Indianapolis can buy water utility

Mayor Bart Peterson predicted the city will succeed in efforts to buy the Indianapolis Water Co. after a regulator's favorable ruling.

The Indiana Utility Regulatory Commission sided with Indianapolis Friday when it denied the utility's motion to dismiss a petition from the city to buy it.

In September, the city asked the commission to use its powers to set a sale price for the water company.

Meanwhile, the utility argued the commission lacked the authority to oversee the proposed sale. Instead, the company said, a court should determine the sale price as part of condemnation proceedings.

Peterson said it was crucial that the city control its supply of water, pointing to the energy crunch and rolling blackouts plaguing California as an example of what happens when cities lose that control.

"It is very important that we act in this city to take care of our most precious natural resource," he said.

The regulatory commission has scheduled a conference for Wednesday to begin the process of selling the water company to the city. At that meeting a schedule is expected to be set for the city, the water company and other parties to make arguments about how the commission should go about determining a "fair value" for the company.

Peterson described the commission's ruling as "a clear-cut statement" that the regulator has the right to oversee the sale of the water company.

"At the end of that process, the city will become the owner of the Indianapolis Water Co.," a confident Peterson said at a Friday afternoon news conference. Afterward, though, the mayor seemed to tone down his words, noting "that nothing in life is inevitable."

Merrillville-based NiSource bought the water company in 1996 for $288 million. NiSource was ordered to sell the water company as part of its $6 billion purchase of Columbia Energy Group, which was completed in November.

Water company officials haven't made a decision yet, but they will probably fight Friday's decision.

"I think that it's more likely than not that it will be appealed," said John Davis, the water company's general counsel.

That appeal would have to be made within 30 days to the Indiana Court of Appeals.

If the court accepted the appeal -- and the city's attorney, Jim Strain, says that is unlikely -- the commission would then have a decision to make. The commission could wait for the appeals court to make a decision, which could drastically slow down the city's efforts.

Or, the commission could go ahead with the process of setting a sale price for the water company -- a process the city believes will take six months or so -- assuming that the appeals court would side with the commission.

Peterson clearly has the backing of the City-County Council, which unanimously urged him in October to take "all action necessary" to buy the 131-year-old utility. And Council President Beurt SerVaas joined Peterson at Friday's news conference to praise the commission's decision.

The conflict brings to mind an old saying about the importance of water rights, said Chief Deputy Mayor Michael O'Connor.

"Whiskey is for drinkin', and water is for fightin' over."