Helen J. Murray, President and Chief Operating Officer of Indiana Michigan Power has written an Op-Ed piece for the Journal Gazette. Â It was printed in today’s edition. Â She has graciously given permission for it to be reprinted here.
Customers deserve to keep I&M service
As the expiration of the City Light Lease draws near, much has been reported regarding discussions between the city of Fort Wayne and Indiana Michigan Power. This is an important issue to taxpayers and consumers of electricity.
I&M has been providing low-cost electricity for the life of the 35-year lease, and even now I&M is among the lowest-cost electricity providers in Indiana. Customer satisfaction with I&M is at an all-time high, driven in part by improved service reliability. This became especially apparent during the December ice storm when I&M was able to amass more than 1,500 utility workers from around the region to restore power during one of the worst winter storms in more than 20 years.
All of that could change when the lease expires on Feb. 28, 2010.
In 1974 when the city of Fort Wayne and I&M entered into a lease agreement for the city’s electric generating and distribution facilities, both utilities served Fort Wayne customers. Duplicate distribution systems were intertwined throughout the city, and customers next to one another received service from different utilities.
But the city’s system was in trouble. Costs were escalating. The generating plants and infrastructure were aging and unreliable. The city purchased 85 percent of its power from I&M. According to then-Mayor Ivan Lebamoff, the money necessary to bring the municipal utility up to par would have resulted in a rate increase so large that the city would lose its remaining customers to I&M.
Over the course of the lease, I&M has invested $86 million to create a modern, integrated electric system that serves Fort Wayne today and, in the course of doing so, retired 51 of the city’s 53 circuits.
During the past four years, I&M negotiated with city officials to end the lease by paying the city for its few remaining assets. But rather than respond to our offers, the city broke off negotiations and publicly announced its intentions to replace I&M as the provider of electric service to customers in the central core of Fort Wayne.
The most important issue facing both parties is the right to serve the customers. While the city will receive what remains of its original assets when the lease ends and has the option to purchase certain improvements made by I&M, this does not give the city the right to “replace” I&M or serve customers in our service territory.
A 1980 state law, sometimes called the “territorial act,” created exclusive service territories for utilities to avoid the wasteful and costly duplication of electric facilities. I&M was assigned exclusive rights to serve Fort Wayne under this law. The city recently hired lobbyists to attempt to change that law and to force I&M customers to become customers of the city. Fortunately, those efforts were not successful, and the law remains in place.
The people of Fort Wayne deserve the best electric service at the lowest possible price, and I&M’s customers have that today. While we think it is prudent for city officials to consider its options, one study commissioned by the city concluded that “the city cannot reasonably expect to benefit â€¦ from the acquisition and operation of the electric system” in Fort Wayne.
City officials have declined to share the conclusions of a second study completed last year and have now hired another consultant to conduct a third study.
With only six months left before the lease expires, it is important that I&M and city officials resolve this issue in the best interest of the people of Fort Wayne.
An agreement would benefit customers by continuing to provide low-cost, reliable electric service. An agreement would also benefit the city by providing annual payments for its remaining assets as well as $2.8 million in annual property taxes.
Why do the people of I&M feel so strongly about this matter? The company and its 500 employees are part of the Fort Wayne community. I&M supports numerous non-profit organizations, plays an important role in economic development, and our employees volunteer their time, talent and energies to community causes. In short, we are proud to call Fort Wayne our home.
We believe the citizens of Fort Wayne should continue to receive the reliable, low-cost power, the skill and expertise in delivering and restoring electricity and the great customer service they want and have come to expect from I&M.