Environment and Utilities and Media & Marketing

Citizens' new name is a gas-in a way: Parent company of local utility adds 'energy' to its moniker to reflect diversity of operations

August 25, 2008

Citizens Gas & Coke Utility on Aug. 25 will announce a new name and logo that reflect the diversification of its energy businesses and the closure last year of its 98-year-old foundry coke plant.

Citizens Energy Group will be the name of the parent, a utility founded 120 years ago. Two units-Citizens Gas and Citizens Thermal-will retain their names. But a third, Citizens By-Products, will be renamed Citizens Resources.

"We're entering a new era," said Citizens President and CEO Carey Lykins.

"We need to present a more contemporary, modern image. Even 'utility' is a pretty old-school concept."

The familiar blue "G" logo that has identified Citizens Gas since at least the 1970s is gone. In its place is a blue and green "C" tilted sideways.

Trying to appear more environmentally "green" is not uncommon among utilities these days.

Earlier this year, Indianapolis Power & Light dumped its red, upper case "IPL'' for lessimpactful, lower-case letters, accented by a dash of green.

It's not all show. IPL recently agreed to buy 100 megawatts of power from a northern Indiana wind turbine farm. Citizens' main product-natural gas-is inherently less polluting than coal and its steam division gets part of its supply from trash burned at the city's south-side waste-to-energy plant.

Citizens customers have been spared from one contemporary trend: an ambiguous energy company name the likes of Avista or Vectren.

Indianapolis advertising agency Bandy Carroll Hellige found that "Citizens" had a great deal of "brand equity," said Citizens spokesman Dan Considine.

"It's been part of our name for 100 years. Why would we change that?" said Lykins, who began contemplating the name changes last year as Citizens wound down operations at its Prospect Street plant that baked coal into foundry coke.

Competition from foreign coke suppliers and a slowdown in the U.S. metals industry made the plant a liability. Production ended last summer, but demolition likely won't get started in earnest until next year.

Citizens built the plant in 1906, just as supplies of natural gas from wells in central and east central Indiana began to play out. One of the by-products of baking coal was synthetic gas, which once coursed through Citizens' lines in Marion County.

Natural gas and steam service still account for the bulk of Citizens' $522.5 million in 2007 operating revenue, contributing $477.3 million to the total. But gas and steam posted a combined loss last year of $4.2 million, and the prospect of revenue growth in the sector seems remote because the utility's customer base in Marion County is flat. In fact, the average number of customers last year fell 184, to 265,655. Citizens competes with IPL to be the heating source of choice among builders.

Looking at flat market growth, Citizens in recent years grew far beyond coke and natural gas-a diversification that makes the Citizens Energy Group name appropriate.

One of its divisions, Citizens By-Products (now Citizens Resources), earned nearly $32 million last year. Resources oversees Citizens Mechanical, which provides HVAC services to businesses. It also represents Citizens' ownership interest in Indianapolis-based ProLiance Energy. ProLiance is among the nation's largest suppliers of natural gas to municipal utilities and big industry.

Much of the company's growth has also come from the sale of chilled water to downtown buildings. The sale of chilled water to 50 downtown customers last year generated a profit of $9 million. It's investing upward of $15 million in those downtown operations this year.

Meanwhile, Citizens sees potential growth through the construction of socalled district energy plants. For example, it plans to construct a natural-gaspowered steam facility in Speedway to serve large employers there such as Allison Transmission.

"We're hoping to market and expand this business line," Lykins said.

Citizens also has moved outside of Marion County. It operates a district energy plant for an Eli Lilly and Co. facility in Greenfield. It also owns Westfield Gas, in Hamilton County.

Overall, Citizens Energy Group last year lost a combined $28.6 million, partly reflecting a $66 million charge from the discontinued coke operation.

Lykins said the cost of the name change will be "diminimus." Logos will be changed out gradually as the company replaces things such as trucks and uniforms.

"We'll do this in as modest a way as possible," Considine said. "We're not going to do any multimedia advertising."
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