Nation's Largest Water Partnership Begins Operations

May 1, 2002

City Officials Say Benefits Include Stable Rates, Local Control and Improved Water Quality

Indianapolis Mayor Bart Peterson was joined by officials from the Indianapolis City-County Council, the new Indianapolis Board of Waterworks and USFilter to celebrate the opening of the nation's largest public-private partnership for water services.

The city's 20-year agreement with USFilter Operating Services will bring substantial benefits to the greater Indianapolis area, Peterson said, including rate stability, improvements in water quality and customer service, and more local control on decisions impacting the city's long-term growth. The new partnership was an integral part of Peterson's plan to acquire the assets of Indianapolis Water Company (IWC) from the regulated utility NiSource, which was required by federal law to divest all of its water utility assets due to a planned merger with Columbia Energy Group.

Until the city's purchase of IWC, Indianapolis had been the largest city in the nation that did not own its own water utility.

"Our partnership is summed up by two issues -- local control and quality of life," Peterson said. "Through our agreement with USFilter, we are controlling our community's most precious resource, controlling the assets that treat and deliver that resource and stabilizing water rates. Water is important to every citizen in central Indiana because it enhances a community's overall quality of life. And through good service and stable rates, water contributes to the overall stability of neighborhoods and businesses alike."

The city -- with bipartisan support -- first became interested in buying the water company's assets in late 2000, after it became clear that NiSource would have to sell the water company. In some cities, the sale of utilities has resulted in rate increases. However, due to the acquisition and USFilter partnership, water rates for Indianapolis consumers will be frozen for the next five years. The city further contributes to lower operating costs because of favorable tax and interest rate structures.

The partnership is highlighted by an innovative service agreement that links a portion of the city's financial payments to USFilter with the company's performance on key customer service, water quality issues, operations, capital improvements and community relations.

"Consumers are the real winners in this agreement," said Ron Davis, executive vice president and general manager of USFilter Operating Services. "Our partnership will add tremendous value to the community on a very cost-effective basis. The specific performance measures will make it quite clear to the citizens of central Indiana that they are being well served. We are elated by this opportunity and look forward to serving the community for many years to come."

USFilter will manage all operations, maintenance and customer service facets of the city's waterworks system that currently serves 1.1 million people. Out of the $1.5 billion contract, approximately $1.1 billion represents operations and maintenance service fees and approximately $400 million reflects capital improvement projects expected to be managed by the company.

Bowen Engineering and Philadelphia Suburban Corporation are just two of the many local and national firms USFilter is teaming with on this project. In addition, the company will implement an aggressive program to integrate minority- and women-owned businesses and contractors for ongoing projects.

USFilter Operating Services designs, builds, operates, owns and finances water, wastewater and related utility facilities and systems. Overall, the company manages 535 municipal and industrial water and wastewater treatment and related projects in North America, serving more than 600 communities and 12 million people.

Source:

USFilter

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