Thursday, September 17, 2015

Citizens Energy Wants Rate Hike To Pay For Water Main Breaks

Average water bills for Citizen Energy's Indianapolis customers will rise $6 a month next year if the IURC grants its latest rate increase. Officials of the supposed nonprofit utility say it needs the rate increase to pay for water main break repairs. Many of the water mains the utility says are nearly 100 years old, and it's experiencing about 700 breaks a year. Citizens says it costs $6,000 to repair a broken main, or about $4.2 million a year.

So Citizens Energy finds itself in a pickle of its own making. Here's why. When Citizens Energy agreed to buy the water utility from the City, it paid a premium of nearly a half billion dollars so Mayor Greg Ballard would have a slush fund to dole out pork barrel projects to reward his campaign contributors prior to his re-election campaign in 2011. The City overpaid for the utility when it bought it from NiSource under Mayor Bart Peterson. NiSource bought the water company from the Indianapolis Water Company, and then proceeded to sell of its most valuable assets while ignoring long-overdue infrastructure repairs.

Inexplicably, Mayor Peterson and the City-County Council agreed to pay NiSource more than it had purchased the water utility from IWC a few years earlier, minus some of its most valuable, money-producing assets. The City then privatized the management and operation of the water utility, turning control of it over to the French company, Veolia, another bad deal for ratepayers. The City had to pay a $29 million break-up fee to Veolia to terminate its agreement with the City, a cost passed on to ratepayers as part of the purchase price Citizens Energy paid. That money could have been better spent repairing over 4,800 water main breaks over a 7-year period. In the course of these transactions, the water utility ran up debt well north of a billion dollars. There was absolutely no basis for paying the City of Indianapolis that half billion dollar cash premium. These were all sham transactions undertaken to make multi-millionaires of several political insiders at the cost of the ratepayers.

The IURC had the power to reject the Citizens Energy deal. It knew or should have known the utility was paying too much for the debt-strapped water utility. The evidence also showed all of the prior owners had failed to keep pace with maintenance of the utility's key infrastructure components, which would have to be addressed at some point. Now ratepayers are being slapped regularly with double-digit rate increases to pay for all of these past, sham transactions used to enrich a group of political insiders.This is what happens when you put the foxes in charges of guarding the chickens at the IURC.

If the IURC cared about ratepayers, it will order Citizens Energy to stop spending millions of dollars annually on phony, feel-good ads blanketing local TV and radio stations and make it give up those costly suites and tickets at Lucas Oil Stadium and Banker's Life Fieldhouse. A nonprofit utility has no business spending money entertaining at sporting events and concerts. Slashing the ridiculous salaries of its overpaid executives and eliminating unnecessary, top-heavy management jobs should also be demanded. Then maybe it will have some spare change to afford necessary repairs rather than constantly sticking it to the ratepayers.


Eric Morris said...

Amen, brother Gary! Natural monopoly is a myth and it is just another excuse/justification for those in power to plunder the rest of us.

Anonymous said...

Right you are on those salaries and bonuses. What creates six figure incomes? Nepotism

Anonymous said...

I'm tired of all this negative talk. I mean, gosh, look at downtown and Georgia Street and all the cool new lofty places on mAss Ave. This is the up and coming city of the Midwest. So what if the sewers are exploding, potholes don't get filled, houses get abandoned and people are using generatiors to keep the lights on thanks to Meester Ballard's inept and corrupt leadership? Every city's corrupt! It's a small price to pay to be the COOL city in the most backward state in the fastest dying part of Amerika. I hope we get a new stadium soon. It has been awhile.

Josh said...

To be fair, the blight that is now covering Indiana like a ubiquitous membrane started to form decades ago with the selloff of factories and other means of a production economy, the Ballard admin and similar admins above and below office of mayor are just a symptom of it.

Those in government seem to think everyone is rich like they are, however they are on welfare just like every other government employee, they just think they're above the pensioner or poor person who needs food stamps.

And it will get worse as the death blow struck the world economy in 2008 starts spreading to the vital organs and kills them. Large banks are now shedding workforce to the tens of thousands, soon other industries may follow suit.

Pete Boggs said...

That's insight Josh! Most government employment is adult daycare or a welfare scheme.