Water Industry News

October 7, 2005

Water company faces questions:
Veolia hasn't broken rules, its president says

By Brendan O'Shaughnessy, Richard D. Walton and Tammy Webber
October 7, 2005

When Indianapolis bought the city's old water utility and hired a private company to run it in 2002, officials hailed the public-private partnership as a victory for customers.

Three years later, Veolia Water Indianapolis -- a subsidiary of the largest water company in the world -- faces a torrent of questions over its performance.

Veolia President Tim Hewitt on Thursday said the company had not violated water-quality or operational rules. "This is important to Veolia," Hewitt said of the Indianapolis contract. The $1.2 billion deal with $300 million in potential incentives is its largest in the United States. "This is a $30 billion company (internationally); I wouldn't say we are in a tight position. I invite anybody to bring in testers or investigators.

"We're not going to put a 20-year contract at risk in the first few years to make foolish short-term profits," he said. "Everybody understands clearly this is a very important project for us in North America and globally."

Since the first of the year, the company has been involved in a series of controversies:
In January, thousands of gallons of untreated water slipped into the system and prompted a boil advisory that shut down some companies and sent home about 40,000 public school children.
Supply shortages through most of June prompted Veolia to ask customers to limit water use during peak hours.
This week, the U.S. attorney's office for the Southern District of Indiana announced it had issued subpoenas in an investigation of the company's operations. Veolia said investigators were looking into allegations of falsified water-quality reports.

Hewitt said he learned Sept. 30 that four management-level employees had been subpoenaed to testify before a federal grand jury to answer questions about alleged falsification of records.

While he would not specifically address the investigation, Hewitt said he thought it stemmed from misunderstandings about differences between daily and quarterly tests for such things as disinfectant byproducts, substances left over from decontaminating drinking water with chemicals such as chlorine.

In response to the subpoenas, the city and the company each ordered independent chemical and bacteria tests to ensure the safety of Central Indiana's primary water supply. Results from tests are expected soon.

The state Department of Environmental Management ordered its own tests last week in response to a complaint against Veolia. The agency's results, released Thursday, showed no violations of state or federal drinking-water quality standards. Some samples reflected elevated levels of disinfection byproducts, but one sample was not enough to indicate a violation, officials said.
Hewitt said he was pleased with the results.

"Tonight we have yet another confirmation about the quality of the water we supply," he said. "IDEM's findings are consistent with ours. Veolia Water has continually met or exceeded state and federal water quality standards."

Hewitt said the city's water is safe for the more than 1 million people who use it. Veolia serves 290,000 homes and businesses in Marion County and parts of surrounding counties, including Carmel, Zionsville and Greenwood.

Mayor Bart Peterson's office and the Department of Waterworks officials who manage the company's contract said they were confident the company has done no wrong.