March 2012, Vol. 67 No. 3


Indy’s Water/Sewer Ownership Shift Proceeds Smoothly

Jeff Griffin, Senior Editor

It’s been more than six months since operation and ownership of water and sanitary sewer services in Indianapolis transferred from the city to a non-profit charitable trust, but most residential and commercial customers likely have experienced no difference in the day-to-day operation of these services.

That’s the way the city, the previous contract operators of the city’s water and wastewater systems, and managers of the trust, Citizens Energy Group, planned it. The goal of all concerned was to make the shift “seamless.” Transferring the two systems required precise execution of a plan involving complex logistics. Water and wastewater services now are operated as Citizens Water, a division of Citizens Energy Group.

In the transition, Citizens Water assumed operations of the water utility from Veolia Water Indianapolis (Veolia) and took assignment of the city’s contract with United Water to operate the wastewater system. Most city and Veolia employees who served the water and wastewater systems are now Citizens employees. Citizens Water gradually will implement various service enhancements and efficiencies expected to save customers about $60 million annually.

The water and sanitary sewer infrastructures cover approximately 320 square miles and in addition to Indianapolis, also provide services on a wholesale basis to the cities of Beech Grove, Lawrence and Greenwood, the Ben Davis Conservancy District and three outside-the-county development areas.

Proven record
A primary reason for the smooth transition is that the trust already has a successful track record of efficient utility management, providing gas services to more than 266,000 customers in Indianapolis and Marion County since 1887. Citizens also operates the nation’s second largest steam and chilled water distribution system in the U.S., providing heating and cooling to large commercial, industrial and institutional customers in downtown Indianapolis.

“Citizens employees are excited about this wonderful opportunity to expand on the purpose of the public charitable trust to add value and improve the quality of life in our community. Citizens Water is committed to providing safe, high quality water to the people of Central Indiana as we make important investments to ensure system reliability and cleaner area rivers and streams,” said Carey Lykins, president and chief executive officer of Citizens Energy Group.

In addition to assuming day-to-day operation and billing of water and wastewater services, Citizens Water also assumed immediate and long-term maintenance duties along with responsibility for active and future construction to improve and enhance both systems.

“Water and wastewater infrastructures in Indianapolis are similar to those of many American cities with pipe in the systems well past their life expectancy,” said Stephen Nielsen, P.E., director, wet distribution engineering for Citizens. “The systems must be constantly monitored for failures; there always are on-going projects to rehabilitate existing pipe and install new pipe.”

With the transition, Citizens Water assumed responsibility for the Long Term Control Plan mandated under a Consent Decree with the U.S. EPA to minimize combined sewer overflows into the White River and other area streams. The plan calls for completion of a $3.5 billion Combined Sewer Overflow (CSO) project by the year 2025. Remaining CSO construction costs are estimated at $1.7 billion.

Citizens Water also is continuing the city’s Septic Tank Elimination Program (STEP), which is bringing sewer service to areas of Marion County where failing septic tanks are jeopardizing public health and the environment. Citizens will complete the city’s current STEP schedule with more than 7,000 septic tank replacements through 2013.

“Projects under way when the transition was completed were not affected,” said Nielsen. “Contracts will remain in place just as they were. However, we believe now we are better able to coordinate projects.”

Included in the transition is the Deep Rock Tunnel Connector project, the largest combined sewer overflow project ever undertaken in Indianapolis.

“The first phase of the project, the seven-mile Deep Rock Tunnel Connector, was recently awarded to Shea-Kiewitt, a joint venture, for $179.3 million. J.F. Shea is a Los Angeles-based company known for constructing the Golden Gate Bridge. Kiewit is an experienced contractor based in Omaha, NE. Shea-Kiewit has considerable experience with deep tunnel projects, including a project in Atlanta, GA,” said John Morgan, Citizens Energy Group manager of special projects and manager of planning and design services.

The project will reduce the amount and frequency of raw sewage overflows during rains. It will include a deep tunnel system 18-feet in diameter 25-miles in length with a storage capacity of 250 million gallons. The project will extend from the Southport Advanced Wastewater Treatment Plant located in southern Marion County to a point beneath the heart of downtown Indianapolis. The Deep Rock Tunnel Connector, which will be complete in 2017, will transport wastewater from three other connector tunnels to be built by 2025.

The financial impact of the utility transition is far reaching and extends far beyond water and wastewater operations, releasing the city from 1.5 billion in public debt, with Citizens Energy Group assuming all assets and liabilities including the consent decree for the abatement of combined sewer overflows, said Dan Considine, Citizens manager of corporate communications. Citizens acquired the water system for the cost of its debt and paid the city $262.6 million for the equity in the wastewater system. A bond issue on future increases in Payment in Lieu of Taxes on the wastewater system and the retention of a wastewater general fund brought total proceeds to the city of about $425 million.

Those funds are being used by the Department of Public Works for unprecedented investments in public works improvements on streets, bridges, sidewalks, multi-use trails, parks and demolition of abandoned houses.

“Today marks a great day for our community,” said Indianapolis Mayor Greg Ballard, on the day the transfer became effective “This historic transfer will make Indianapolis a better place to live and do business by making our rivers and streams cleaner, bringing more consistency to these vital utilities, and saving utility customers money through rates that will be lower than they otherwise would have been. It will benefit our community for generations.”

Personal Look At The Utility Transfer

Last Aug. 26, John Morgan was assistant administrator, tunneling, Indianapolis Department of Public Works. He had served the city for nine years. The next day, he had a new office in a different building and a new title, manager of special projects,

The change wasn’t really a career move for Morgan — it came with the transfer of Indianapolis water and wastewater services to the non-profit charitable trust, Citizens Energy Group. The transfer was very well planned and occurred without significant problems, said Morgan.

“One thing that stood out for me during preparations was interviewing for my ‘new’ job,” he said. “It was the first time in many years of working, I have had to apply for a job, and it was a job I expected to be a continuation of what I was already doing. Going in, I was a little uncomfortable.”

Others shared the same feeling, he said. However, there was no cause for worry; the interview turned out well.

“The new owners showed a high level of respect,” said Morgan. “From the wastewater side, there were 36 of us, and all 36 got jobs at Citizens Water. They tried hard to get each of us in the slot we wanted and although all are not doing exactly what they did before, I believe most are satisfied.”

Morgan said the wastewater group now is a subset of water operations.

“The biggest change for us,” he said, “was in the engineering group with wastewater treatment plant and collections separated. Treatment engineers moved to offices in the treatment plant.”

From his perspective, Morgan said the transition went smoothly and the move to new offices was efficiently orchestrated. He is busy with a variety of projects, including the Deep Rock Tunnel Connector project.

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