Tuesday, March 30, 2010

Citizens Will Borrow Money To Purchase City Utilities

A public information meeting on the proposed sale of Indianapolis' water and sewer utilities to Citizens Gas raises more questions about the ramifications of the sale to ratepayers. Citizens plans to borrow $170 million to make a cash payment to the City of Indianapolis at the closing of the deal. It says it will repay that debt with the savings it will realize from its management of the utilities. Citizens will also be assuming more than $1.5 billion in debt currently owed by the water and sewer utilities. The borrowing costs of Citizens could drive up future rate increases to cover Citizens' costs.

Citizens insists that Indianapolis ratepayers will be better off under their proposed purchase than any other offers the City of Indianapolis considered during its Request for Information process. Citizens has not produced any hard data that backs up this claim. The City only engaged in serious discussions with Citizens so the public really has no idea what the financial model may have looked like if one of the other bidders had been allowed to negotiate a price with the City.

Citizens claims Indianapolis ratepayers will realize a 25% reduction in rates under their management. When asked to guarantee that rate reduction, Citizens conceded it could not make that assurance.


Downtown Indy said...

Don't you think Citizens should be using their money to first clean up the toxic waste dump they abandoned on East Prospect Ave a couple years back?

I suspect that parcel of chemical goo will sit and seep into the aquifer for decades like the National Lead plant on South Arlington did.

It sat there, a dilapidated eyesore and chemical wasteland, for probably 25 years until it was cleaned up a few months ago.

Well, at least the stench is gone.

Sean Shepard said...

Just to clarify the statement, "Citizens claims Indianapolis ratepayers will realize a 25% reduction in rates under their management."

It is my understanding that Citizens claims that by 2020-something rates will be 25% lower than they might otherwise be if things remain under city ownership and control.

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