July 7, 2026 — Illinois American's $142 million request; ICC to rule on the rate case in December 2026 and the merger by November 2026. capitolnewsillinois.com
  4. WSIU / Capitol News Illinois, July 7, 2026 — Illinois American's requested return-on-equity increase from 9.84% to 10.75%. wsiu.org
  5. Citizens Utility Board, statement on Illinois American's rate request, Jan. 27, 2026 — about $230 million in increases granted over the last decade. citizensutilityboard.org
  6. Illinois Public Utilities Act, 220 ILCS 5/2-101 et seq., and the State of Illinois Boards & Commissions listing for the ICC — commissioners may not be employees, officials, or stockholders of regulated corporations, or persons subject to the Commission's regulation. govappointments.illinois.gov
  7. Better Government Association / Illinois Answers, “Private Water Companies Give Big To Illinois Pols,” 2022 — since 2010, Aqua America and American Water gave to legislators of both parties and to local officials (e.g., $12,500 to Speaker Madigan and $17,500 to Sen. Radogno) and pushed for the 2013 law; the article is framed around the Homer Glen pipeline fight. bettergov.org
  8. Illinois State Board of Elections — Illinois American Water Co PAC (IL-Am PAC), Committee ID 23537 (contribution and expenditure filings; also compiled by Transparency USA). Search the committee directly at elections.il.gov, or view a summary at transparencyusa.org.
  9. Illinois General Assembly / LegiScan — bill histories for SB 75 (Water Affordability & Accountability Act), SB 3889 (referendum before a municipal sale), and SB 3178 (Municipal Water System Purchase Act).
  10. Village of Homer Glen, “Northern Will County Water Agency” and “A Detailed History of Lake Water and Sewer Service in the Village,” plus the NWCWA settlement agreement — pipeline cost rising from about $43 million to roughly $200 million by 2022; settlement effective Jan. 31, 2023. homerglenil.org
  11. Citizens Utility Board, “ICC should reject merger involving the state's two biggest private water utilities,” April 20, 2026 — American Water and Essential Utilities announced an all-stock, tax-free merger in October 2025; ICC Docket 25-1057; Essential becomes a subsidiary of American Water; combined 4.7 million customers across 17 states; ICC to rule by Nov. 5, 2026. citizensutilityboard.org
  12. American Water Works Company, Inc., Form 10-Q (filed 2026), U.S. Securities and Exchange Commission — merger expected to close by the end of the first quarter of 2027, subject to state utility-commission approvals. sec.gov
  13. CBS Chicago and Capitol News Illinois, July 2026 — CUB estimates that after the merger and Illinois American's purchase of Prairie Path Water, more than 99.99% of Illinois' regulated water and wastewater customers would be served by American Water and its affiliates. cbsnews.com/chicago
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