IURC Reduces Rate Increase From Citizens

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The Indiana Utility Regulatory Commission has approved a smaller rate hike than requested by an Indianapolis-based utility. Citizens Water was seeking a nearly 15 percent increase. The IURC says 9 percent is sufficient, arguing the requested "level of executive compensation" was too high. March 19, 2014

News Release

INDIANAPOLIS, Ind. - Today the Indiana Utility Regulatory Commission (IURC) reduced the increase in operating revenues initially requested by Citizens Water in its rate case from 14.7 percent to 9 percent. The difference between the amount requested and the amount approved is mainly related to reductions in costs, including executive compensation.

The IURC found that Citizens Water's level of executive compensation was not appropriate for a municipal utility. Consequently, the IURC significantly limited the amount of recovery in this area. In Citizens Water's next rate case, the IURC expects the utility to realign compensation so that it is more compatible with actual municipal-based expenses.

The IURC decreased recoverable executive compensation by approximately $900,000 for 16 employees by eliminating the Executive Incentive Plan and cutting their Short Term Incentive Plan increases by 38 percent. The reduction to executive pay increases takes the amount from 47 percent to 9 percent, which is equal to the average increases nonexecutive employees receive. These reductions in executive pay and other operations and maintenance expenses resulted in a total decrease of $1.4 million.

Additionally, the IURC rejected Citizens Water's claim of reduction in water consumption amounting to $1.6 million due to lack of evidence. Also rejected was an adjustment to nonrecurring charges of $1.2 million because Citizens Water based these charges on an average that included a period when the City of Indianapolis owned the utility. Further, the IURC only allowed current and 2015 infrastructure investments to be recovered, which will save ratepayers an additional $2 million in capital expenditures. These investments are needed as the state's water systems are aging and in need of improvement.

In addition to today's rate case order, the IURC opened an investigation into the management practices, including billing and call center issues, of Citizens Energy Group (gas and water) and CWA Authority, Inc. (wastewater). The primary issues so far are related to the following: 1) customer service quality (e.g., one out of five callers hang up prior to receiving service due to long wait times); 2) billing compliance with approved rules, regulations, and tariffs; and 3) payment application compliance with state and federal laws. A procedural schedule has not yet been set, but is forthcoming.

To view today's rate case decision under Cause No. 44306 or the new investigation under Cause No. 44462, please visit our homepage at www.in.gov/iurc. Other cases still pending before the IURC include the Citizens Thermal Energy rate case, under Cause No. 44349, and the CWA Authority, Inc. (wastewater) rate case, under Cause No. 44305.

The Commission is a fact-finding body that hears evidence in cases filed before it and makes decisions based on the evidence presented in those cases. An advocate of neither the public nor the utilities, the IURC is required by state statute to make decisions that balance the interests of all parties to ensure the utilities provide adequate and reliable service at reasonable prices. For more information, please visit: www.in.gov/iurc.

Source: The Indiana Utility Regulatory Commission

March 20, 2014

Statement From Citizens Energy Group

"Citizens Energy Group is currently reviewing the water rate order received today from the Indiana Utility Regulatory Commission (IURC). The IURC approved a 9 percent increase in revenue for the water utility. This will translate into less than a $3 per month increase in the average residential water bill.

Like the IURC, we are very concerned about the impact of rate increases on our customers. The reduction in revenue approved by the IURC does create a shortfall in funds for vital infrastructure investments. Years of under investment by past owners has resulted in a water system that experiences 700 main breaks per year, resulting in $3.5 million in repair costs and 3 billion gallons of wasted water. If Indianapolis is going to remain a world class city, it is important Citizens makes investments to upgrade its water system to ensure safety, reliability and water quality.

As evidenced by three straight J.D. Power Awards (2011-2013) for customer satisfaction, Citizens takes great pride in being an industry leader for customer service. Citizens has been and will continue to be transparent with the IURC on its combined billing and customer service practices. In combining the gas, water and wastewater utilities in 2011 and 2012, Citizens did experience some delays in responding to customers. Since then call wait times at the Citizens’ call center have been significantly reduced.

The total executive compensation program at Citizens is currently undergoing a review by a leading compensation consultant. The results of that review should be available to the public by mid-year."

Source: Citizens Energy Group

March 20, 2014

News Release

The following statement on today's Indiana Utility Regulatory Commission (IURC) orders regarding Citizens Energy Group may be attributed to Indiana Utility Consumer Counselor David Stippler:

"While we are reviewing today's orders in the water rate case and the new investigation of Citizens, the Indiana Office of Utility Consumer Counselor (OUCC) is pleased that the Commission has taken action. Today's rate order takes important steps in addressing the utility's executive compensation, while reducing various line items regarding operating expenses.

"The rate order also requires Citizens to work with the OUCC, IURC and other parties in future cases to address savings from the 2011 acquisition of the city's water and sewer utilities, and to address ways in which the savings will affect future rates.

"In the Commission’s newly opened investigation of Citizens' billing and customer service practices, the OUCC's legal and technical teams look forward to fully participating and engaging in a robust dialogue that leads to a meaningful outcome."

In the rate case (IURC Cause No. 44306), the Commission today rejected Citizens Water's requested increase, granting an increase of approximately 9 percent instead. Citizens' original request would have raised annual water revenues by 14.7 percent (approximately $25.3 million). The OUCC filed testimony during the case recommending limiting the increase to approximately 3 percent.

In the new investigation (IURC Cause No. 44462), a prehearing conference is scheduled for April 22, 2014. Prehearing conferences are primarily held for the purpose of setting a procedural schedule, including hearing dates and testimonial deadlines for utilities, the OUCC, and other parties that may intervene.

The Indiana Office of Utility Consumer Counselor (OUCC) represents Indiana consumer interests before state and federal bodies that regulate utilities. As a state agency, the OUCC’s mission is to represent all Indiana consumers to ensure quality, reliable utility services at the most reasonable prices possible through dedicated advocacy, consumer education, and creative problem solving.

Source: The Indiana Office of Utility Consumer Counselor