Water, sewer deal gets final OK

Indianapolis Star – Indianapolis, Ind.

Citizens Energy Group will take control of Indianapolis’ water and sewerutilities in about six weeks, following state regulators’ approval of the deal Wednesday.

Under the deal, first announced early last year, Citizens will take over the utilities’ operations and capital projects, as well as $1.5 billion in debt. The city will receive at least $425 million to use on infrastructure projects such as roads, sidewalks and bridges as part of Mayor Greg Ballard’s RebuildIndy program.

The Indiana Utility Regulatory Commission held several hearings this year before granting approval Wednesday. Though the proposal’s details have drawn criticism — particularly the use of the proceeds for road projects –ultimately no group filed a formal protest.
Chris Cotterill, the mayor’s chief of staff, said it would take about six weeks to officially close the paperwork with Citizens.

Citizens is an Indianapolis-based nonprofit charitable trust whose natural
gas utility provides service to most of Marion County. The main change water
customers will notice is the name Citizens Energy Group topping their bills in
about six weeks.
No immediate rate increases are associated with the deal, although water and
sewer rates are expected to increase by triple-digit percentages over the next
15 years to pay for system upgrades. But Citizens Energy Group says its takeover
will reduce the extent of future rate increases by 25 percent by saving $60
million a year in operating costs.
Citizens spokesman Dan Considine said those savings will be realized because
the nonprofit will be managing five services — adding the sewer and water
utilities to the gas, chilled water and steam services it already operates. For
example, combining sewer, water and gas bills for customers of all three will
save $1 million annually.
“It’s really a lot about the economies of scale when you bring five entities
together,” Considine said. Mike Leppert, a former IURC executive director who now is a partner in the lobbying firm EvansLeppert, said the approval was no surprise.
“Citizens has a proven track record of running utilities well,” said Leppert,
who did not play a role in the Citizens deal. “I think it’s a good thing for the
city.”
The water utility has changed ownership several times, most recently in 2002.
That’s when the city bought it from NiSource, starting the only period of city
ownership in the water company’s 133-year history. It serves about 305,000
households and other customers in Marion County and portions of Boone, Hamilton,
Hancock, Hendricks, Johnson, Morgan and Shelby counties.
As part of the deal, the city has agreed to pay the water utility’s private
manager, Veolia Water, a break-up fee of $29 million to end its 20-year
contract, which began in 2002.
Citizens will operate the water utility, but the sewer system will continue
to be managed by United Water, which has a contract through 2016. Citizens will
handle customer service and billing for the sewer utility. It serves about
225,000 households and other customers in Marion County.
The mayor called Wednesday’s decision historic, saying Citizens has a
124-year reputation for quality service.
“The stage is now set for the city to make unprecedented investments in our
community that will help to improve the quality of life for decades to come,”
Ballard said.
Melina Kennedy, the Democrat challenging Ballard in the Nov. 8 election, has
raised the question of whether the city should gather more input before
committing all that money to RebuildIndy.
“I want to make sure the mayor makes it clear to the residents that they are
paying for these streets and roads through water and sewer rates,” she said.
“Just like all of us learned at a young age, money does not fall from
trees.”
Follow Star reporter Chris Sikich on Twitter at twitter.com/ChrisSikich. Call
him at (317) 444-6036.