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IPL credits $1B in Indiana investments with nabbing new U.S. hub

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The state's corporate-friendly environmental policies aside, Indianapolis Power and Light Co.’s parent chose the city as its new center for U.S. operations largely because of the utility's billion-dollar upgrades.

AES Corp., a global energy provider headquartered in Arlington, Va., announced Friday that it planned to make Indianapolis a national hub and add up to 100 jobs, mostly for administrative and back-office functions. The new operation, dubbed the U.S. Strategic Business Unit, will be housed in IPL's existing headquarters on Monument Circle.

The unit will include IPL; Dayton Power & Light in Dayton, Ohio; and 19 other AES subsidiaries in the U.S., mostly power generators, reaching as far away as Hawaii.

During a Friday press conference, IPL CEO Ken Zabzebski, who will head the new nationwide operation, listed Indiana’s business climate and quality of work force as reasons AES chose Indianapolis.

But IPL's own investments were a big key, said Zabzebski, who will remain as IPL's CEO on top of his new role.

IPL plans to retire six coal-fire units at its Eagle Valley operation in Martinsville and build a natural-gas plant. The company also wants to upgrade coal plants on Harding Street in Indianapolis and in Petersburg in order to meet changing federal regulations.

The three projects will cost about $1 billion.

“We made a major investment in this state,” Zabzebski said Friday. “This continues to reinforce that investment, and [we] really believe in the state of Indiana and what we’re doing here.”

The investments—in particular the $511 million allotted for Harding Street and Petersburg—that helped lure the jobs to Indianapolis have been a point of contention for environmental and consumer groups.

The Sierra Club Hoosier Chapter and Citizens Action Coalition have both petitioned the Indiana Utility Regulatory Commission to deny IPL the right to upgrade the plants.

The groups believe IPL did not properly assess costs, and that there are better options available to meet regulations.

Now that IPL has pinned job growth to the investments, the IURC case has a new dynamic. Gov. Mike Pence and Indianapolis Deputy Mayor Deron Kintner both spoke publicly in favor of AES’ new operation at Friday's announcement.

Jodi Perras, Indiana’s representative for the Sierra Club’s Beyond Coal Campaign, said Indianapolis needs the jobs, but she hoped the AES announcement would not affect the IURC matter.

AES has developed renewable energy projects around the world, and should consider using some of those approaches in Indiana, she added.

“Perhaps some of their ideas could enlighten some of their employees in Indianapolis,” Perras said.

AES posted the first set of new jobs Thursday. Zabzebski said the company will search for people to fill financial and accounting positions in the first wave of hiring, which will take a few months.

The next round will include a lot of support jobs, such as human resources. The hiring will likely extend into 2014.

About 80 of the 100 new jobs will be new, with the remaining 20 being existing AES employees who transfer to Indianapolis.

AES is setting up similar hubs around the world. The company plans a European hub in the Netherlands and an Asian one in the Philippines, Zabzebski said.

Selecting Indianapolis as a management hub made sense to Morningstar analyst Charles Fishman, who covers AES. Besides the $1 billion in upgrades, IPL is bigger and more profitable than the Dayton utility, he told IBJ on Thursday.

"Indianapolis Power and Light has a reputation as being a very well-run utility," Fishman said.

About 1,400 people work for IPL today.

 

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