Cities taking tougher stance on utility issues

Cities taking tougher stance on utility issues

CHAMPAIGN – Firefighter Todd Anderson recalls trying to open a fire hydrant on North Market Street on Oct. 28, 2005, as flames soared from the nearby Stark Excavating Inc. maintenance building.

Efforts to operate a hydrant closer to the building, in the 2000 block of North Market, had failed. Anderson frantically worked on a second hydrant about 400 feet away, trying to get the cap off.

"It wouldn't budge," he said. "I ended up breaking a hydrant wrench trying to get it open."

Firefighters eventually opened a privately owned hydrant near the Barnes & Noble bookstore to fight the fire, which destroyed the building but caused no injuries.

"It would be nice if the hydrants worked," Anderson said. "It was very frustrating watching the fire grow and knowing the first one (hydrant) had failed, too."

While Illinois American Water Co. is responsible for maintaining fire hydrants in Champaign-Urbana, the two faulty hydrants dismayed Champaign Fire Chief David Penicook so greatly that he now has firefighters regularly inspect city hydrants.

Consider that action a sign of the times.

Champaign and Urbana officials are becoming increasingly aggressive with the local water and electric companies. The cities are lobbying for state legislation, demanding access to service records and intervening in rate-increase and ownership-change cases before the Illinois Commerce Commission. When they intervene, the cities ask hard questions about maintenance and service delivery concerns and about how the proposed new owner would address them.

That stance is prompted, officials say, by incidents like the fire hydrant problems or the five boil orders Illinois American Water issued last summer, which led Champaign to file a still-pending complaint with the commission.

Utility companies have different reactions to the cities' tougher stance.

Champaign and Urbana are among the communities that intervene in almost every commission case, said Ron Pate, director of regional operations with AmerenIP. But he said AmerenIP doesn't mind and that his company's relationship with the cities is good.

"We understand their desire to have a place at the table and intervention allows them to raise their concerns," Pate said.

Barry Suits, network operations manager with Illinois American Water, said the cities might be going too far.

"We do a good job, provide good service and our customers are happy," he said. "It seems to me there's a point where more government micromanagement is not helping provide better water service."

But city officials say they aren't going to put up with inferior service in today's deregulated utility environment.

"We're here to defend the citizens," Urbana Mayor Laurel Prussing said.

The communities must be vigilant because of growing consolidation in the utility industry, said Urbana City Attorney Jim Gitz. In recent years, the cities have seen once-local utility companies purchased by larger, more distant and, in some cases, less responsive companies.

And if cities don't speak up, the commission takes that as agreement on proposed rate increases and mergers, he said.

"It's more critical than ever for cities to be involved," Gitz said.

The changing utility environment became apparent June 25, 2003, when Champaign held a public hearing to allow residents to voice their complaints about Illinois Power, which was purchased by the Houston-based Dynegy in 2000. Dynegy sold Illinois Power to Ameren in 2004.

For two hours at that hearing, institutional and commercial customers, home-builders, contractors and developers testified about an alarming decline in service at Illinois Power under Dynegy. Home-builders spoke of waits, some as long as 60 days, in getting service connections to new homes.

"Dynegy decimated local decision making," Champaign City Manager Steve Carter said. "The water company did the same thing. You don't have anybody locally who can make a decision, so when our citizens have a complaint, what do they do? It led to a real degradation of service."

Illinois American Water, a subsidiary of Voorhees, N.J.-based American Water Works Co., purchased Northern Illinois Water in 1999.

The cities' relationship with Illinois Power began to change in 2004, when Ameren proposed to buy it. The cities decided to intervene, seeing it as an opportunity to raise their concerns.

The strategy worked. The cities reached an agreement with AmerenIP two years ago in which the company agreed to make $12 million in improvements to C-U's electric infrastructure during 2005 and 2006, with $2 million of that amount available to be spent at the cities' direction (they haven't decided how to spend the money yet).

AmerenIP also agreed to conduct an audit of the electric transmission and distribution systems that would be shared with the cities and to make recommendations for improvements.

"In our view, far more can be accomplished by working in a collaborative manner," Pate said. "There were some strained relationships there (under Dynegy). We've made great strides in overcoming that and in improving communication."

AmerenIP's improvements have included installing animal protections at substations, which have decreased the number of power outages; major renovations of certain substations serving Champaign-Urbana; adding new substation circuits to reinforce the fast-growing areas north and west of Market Place Mall; and the current installation of a new major transmission line from Rising Road to Bondville to avoid overloads and improve stability, Pate said.

"For a relatively minor amount of money and effort, we're seeing tremendous improvements in cooperation with Ameren," said Bruce Walden, Urbana's chief administrative officer. "As a result, our citizens are seeing improved reliability."

City officials want to see a similar relationship develop with Illinois American Water.

Champaign Assistant City Manager Paul Berg sent the water company a letter on July 26 asking for five meetings between late August and Nov. 2 with Champaign, Urbana and University of Illinois officials.

"Our primary interest in all of this is to begin to build a 'community water partnership' that is based on factual information, trust and a desire to work together to provide the best possible water service to our citizens at the lowest possible cost," Berg wrote.

Berg said the cities want to talk about what steps the company has taken to avoid the boil-order problems of 2003 and 2005.

Other proposed topics: hydrant maintenance; a new water treatment plant for west Champaign; the American Water spinoff; water company surveys; capital improvement plans; rate increase plans; and the Mahomet Aquifer study.

If an improved relationship can be developed, city officials say they'll drop consideration of using eminent domain to purchase the local water system. Such a step would likely take years in court and cost in excess of $100 million, Berg said.

But establishing a better relationship is going to take some work and time, according to a water company official.

In a letter dated Aug. 3, Suits did not immediately agree to all the meetings Berg sought.

"Paul, you expressed a desire 'to build a community water partnership' that is based on factual information, trust and a desire to work together," Suits wrote. "I agree that is a goal worth pursuing.

"However, the contents of your letter indicate that, before we meet on any of the topics you have proposed, we need to have some conversations about how that trust – and mutual respect – will be developed."

Suits said the water company is doing many positive things, has not issued a boil order in more than a year, is planning a new $40 million water treatment plant for west Champaign and has committed to providing $600,000 for an aquifer study over a two-year period.

To prevent boil orders, the company has run a power generator at its Mattis Avenue treatment plant continuously since August 2005 so that the water system doesn't lose pumping capacity and pressure in a momentary loss of electricity. The generator provides 40 percent of the plant's pumping capacity.

The water company said a survey of 500 customers in June showed residents are overwhelmingly pleased with the quality of water service, taste and rates.

But Illinois American Water gets little credit for those things from the cities, Suits said.

"Our customers drink the best-testing water in the country," he said. "They get it at a fair and reasonable cost.

"I don't know what more they could want."

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