Saturday, December 19, 2009

Water Company Spends More Than A Million On Rate Increase Request

WTHR's Mary Milz has a mind-blowing report on how Indianapolis Waterworks has spent more than $1 million on its efforts to increase water utility rates for Indianapolis residents this past year. Much of the money has been spent on lawyers and public relations representatives. The waterworks' executive director, Matt Klein, sounds like a complete buffoon trying to explain to Milz why he needed a public relations representative from Sease Gerig & Associates standing next to him while she interviewed him. Here's a bit of Milz' story:

Waterworks Executive Director Matt Klein joined the utility in March. "I know it's cost a lot. I'm not happy. I'm a rate payer too," he said.

Most of the $1.1 million, more than $700,000, has gone toward attorney fees, some as high as $445 an hour. That has Hunter wondering why city attorneys couldn't do the job or at least play a bigger role in the case.

"The rate case is a particular kind of regulatory act and we need to bring in people, lawyers and consultants with expertise, who know how to prosecute a rate case," said Klein.

Waterworks has also hired engineering, accounting and communications consultants.

After the utility lost its communications specialists in September, it signed a contract with Sease, Gerig & Associates. The contract calls for paying the firm up to $170 an hour to "assist in communicating...the need for the proposed rate hike," to work with members of the media, be a resource to Waterworks staff and "work with local government officials as needed to implement the strategic plan necessary to obtain IURC approval."
Republican City-County Councilor Benjamin Hunter expressed his outrage at how much money the water company has spent on consulting work. "Couldn't that duty be spread to someone else in the organization? Could someone else pick up the tab or could a city [public information officer] assist them in the meantime?" said Hunter.

Suffice it to say that the Ballard administration has been an utter disappointment when it comes to its handling of the water company. The corruption in its administration began under the Peterson administration when the former mayor negotiated a deal that called for the City to purchase the utility for more than double its actual value. That deal was loaded with consulting agreements that spread the wealth around to fatcat political cronies. That was followed by the one-sided privatization agreement with Veolia, which made even more fatcats a lot of money. Then there was the ill-fated decision to switch out of long-term bonds to variable rate bonds with all of the attending consequences and risks, which set taxpayers back at least another $60 million.

The Ballard administration made the Veolia contract even worse from the standpoint of the City's residents. It now wants to sell off the water company to a public benefit corporation; however, it first wants to jack water rates another 35% (that translates into a doubling of water rates under Ballard) to increase the value of the water company to a purchaser so it has a windfall of money to spend on public works-related projects. Again, the big winners will be the fatcat contributors who've donated millions to Ballard's re-election campaign committee since he took office two years ago.


Citizen Kane said...

That is one of the big problems that no one pays attention to - whenever there is any hint of restructuring, money gets spent on expensive, needless consultants who suck money out of a supposedly financially hurting entity. Sometimes it is a little bit of money and sometimes it is a lot. Relatively speaking, it always ends up being a substantial sum of money, with no discernible benefits. Most problems can be fixed with the implementation of basic management techniques. Privatization, sell-offs and other forms of restructuring only divert money from the basic mission - and the cycle repeats itself. These latest set of ventures by city government will end up the same as the others - private (friends) benefit and the general public loses.

Paul K. Ogden said...

CK, is exactly correct that I would add "lawyers" to his comment about consultants.

How else can one explain $580,000 to draw 29 CC council districts when Rokita did 150 districts for $20,000.