Asking the hard questions about who runs and owns utilities

Dateline: Thu 29 Apr 2010

Tom Henderson, manager of Extreme Labs Inc., a Bloomington-based computer analysis lab, is the author of a column in the April 10 Indianapolis Business Journal that raises red flags about Mayor Greg Ballard's proposal to sell  the water company and sewer system to Citizens Energy Group, a public trust.

Writes Hendersoon:

"Now there’s a new idea: Push the burdens from city-county governments to Citizens Energy Group. Citizens would take on the debt and perhaps do something about the problems. Economies of scale would create an efficiently run utility, serving the citizenry. Perhaps.

"Part of the overall utility problem is that lack of government oversight and public policy vision has made Indianapolis one of the highest-polluting and just plain ugliest cities in the Midwest."

He documents that assertion by citing the sale of Indianapolis Power and Light Co. some years ago to AES Corp. and the problems that resulted. As for the water utility deal, he says,

"The water utility faces the most radical change, along with sewer management. Its rates will climb the most radically over the next decade, as it needs to finance enormous amounts of construction. Shifting the burden actually solves little.

"And so Citizens Energy Group, a public charitable trust, gains the ownership of the rights of way, the easements, the capital infrastructure of the area’s largest utilities. The asset and liability shift is unprecedented. I encourage all of you to ask questions, and now, before the smoke clears—expensively.•"

The Star has also raised questions about the deal. In an April 27 article, Francesca Jarosz says Ballard is proposing a way to raise $450 million (even the number is in question) without raising taxes -- a technicality. The point is, ratepayers will be paying more, and ratepayers are of course taxpayers -- an argument made by  Grant Smith, executive director of the consumer advocacy group Citizens Action Coalition of Indiana.

You can read all of Henderson's piece here:

http://www.ibj.com/article?articleId=19200

In addition, on the IBJ website, there's an April 24 letter to the editor disagreeing with Tom's position.

 

Comments

Tell The Truth [Member] said:

You get what you pay for.

For 40 years, Indianapolis has had one of the lowest kwh electric costs in the world. But the cost to our environment, here and in Petersburg, site of their largest plant, has been enormous.

In 1983, the city commissioned a study on our Combined Sewer Overflow problem. The fix was about $150 million. An esrtwhile Republican City Councilwoman, Beulah Coughenour, shepherded that study and its fix-up timeline. At the last minute, the GOP machinery pulled the rug from her. "Too much new taxes!" was the battlecry. And it went unsolved until earlier in this decade. She fought against the tide in he rown party for a few more years, then gave up. She was a trooper.

Problems delayed are problems amplified. Mayor Peterson fixed part of the problem wiht the Pogue's Run project, which cost over $230 million total, and only fixed about 25%...enough to get the EPA off our collective asses (pardon the pun) for awhile.

Total fix for the CSO problem now: another billion. IF we start now. There's some minor tinkering around the edges, but the bix cost is pushed down the road.

Part of that problem flows back (pardon THAT pun) to the water utility, because sewer lines run parallel or, worse yet, combined with stormwater drainage lines under our city's core. The water utility collects sewer fees too, mostly as a percentage of your overall water bill because it's, uh, difficult to measure poop output from each home.

We have "gotten by" on multiple expensive fixes in this community, since UniGov delivered the soul of our town to the GOP in the 60s. They sacrificed much at the altar of "no new taxes" for four decades. The jail, City-County offices, court space...you name it. That was their governmemntal philosophy. It worked for them.

Try that approach at home. Ignore your house for 40 years. Forget roof repairs, plumbing and electrical upgrades. You'll have short-term cash in your pocket, and long-term expense. Or ruin.

I detest most of what Ballard stands for, but I give him credit for trying a creative solution to the sewer problem. He's pushing back water/sewer rate increases with a sale of the water utility.

Is it long-term smart? I leave that to the professionals. Given Ballard's track record, I doubt it.

One semi-gotcha moment: a good chunk of that GOP royalty lives in Williams Creek, or has over the years. All on septic. Along with 25% of our fair city. On freaking rural-type septic systems instead of sewers.

So the overworked sewers we've got, IF it had the whole city hooked up, would be smellier and deadlier if we had city-wide sewers. The public health implications have been are are staggering.

A good friend once joked, "There's a little of all of us in the White River."

Unless you live in Williams Creek. Then, if it rains hard, cancel the lawn party. And set up the porta potties.

But hey--we had low city taxes for 40 years! Yessirreee.

2010-04-29 10:05:13

ruthholl [Member] said:

I have heard friends who lived in other major cities -- Milwuakee, Chicago -- make the same arguments. We are cheap cheap cheap, and now the chickens have come home to roost.
Well said.

2010-04-29 10:37:57

Tell The Truth [Member] said:

Thanks Ruthie.

Duck, though. You-know-who is probably ready to bash.

Cheap isn't always bad. I'm as cheap as they come on some issues. But our critical infrastructure cannot be ignored in favor of political expediency.

Lugar started that trend. Hudnut continued it, although I always got the sense be pushed back against the low-tax crowd. Ultimately, Goldsmith went further to the right than Lugar on taxes, and away you go...

God I'm glad Goldy is gone. Hateful and mean never work for a mayor. (How mean was Golfy? Ask Hudnut) Ballard's better. Perish the thought.

