Regulators investigating Citizens, deny full rate increase

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The Indiana Utility Regulatory Commission (IURC) announced the approval of a rate hike for the company Wednesday, while also opening an investigation into billing and call center issues at Citizens Energy Group and CWA Authority, Inc.

Citizens wanted a 14.7 percent increase, but the IURC only approved a 9 percent hike, saying that the request included too much of a pay raise for executives. Citizens CEO Carey Lykins made $2.8 million in 2012 and just under $2 million last year. The commission wants Citizens to cut $900,000 in top executive compensation and realign the pay before their next rate case, so it is more compatible with actual municipal-based expenses.

"We looked at those numbers and determined that this was not appropriate for a municipal utility and we made changes there," said Danielle McGrath, IURC.

The cuts in recoverable executive compensation and other operations expenses totaled $1.4 million.

The rate increase equates to less than three dollars more a month on average, but for customers like Micah Durham, any increase is tough to take, especially if the people running the utility are making millions.

"The guys at the top should take the cut rather than hiking the bottom up, because look, we are already paying enough," Durham said.

These investments are needed as the state's water systems are aging and in need of improvement.


"Now there's going to be a shortfall, so we'll have to determine how we can make those adjustments," said Citizens spokesperson Sara Holsapple.

As for the investigation, the IURC cited one out of five callers hangs up before actually getting help because wait times are so long to Citizens' customer service center. The state wants the company to make its systems more efficient.

"If one in five callers are hanging up because they can't get through to someone, that's a problem. That does need to be looked into," said consumer counselor Anthony Swinger.

The company admitted to the problem, but says it's because its business tripled when it took over the Indianapolis water company in 2011. It has been trying to catch up since and says, on most days, customer service is adequate.

The IURC also limited Citizens to recover what it needs to for infrastructure improvement through next year, which will save ratepayers another $2 million.

The commission will also investigate billing compliance with approved rules, regulations, and tariffs and payment application compliance with state and federal laws.

Citizens released a written statement Wednesday in response to IURC's decision. It said: 

"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."

You can see IURC's full decision Cause No. 44306 or the new investigation under Cause No. 44462 at IURC's website.

The company says it will spend the money to improve aging water mains and infrastructure.

Water bills will be getting higher for 300,000 Hoosiers served by Citizens Water company.