Would Citizens Water control costs?

We have no crystal ball by which to forecast the future.  However, if we’re permitted to speculate a bit, without being assailed for making unsubstantiated predictions, we anticipate that the proponents from the Anderson Corporation for Economic Development will likely be pushing hard to persuade Citizens Water, and the public at large, that their reservoir idea is necessary in order to augment the occasional dry-weather flows in White River to a growing and thirsty central Indiana.   (We might also add  “excessively consumptive” to the list— last year at this time, a residential customer on the Citizens Water system was drawing over a million gallons per day to irrigate his estate and private golf course in Carmel).  If the CED is successful in that pursuit, the doors would open up to financing sources such as municipal or utility bonds which are paid off over time by the ratepayers.

However, some in Indianapolis are currently skeptical of Citizens Water’s ability to control costs, including its management salaries, the cost of  which are also borne by its central Indiana customers (see below the recent critical blog post by Ogden on Politics and the included link to a related report in The Indianapolis Star about the high salaries).

A new dam and reservoir would likely ultimately be paid for primarily by central Indiana water customers and residents, approximately 180,00 of whom are living at or near the Federal poverty line, according, ironically, to a Citizens Water manager.  Of course, the Anderson and Chesterfield area residents who have voiced support for the reservoir idea probably wouldn’t be responsible for paying any of the costs of the new water infrastructure because their water is supplied by their own municipal system.


Ogden on Politics–  http://www.ogdenonpolitics.com

Saturday, July 6, 2013

Citizens Energy Rewards CEO By Doubling His Pay, Handing Out Other Perks While Asking for Large Rate Increase

The Indianapolis Star has an excellent article detailing how Citizens Energy is increasing pay and perks for its executives while asking for a huge rate increase:

Dozens of gold rings. A $6,500 holiday lunch catered by the Ritz Charles. And $2.9 million for the CEO.

Those aren’t the biggest factors behind Citizens Energy Group’sdecision to seek a 14.7 percent increase in water rates, but they’re the ones raising eyebrows.

The company, which provides water to about 300,000 Indianapolis-area residents, wants state regulators to approve the rate hike primarily to fund big-ticket infrastructure improvements.

Most agree those upgrades are badly needed. The long-neglected water system had 730 water main breaks last year and some sections date back to the 1800s.

But other expenses, including big paychecks and large raises for Citizens executives, are prompting concerns about the company’s stewardship of ratepayer dollars — and raising questions about its promise to keep rates low.

An Indianapolis Star review found that Citizens CEO Carey Lykins earned $2.9 million in 2012 — nearly double what he made the previous year and more than triple what the leaders of other large municipal gas utilities earned. About $600,000 of that was base salary. The rest was executive and short-term incentive pay.

Other executives at the company also saw big raises in 2012, with compensation for the company’s top 14 officials growing 54 percent, for a total of $11.2 million, according to filings in the rate case and information the company provided to The Star.

Citizens ranks fourth for number of customers, according to the American Public Gas Association. But when it comes to compensating its top executive, Citizens dramatically outpaces its counterparts.Utility chiefs in San AntonioPhiladelphiaMemphis, and Omaha earned $206,000 to $820,000 last year — not even close to Lykins’ $2.9 million.

To see the rest of the lengthy article, click here.

As I’ve said before, the sale of the water and sewer utilities didn’t net the public a dime.  The utilities were previously owned by the city, i.e. the residents of Indianapolis.  Citizens is a public trust owned by the public that consumes its services. The two sets of owners are virtually identical.  The sale was the equivalent of a wife taking out a loan to buy her husband’s car. Citizens took out a 30 year loan to pay the city the cost of the utilities. We the public have to pay that back.  Apparently in addition to much higher rates, Citizens has used the opportunity to dramatically increase executive compensation and perks.

Posted by Paul K. Ogden at 8:49 AM 3 comments: 


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