Monday, August 08, 2011

How About Spending The Money On Maintaining Our Public Utilities?

Mayor Greg Ballard and his Democratic opponent Melina Kennedy have been debating whether the City should spend all of the $425 million the City netted from the sale of the water and sewer utilities to Citizens Energy for new streets and sidewalks, or set aside some of the money as Kennedy would like to do for education and crime prevention. Some might also ask why the money isn't being spent on maintaining the utilities. A reader passed along a recent story that aired on WTHR News questioning why Indianapolis was experiencing such a high volume of water main breaks.

The water company is asking US to wait at least another week before we water our lawns.

The extremely high demand for water is putting a lot of stress on the city's aging water mains.

13 investigates has found the number of breaks isn't just high when compared to last year. It's also abnormally higher than one of our nation's biggest cities . . .

News of an extended request to voluntarily limit water consumption made news near the ninth hole.

It comes as the Indianapolis Water Company says high water consumption is "stressing" its old system.
"The lack of rain will drive people to demand more water, all at the same time. With that demand, it stresses the pipes. And that's what causes the main breaks," explained Department of Waterworks Executive Director Matthew Klein.

The city has had 65 main failures so far this month, nearly a dozen more than last year.

But water mains were breaking at a record pace well before the dry spell. Most contributed to freezing and thawing.

Now the city says it's the heat-related demand.
"We want to make sure main breaks don't happen on hospitals, assisted living facilities and people who might be at risk," Klein said.

13 Investigates wanted to know how other cities with old systems were faring.

In Friday's New York Daily News, New York City reports 7,000 miles of old water mains dating back to the 1870s. That's 3,000 more than Indianapolis and some of New York's pipes are ten years older.

Yet last year New York recorded just 444 water main breaks. Indianapolis had nearly 700.

In 2009, New York had 360 breaks, while Indianapolis nearly doubled that number with 600.

New York city officials say heat is not a factor.

"Our 4,300 miles of mains are made up of different qualities, 50, 60, 100 years old, and depending on how you move the water, and the pressures," Klein said it could all add up to trouble.

New York also reportedly spent a billion dollars replacing and maintaining its system since 2002 using a team of "leak detection units." Indianapolis does not have such a system.
Yes, Klein's claim that heat is the reason for the high number of water main breaks is a complete fabrication. I've explained the history of the water company that led us to where we are on multiple occasions in the past, but it always seems to get overlooked in the big picture discussions by our esteemed civic leaders. I'll repeat the history again, although it's now too late to mean anything just like explaining why our nation's credit worthiness was downgraded on Friday. [No, the tea party is not to blame for the S&P's downgrade as some Democrats are now claiming, if you were stupid enough to buy that argument].

After NiSource bought the water company back in the 1990s, it started selling off its most profitable assets and ignored the infrastructure needs of the water company. It turned around and sold the water company to the City of Indianapolis for more than double what it was truly worth given the unmet infrastructure needs and the sell off of some of its prized assets. Despite major increases in water rates over the past several years, the City made barely a dent in the backlog of work that needed to be done after running up about $900 billion in new debt. In their infinite wisdom, Mayor Greg Ballard and the City-County Council approved a deal selling the assets to Citizens Energy and tacking on an extra $425 million to the selling price that could be spent by Mayor Greg Ballard in his re-election campaign on new streets and sidewalk projects. The utility assets' value were simply inflated to produce the $425 million. You and I will pay for that in even higher water and sewer utility rates over the coming decade, which will likely increase several fold. And you will also see higher rates to make the necessary repairs ignored by NiSource and its successor operator, Veolia. Like NiSource, however, Veolia made hundreds of millions of dollars at your expense due to the stupidity or corruption of our elected officials, pick your poison. Now the parties are squealing over whether Mayor Greg Ballard should be allowed to engage in self-promotion by touting the benefits of his deal, along with your skyrocketing utility bill. Yes, they really do think you are all just a bunch of suckers.


Paul K. Ogden said...

