IBJOpinion

EDITORIAL: City water utility in over its head

Back to TopCommentsE-mailPrintBookmark and Share
IBJ Editorial

As missteps by the city’s water utility threaten to drown local ratepayers with dramatically higher bills, Mayor Greg Ballard’s administration is exploring a complete overhaul of the system. The mayor’s initiative—even though it’s not driven entirely by the water utility’s woes—can’t produce results soon enough.

The city’s purchase of Indianapolis Water Co. in 2002 has clearly backfired due to lack of execution.

A consultant’s report filed along with the Department of Waterworks’ pending request for a whopping 35-percent rate hike says the department was never adequately staffed to responsibly oversee the utility after it was purchased from Merrillville-based NiSource.

When important decisions must be made, the city staff too often defers to consultants, its own volunteer board and Veolia Water, the French firm that was hired to manage the utility, according to the report prepared by a Colorado utility consulting firm hired by the city to assess the utility.

The damning report is part of the case before the Indiana Utility Regulatory Commission, which must decide whether to grant the utility’s hefty rate increase. The higher rates would pay for $111 million in capital improvements to the city’s water utility infrastructure.

If the rate hike is granted, it will be the second one this year. The IURC earlier approved a 12.3-percent hike to cover more than $25 million in annual debt servicing costs caused by the utility’s overreliance on variable-rate bonds.

The Department of Waterworks already has taken some steps to get its house in order. In March, it hired the former head of enforcement at the Indiana Department of Environmental Management to run the department. Since then, some key positions, including chief financial officer, have changed hands, and there’s a greater emphasis on long-term financial planning.

More drastic changes are in the works.

In an effort to raise cash that could be used to pay for all manner of city infrastructure needs, including a sewer system in need of $2 billion in upgrades, the city is exploring selling the city’s water and sewer utilities outright.

The city’s Infrastructure Advisory Commission is considering proposals from 23 firms that cover a range of options. Among them is a pitch from Citizens Energy, which supplies natural gas here, to pay $1.5 billion for the water and sewer utilities.

The city must carefully consider which of the proposals will maximize the cash that can be generated to fund the city’s considerable infrastructure needs. But equal weight must be given to which proposal would result in responsible stewardship of the city’s water resources.

It’s unlikely the steep rate hike now being considered by the IURC would have been necessary had the utility’s daily operation and long-term capital requirements been handled with sufficient city oversight.•

__________

To comment on this editorial, write to ibjedit@ibj.com.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. How can any company that has the cash and other assets be allowed to simply foreclose and not pay the debt? Simon, pay the debt and sell the property yourself. Don't just stiff the bank with the loan and require them to find a buyer.

  2. If you only knew....

  3. The proposal is structured in such a way that a private company (who has competitors in the marketplace) has struck a deal to get "financing" through utility ratepayers via IPL. Competitors to BlueIndy are at disadvantage now. The story isn't "how green can we be" but how creative "financing" through captive ratepayers benefits a company whose proposal should sink or float in the competitive marketplace without customer funding. If it was a great idea there would be financing available. IBJ needs to be doing a story on the utility ratemaking piece of this (which is pretty complicated) but instead it suggests that folks are whining about paying for being green.

  4. The facts contained in your post make your position so much more credible than those based on sheer emotion. Thanks for enlightening us.

  5. Please consider a couple of economic realities: First, retail is more consolidated now than it was when malls like this were built. There used to be many department stores. Now, in essence, there is one--Macy's. Right off, you've eliminated the need for multiple anchor stores in malls. And in-line retailers have consolidated or folded or have stopped building new stores because so much of their business is now online. The Limited, for example, Next, malls are closing all over the country, even some of the former gems are now derelict.Times change. And finally, as the income level of any particular area declines, so do the retail offerings. Sad, but true.

ADVERTISEMENT