INDIANAPOLIS -- A state consumer agency has recommended against a massive water rate hike for Indianapolis Water customers.

Veolia Water, which runs the Indiana Department of Waterworks, said millions of dollars in improvements are needed, and requested a 35 percent rate hike last year.

But the Indiana Office of Utility Consumer Counselor, which represents consumer interests before state and federal bodies that regulate utilities, recommended on Tuesday that the Indiana Utility Regulatory Commission only approve a 21 percent increase for the utility.

"Our staff has closely scrutinized the testimony and exhibits filed by the DOW in late September," said Indiana Utility Consumer Counselor David Stippler in a statement. "Based on our review, we concur that Indianapolis Water needs to make a number of capital improvements that are long overdue, and that it is entitled to recover reasonable costs that will -- in turn -- ensure safe water and reliable service for customers in the years to come."

About 1 million customers are on Indianapolis Water's system

The IURC approved an 11 percent rate hike in the summer of 2008, after the company slipped into debt amid the recession.

Indianapolis Water will have the opportunity to file rebuttal testimony next month. A company representative told 6News Tuesday evening that utility had not yet had a chance to review the OUCC's filing.