Regulators approve Indianapolis water utility transfer

State regulators on Wednesday approved a proposal to transfer control of Indianapolis’ water and sewer utilities to a local not-for-profit trust.

The $1.9 billion sale will put management of the utilities, which were owned by the city and run by private operators, into the hands of Citizens Energy Group, a provider of gas, steam and chilled water.

It also transfers about $1.5 billion in city utility debt to Citizens and frees up $425 million for the city to invest in roads, sidewalks, bridges and other infrastructure – as well as potential projects such as demolishing abandoned homes and priming infrastructure for economic development deals.

The City-County Council approved the sale last July, and approval by the Indiana Utility Regulatory Commission was the last step needed to finalize it.

“The stage is now set for the city to make unprecedented investments in our community that will help to improve quality of life for decades to come,” Mayor Greg Ballard said in a prepared statement.

The city and Citizens will review documents needed to complete the transaction in coming weeks before the deal is finalized. Citizens will assume the city’s contract with United Water to operate the wastewater system and has offered positions to most employees at Veolia, the private operator of the water system.

 Citizens has projected it can save between $40 million and $60 million per year by combining the operations of the utilities under one umbrella.

If those savings levels are achieved, it will help curb projected triple-digit rate increases projected over the next 15 years. If projections miss, residents could see their rates increase above those estimates to pay off hundreds of millions in debt for the sale.

Rather than elected officials or their appointees, Citizens’ board of directors will now make decisions about when to seek rate increases and by how much. The board is appointed by a board of trustees.

The Indiana Utility Regulatory Commission, whose members are appointed by the governor, also will have to approve rate increases.