IBJNews

Toll road operator among water-utility suitors

Back to TopCommentsE-mailPrintBookmark and Share

Among 23 firms that have expressed interest in operating Indianapolis’ water and sewer systems is Macquarie, the Australian firm that operates the Indiana Toll Road under a 75-year, $3.8 billion lease.

Macquarie arm Macquarie Capital Inc. does not detail its plans in an expression of interest filed with the city, but it notes its finance and operating experience in numerous projects worldwide.

One of the biggest is a 2006 deal in which a Macquarie-led consortium completed a $12 billion deal for Thames Water, the largest water utility in the United Kingdom.

Macquarie also is involved in consortiums that operate Acquarion Water, which serves customers in Connecticut, Massachusetts and New Hampshire. Another deal completed in 2007 involved Duquesne Light, a Pittsburgh-area utility.

In July, Mayor Greg Ballard issued requests for interest from companies potentially interested in operating the city’s water and sewer systems. Currently, the city’s water utility is operated under a long-term contract with Veolia Water; the sewage plants by United Water.

United Water and Veolia were among the 23 firms filing proposals with the city in recent months. Also among them was Citizens Energy Group, which provides gas, steam and chilled water service to the city.

Citizens, with annual revenue of $1.6 billion, proposes acquiring the water and gas utilities for about $1.5 billion.

Citizens said that as a public charitable trust it can conduct tax-exempt financing at favorable rates as a municipal utility. A private firm cannot, although the city could retain ownership of the utilities and instead partner with private firms to maintain a public-financing component.

Citizens has not ruled out partnering with other “world class” management firms to help run the water and sewer utilities, said Citizens spokesman Dan Considine.

In its presentation to the city, Citizens said it could also assume existing debt of the Department of Waterworks and Department of Public Works concerning the water and sewer operations.

While Citizens would appear to have an edge over rivals, Veolia is pushing its experience in managing water and sewer utilities worldwide, including 650 systems in North America.

Among them is Milwaukee’s sewer system, which includes a series of deep underground sewer-overflow tunnels of the type that Indianapolis plans to construct as part of a $4 billion combined sewer-overflow remediation plan being mandated by the federal government.

Indianapolis contemplates a deep tunnel system running from the northeast side to the southeast side of the city.

“We have a very strong U.S. presence” already, said Veolia spokeswoman Lou Ann Baker.

Veolia also has a 20-year contract with the city to operate Indianapolis Water.  The contract, inked in 2002, can be terminated by the city.  It’s unclear what financial penalties the city could incur by doing that, however.

Some firms expressed interest in only the sewer system, including Indianapolis-based Algaewheel. It proposes a different sort of wastewater processing that converts sludge to algae, which could further be processed into fuels such as biodiesel and jet fuel.

Another was Louisville Water Co., which operates the water utility in the Kentucky city as a for-profit. It shares 50 percent of annual profits with the city.

Meanwhile, engineering and construction firm Black & Veatch, a Kansas-based firm that has worked on combined sewer-overflow projects in the U.S., said it could bring up to $750 million in annual savings to Indianapolis through 2025.

Other firms expressing interest were Berndin Lochmueller, CH2M Hill, Keramida, and Shrewsberry and Associates.

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
ADVERTISEMENT