Gary, didn't you read Tully's column. The $450 million is found money, a big pot of money that fortunately was generated. Of course Tully says nothing abut Citizens taking out a 30 year loan to generate the pot of money and the fact that as Citizens is a public company, we rate payers have to pay that back.

Gary R. Welsh said...

And money grows on trees, Paul. We're stupid for not knowing that, aren't we?

Bob said...

The question of why were weren't spending money on maintaining the water system was one that I had as well.

As I understand it, the issue behind the broken water mains and the heat is that the internal pressure on the mains drops with excessive water usage (vs pumping capacity) during the heat - the change in normal pressure is what causes the deteriorated mains to then break. I would need more of an explanation to call "Bullshit" on that or not.

That said, having a water system that's unprepared for hot weather in summer is like not having snow plows for the roads in winter (Who knew it got hot in Indianapolis?!?)

I am glad the water system is being moved to Citizen's Energy. I think that the City has demonstrated its incompetence and willingness to treat the utility as a political tool--over a couple of different administrations including this one.

Wasn't there also a huge issue with the bonds having to be re-financed that cost a bundle?

Where is the independent oversight (IURC?) when you need it.

I believe that Fox 59 was doing "hard hitting investigative journalism" by sticking a camera in the face of residents who were watering their yard... too bad they didn't try that with me - I would have gladly asked them why they weren't focusing on why we have a decrepit system in the first place.

guy77money said...

Hey guys. The city screwed up with the bonds instead of getting out of the variable rate bonds when the first ones failed they got some horrible advice and held on to them thinking that the interest rates would come down. It didn't happen and they ended up buying them out around 10 percent. Thus they ended up going for an emergency rate increase just to keep the water company solvent. The Gas Company was a lot smarter, when their first variable bond failed they bailed out of all of them immediately thus saving them and the rate payers a bundle.

Not sure who were the knuckle heads who were advising the city? But at least the water company will be in better hands.

Paul K. Ogden said...

I just cannot buy that pipes are breaking because it's hot outside. That doesn't sound right.
The pipes are in the ground where it's cooler.

The explantion sounds made up. I think it's just because it's an old system.

guy77money said...

It's called POLITICS and it sucks!

Indy4u2c said...

...the question as to WHY the CITY has FAILED to MAINTAIN the WATERWORKS falls on Ballard.

Mayor Ballard, why have you neglected the WATER UTILITY?

guy77money said...

Paul what happens is they have to turn up the pressure to keep up with demand thus causing the breaks. I don't think the Water Company has ever has a policy to replaces old mains. When they were a private company they were using most of the excess cash to pay the dividend on the stock. When NIPSCO and the city took over they were more focused on new mains and growing the customer base. The old mains have never been much of a concern to the water company.

As a side note the city sold all of the new water mains to Carmel (north of 86th street) so they wouldn't slow down the sale from NIPSCO to the city.

guy77money said...

Actually Gary NIPSCO sold off Miller Pipe Line and SMNP and all the land up around Geist after they found out that the city was going to go after the Water Company. SerVass and Peterson were in such a hurry to complete the sale they just ignored everything that should have sent up red flags! The city ended up paying more then double the amount NIPSCO paid minus the above companies. Of course the Columbia Gas purchase which caused them to sell the water company blew up in their faces. That little bum CEO of NIPSCO Gary Neal (or was it O'Neal) walked away with a golden parachute and ruined two good Indiana companies.

Citizen Kane said...

Of course, Tully is paid to ignore the obvious and promote status quo propaganda. Don't you guys know that utility pipes aren't really infrastructure - it just a bunch of stuff in the ground? Once you put it in, what more is there to do? Now paving over the roads, without fixing the deteriorated pavement base, is something special indeed - Rebuild Indy!

Marycatherine Barton said...

Thanks, Gary. Yes, the parties really do think all of us 'subjects' are, to quote you, "just a bunch of suckers". And yes, I do think the proceeds of the sale of our water and sewer utilities to Citizens Engergy, should be spent on maintaining OUR public utilities.