2010-04-29 13:14:48

hendy [Member] said:

You present a veritable pit of choices here. Each of these guys has palmed off the problem to the future, just like funding of pension plans. They ought to be jailed, having violated the public trust. It's their job to push this into the faces of everyone, and get it done.

Ballard via his position as mayor, gives away the largest land deal EVER in Indpls city history to CEG.

You want cheap electricity, but you're willing to ignore the nauseating eye pollution of the strings of wires across the city (except beautiful Meridian St), the sewage that runs into the White River like a third world country, and the blight of Morse and Geist's McMansions.

Once up on a time, 86th St from Meridian to almost Castleton, was a rich lush forest. Growth there means we have untold power lines, saturated sewers, and now, a huge building vacancy rate from overgrowth and undercapitalization.

Yes, I wrote that piece. I have a love for the city my parents were born in. Buried utilities were glorious to my grandfather, who had the first such utilities in his neighborhood near 46th & Central. Now Indy looks like Bangalore. And it craps into its rivers like Bangalore. And Ballard thinks its kewl to shift the cost to a utility that doesn't have to worry about bankruptcy. You're seeing and smelling the tip of the iceberg. Great cities have great infrastructure and vibrancy. As Indy ages, it's starting to lack *both*.

2010-04-29 13:37:18

varangianguard [unverified] said:

Want the good news first, or the bad?

Combined sewer overflow systems are/were (more are than were, I suppose) all over in the Midwestern cities (I can attest to Louisville and Cincinnati). They were a cost compromise way back when, and that's when it only mattered one or twice a year.

The sewer system (esp. in the old City) was almost never upgraded when changes to urban density made upgrades necessary. Same story as today, political deferment to the grandkids (or later).
As an aside, I recently read that Pogue's Run was encapsulated downtown in the late 19th century as much because a once pristine stream had become an open cesspool as for any other reason. Nice.

Same with electric/communications utilities. It is all about money. Ratepayers just don't seem interested enough to pay for having underground Elec/Comm utilities to pay for them, and pay for them they would.

At least for areas of Marion County that are still on septic systems, I believe there is an ongoing masterplan to convert these areas to sanitary and storm sewers. Residents are at least picking up the lion's share of those costs. Nobody made them build outside of the City's infrastructure, after all.

2010-04-29 16:00:32

Ms. Cynical [unverified] said:

Nobody made them build outside of the City's infrastructure, after all, said Varagiaguard.

Have you forgotten what the "city" used to be? Most of Marion county was agricultural and rural outside the "old city limits".

Refusal to extend the sewers (and the water lines) as the city expanded under UniGov leaves large swaths of Marion County unserved by either city water or sewer -- and not by homeowners' choice.

2010-04-29 21:32:21

Write Man [Member] said:

I think 3T's comments are spot-on here, especially the analogy of a neglected home. At some point in time assets require investments in order to maintain (or perish the thought) bolster value.

But t-a-x is a four letter word here (and in the T-bag/Conservative way of thinking everywhere). It's a great campaign hot-button that even the most uneducated among us will respond to -- greed and fear are strong motivators, even if the outcome is to vote against one's best interest. And so long as all the infrastructure one needs to make a living is intact, why bother re-investing for the common good if you've got yours?

As I've said before, I'm all for paying more in taxes to make the community better, with the simple caveat that there be some true transparency for how those tax dollars are spent.

We lived in Jacksonville, FL for a bit, and a Republican mayor passed "The Better Jax Plan", a 5-year increase in sales tax accompanied by a neighborhood-by-neighborhood plan that showed how that investment would be spent (new roads, sidewalks, bridges, etc). It was available in pdf form, I've sent it in the past to Peterson, also Ballard, plenty of journos at the Star and IBJ, but never a response. And sorry, I've posted this info here, too (one more time for good measure: http://www.coj.net/Departments/Better+Jacksonville+Plan/default.htm).

It didn't please everyone (nothing ever does or will) but it worked because people could see how their precious money was being spent. I think if one were to compare the two cities one would find some striking demographic similarities (largely conservative, fairly significant populations that are under-educated, some real infrastructure issues due to neglect, etc.).

2010-04-30 07:12:46

hendy [Member] said:

Like others, no one wants to fight and are willing to roll over and accept their fate after the EPA finally drops a major hammer on the city. Without a doubt, the problem will escalate and the cure for our children will be miserable, just like pension funding problems.

We did the same thing with S Hugh Dillin and desegregation.

No guts, no glory. Ballard is simply shifting burden based on future revenues. Daniels sold the rights to the Indiana Toll Road instead of investing.

No one wants to invest, just reap. No ground, no seeds, no water, no fertilizer, no weeding, just gimme the GD vegetables. We weren't taught this. We don't teach this. Yet it seems to be the status quo in Indiana. I'm saddened.

2010-04-30 11:11:02

Crossed Wires [unverified] said:

"At least for areas of Marion County that are still on septic systems, I believe there is an ongoing masterplan to convert these areas to sanitary and storm sewers."

You might want to check that. Word out of DPW is that the water company will not do any new hookups until 2015. They will complete projects already bidded and on the books.

2010-05-02 08:20:53

DK [unverified] said:

I wish someone with the media would look at Vectren's ridiculous distribution and tax charges. Our gas bill this month: $13 for gas and nearly $20 for distribution and taxes. This isn't an isolated incident--happens every month. I called the Indiana Utility Regulatory Commission and no one called me back.

2010-05-02 14:12:23

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