Consumer Groups Say Ballard Water Rate Hike Too High

The Office of Utility Consumer Counselor and the Indianapolis Water Industrial Group are opposing the Ballard administration's efforts to hike water utility rates by 17%. The groups tell the IURC the Indianapolis Water Company can get by with a 10% rate hike. The Star's Brendan O'Shaughnessy explains:

Waterworks officials said that even with the full rate increase, the department would need a short-term loan of $6.5 million to make it through this year.

But the opponents said the department overstated its debt and upgrade needs, underestimated revenues and planned to give Veolia, the France-based private contractor operating the utility, an improper 5 percent contract increase.

"They didn't meet the burden of proof for any emergency relief," said Bette Dodd, an attorney for the industrial group that includes National Starch and Rolls-Royce.
Jo Lynn Garing, a spokeswoman for the department, disagreed.

She said the opponents expect the department to tap into reserves but that bond agreements do not allow that. She said the full rate increase is needed or the department's credit rating could be downgraded, causing future projects to cost more in interest fees.

Unbelievably, the Ballard administration has refused to investigate and review the awarding of the more than $40 million a year privatization contract to Veolia during the Peterson administration. The French-owned company hired a bevy of lobbyists with close ties to Peterson to represent it. Observers say the City gave away the store to Veolia, leaving little operating income for the water company. Ballard had promised his supporters during his 2007 campaign he would get to the bottom of the water company mess. Instead, he is seeking to give even more money to Veolia and forcing water users to pay the penalties the water company is incurring because of questionable bond transactions the Peterson administration approved that are now costing at least $70 million in prepayment penalties to avoid paying 9.5% interest rates.

On an interesting side note to this story, Ballard's Department of Waterworks hired as the new executive director helping to oversee the Indianapolis Water Company, Matt Klein, who previously worked as an environmental lawyer for Bose McKinney, one of the firms heavily involved in the original water company deal with Veolia. Federal district court Judge Larry McKinney recently imposed sanctions against the Bose McKinney law firm for its role in representing one of the parties involved in the case of 1100 West, LLC v. Red Spot Paint & Varnish Co. As reported by the Indiana Law Blog recently, Judge McKinney concluded, "In summary, at least starting in the summer of 2006, BME skated the edge of its responsibility to its client, to 1100 West, and to the Court under the Federal Rules of Civil Procedure to disclose relevant information as well as information likely to lead to relevant information." McKinney continued, "BME also failed in its responsibility to be candid with the Court by making statements in Court filings that it knew were misrepresentations at best and false at worst." Judge McKinney's order specifically identifies misconduct committed by Klein as an associate at Bose McKinney for work he did on the case.

UPDATE: The IBJ's Scott Olson has more on the Bose McKinney/Matt Klein story today. He writes about Bose McKinney agreeing to pay some of the other party's legal fees:

Bose McKinney & Evans LLP has agreed to pick up part of the opposing counsel's legal tab in an environmental-contamination case in which a federal judge sanctioned both the Indianapolis-based law firm and its client for withholding evidence.

Details of the settlement reached Friday are confidential. But the legal tab split between Bose and its client, Red Spot Paint & Varnish Co. in Evansville, is estimated to runs into the millions.

The firm's agreement to pay the fees stems from a June 5 order in which Indianapolis Judge Larry McKinney found Red Spot failed to come clean about its use of the toxins trichloroethylene and perchloroethylene, and that Bose "compounded the problem by, like a chameleon, becoming indistinguishable from its client."

In his order, McKinney stipulated that Bose and Red Spot each pay half of the legal fees of the plaintiff, 1100 West LLC, a neighbor of Red Spot's that had blamed the company for contaminating its site. The judge also declared 1100 West victorious without going through a trial.

"We are very pleased that 1100 West and Bose McKinney & Evans have today resolved their differences in a mutually satisfactory manner." Bose McKinney Managing Partner Kendall C. Crook said in a written statement issued late Friday.

The law firm stepped down from representing Red Spot early this year, and the two principal litigators who handled the case are no longer with the firm. One was fired and the other agreed to quit, according to court records.

In legal filings since, the parties have blamed one another for the miscues.

"Despite being represented by 'new' counsel ... Red Spot continues to obfuscate the truth. ... This demonstrates the root cause of the problem is Red Spot itself and not the lawyers," Bose charged in court papers.

For its part, Red Spot wrote that Bose McKinney, which had collected nearly $3 million in legal fees, had thrown its former client "under the bus" in an effort to distract the court from its own misconduct.

Besides expensive legal fees wracked up in the 6-year-old case, Red Spot is on the hook for millions of dollars in cleanup costs.