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Wednesday, December 13, 2006

Ind. Decisions - More on: Appeals court to hear Lawrence utilities case

This Feb. 15, 2006 ILB entry is headed "Appeals court to hear Lawrence utilities case," (it might have been headed "privatization gone bad") and includes links to the Nov. 2, 2005 trial court ruling by Judge Dreyer, along with other background.

Today the Indianapolis Star reports, in a comprehensive story by Kevin Corcoran:

A controversial water company deal that prompted a federal investigation and left Lawrence residents paying some of the highest rates in the metro area appeared to be nearing an end Tuesday.

As the FBI closed its investigation without charges, Lawrence and Citizens Gas & Coke Utility officials announced they want to form a public charitable trust that would own and operate Lawrence's water and sewer utilities.

The proposed agreement with Citizens Gas would lead to a reduction in the combined water and sewer rates that nearly 15,000 residential and commercial customers pay by an average of 20 percent, saving ratepayers $3 million a year.

The plan emerged from months of court-ordered mediation and would end a lawsuit brought by Lawrence officials and ratepayers to regain control over the waterworks from a private company, Lawrence Utilities LLC.

City officials approached Citizens Gas officials this summer about buying the utilities should the city regain control of them. Under the agreement, Citizens Gas would form a nonprofit trust called Citizens Water of Lawrence to assume ownership of the utilities.

The nonprofit trust would restore Indiana Utility Regulatory Commission control over water rates, which would be set on a break-even basis.

Lawrence would get about $40 million in cash for the utilities' land, buildings and equipment. By placing the assets in an irrevocable trust, the waterworks would be removed from political control or the possibility of a private sale.

Then-Mayor Thomas D. Schneider, a Republican, handed control of the utilities to three of his political supporters in mid-2001 without taking bids. Company records show the men invested $1,000, and Schneider provided a $4.84 million infusion of cash, vehicles and assets to help launch their startup company.

Customers have criticized Schneider's pact, which could extend for 50 years, because it included three hefty water rate increases in less than two years, doubling Lawrence's rates.

The deal contributed to Schneider's defeat after 16 years as mayor.

A sidebar notes:
The city and ratepayers sued the water company to break the contract. In November 2005, they won a favorable ruling from a Marion Superior Court judge, who found the contract had violated a state bidding law. The agreement to be announced this week would end an appeal of this decision and a pending lawsuit in Marion County and transfer the Lawrence waterworks to a public charitable trust operated by the board that controls Citizens Gas & Coke Utility.
See also this entry from Advance Indiana.

Posted by Marcia Oddi on December 13, 2006 09:53 AM
Posted to Ind. Trial Ct. Decisions