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Fitch Ratings has upgraded the rating on the following Indianapolis, IN (the city) water system revenue bonds issued on behalf of the city's Board of Directors for Utilities of its Department of Public Utilities, doing business as Citizens Energy Group (Citizens) to 'AA-' from 'A+':
Fitch has updated the issuer for the 2016B bonds to the city of Indianapolis.
The Rating Outlook is Stable
Two More Tunnels Open, Will Prevent Up to 700 Million Gallons of Sewage from Entering Waterways Annually
INDIANAPOLIS – Citizens Energy Group announced today that two more tunnels on its DigIndy Tunnel System have opened. The White River and Lower Pogues Run Tunnels will prevent up to 700 million gallons of sewage from entering waterways annually. A total of four of the system’s six tunnels are now in operation (including the Deep Rock Tunnel Connector and Eagle Creek Tunnel), comprising nearly 17 of the system’s 28 miles.
“Today we celebrate the opening of the White River and Pogues Run Tunnels, which are nearly eliminating sewer overflows into the White River in one of the most densely populated areas of the city stretching from the near north side to the south edge of downtown,” said Jeffrey Harrison, President & CEO of Citizens Energy Group. “These tunnels are continuing the progress we have made since December 2017 when we opened the first 10 miles of DigIndy from downtown to the county line. That segment of the tunnel system already has prevented more than 3 billion gallons of sewage from reaching area waterways.”
The White River Tunnel is nearly 6 miles long and includes approximately 9,000 feet of consolidation sewers, which transport sewage from combined sewer overflow (CSO) points to the tunnel. This segment of the tunnel will prevent CSOs along the White River in the Riverside, Haughville, Stringtown, and Old Southside neighborhoods, as well as Downtown Indianapolis.
The Lower Pogues Run Tunnel is nearly 2 miles long and includes 1,200 feet of consolidation sewers. The tunnel, along with other improvements along the Upper and Lower Pogues Run waterways, will significantly reduce CSOs along Pogues Run from the Brookside neighborhood to Downtown.
“We appreciate the support and patience of residents and commuters as we continue our work. With more than half of the DigIndy Tunnel System now operating, we look forward to completing this truly transformational project to enhance quality of life and restore the natural environment here in Indianapolis,” said Harrison.
Click here to take a look at where DigIndy has been, where the project stands now, and how it’s progressing toward the future.
The remaining two tunnels, Pleasant Run and Fall Creek, are expected to open in 2025. When the entire 28-mile DigIndy Tunnel System is complete, it will nearly eliminate CSOs, creating healthier, more vibrant waterways and improving the community. Learn more about the DigIndy Tunnel System at www.DigIndyTunnel.com.
Jackson Brings More Than 20 Years of Financial Expertise to Citizens
INDIANAPOLIS – Citizens Energy Group announced today that Craig Jackson has been named Senior Vice President and Chief Financial Officer. Jackson succeeds John Brehm, who retired on March 31 after more than 17 years at Citizens.
“Craig Jackson is an accomplished leader and senior executive with more than 20 years of experience who, through his leadership, strategic planning, and financial expertise, has successfully navigated industry changes and business transformation,” said Jeffrey Harrison, Citizens President & CEO. “Combined with his wealth of knowledge, Craig’s experience will be a valuable asset as Citizens continues to serve our customers and communities with unparalleled excellence and integrity.”
Prior to joining Citizens, Jackson served as Group Chief Financial Officer at MasTec Inc., a multinational infrastructure engineering and construction company. Prior to his role at MasTec, Jackson served in positions of increasing responsibility with Dayton Power & Light Company and AES Corporation. His roles included serving as Chief Financial Officer of AES’s US Strategic Business Unit and President & CEO of AES U.S. Utilities.
A veteran of the U.S. Air Force, Jackson is a graduate of Bloomsburg University with a Bachelor of Science in Business Administration. He also has an MBA from Wright State University.
(INDIANAPOLIS) — A commitment to offering affordable and reliable energy service for today and tomorrow coupled with a strong sense of community responsibility have earned Jeffrey Harrison, president and CEO of Citizens Energy Group in Indianapolis, a statewide honor. Harrison is the Indiana Chamber of Commerce’s 2021 Ogletree Deakins Business Leader of the Year.
“Jeffrey Harrison is an outstanding chief executive. His compassion, intelligence and thoughtfulness are hallmarks of his decision-making for Citizens Energy consumers and employees, as well as for the Greater Indianapolis community efforts he and the company support,” says Indiana Chamber President Kevin Brinegar.
Recognizing the importance of hand washing as a deterrent to spreading COVID-19, Citizens Energy implemented a policy of reconnecting/not turning off the vital water service for nonpayment – before any government moratorium was issued. The company continues to work with those facing financial hardships, extending payment arrangements up to a year.
“If we look at those customers who are struggling, I’ve walked more than my share of a mile in their shoes. … I’ve been on free and reduced lunch – grew up on food stamps and fairly poor. I get firsthand the struggles that take place in some of these households,” Harrison shares.
That memory for Harrison has fueled his pledge that Citizens Energy offer customers “the best value that we can for the utility services that we provide.” He also says he “can’t commend our staff enough” for their efforts.
Citizens Energy delivers water to an eight county Indianapolis area as well as both natural gas and wastewater services to Marion County. That reach covers more than 800,000 people.
Modernizing service systems includes the 28-mile DigIndy tunnel being built some 250 feet beneath the city, which will be a major factor in reducing combined sewer overflows into area waterways once it’s completed in 2025.
Harrison is also enthusiastic about his role as chair for the Business Equity for Indy Initiative and especially about its purpose.
“It’s just been very humbling to see businesses in central Indiana come together to focus on what I talk about a lot as justice, equity, diversity and inclusion. We’ve got five primary focus areas: learning and talent, hiring and promotion, participation and procurement, impediments to health and then understanding from the business perspective how we can impact public policy.”
Harrison began his current roles with Citizens Energy in mid-2015 and has been with the utility since 2003.
INDIANAPOLIS – Citizens Energy Group’s new Citizens Reservoir has been named 2020 Project of the Year by the American Society of Civil Engineers (Indiana Section). The award recognizes the most outstanding or unique project built in Indiana and completed during the current or past year.
Citizens Vice President of Water Operations Jeff Willman said, “We are very pleased to receive the Project of the Year Award from the American Society of Civil Engineers (Indiana Section). Citizens Reservoir is a transformational project for Central Indiana and will be vital to ensuring adequate water supply for Citizens’ eight-county service area for many years to come.”
Citizens Reservoir is 230 feet deep, has a surface area of 90 acres, and holds approximately 3 billion gallons of water. It is located adjacent to Geist Reservoir along Olio Road. Construction on Citizens Reservoir was completed in late 2020, and it was filled with water from Geist Reservoir in early 2021. During dry periods, up to 30 million gallons per day of stored water can be pumped from Citizens Reservoir into Geist Reservoir and allowed to flow downstream to Citizens’ Fall Creek Water Treatment Plant and White River Water Treatment Plant for processing and distribution throughout Central Indiana.
To learn more about Citizens Reservoir and how it will benefit Central Indiana – and to view videos giving you a front-row seat to this historic project – click here.
Customers Previously Disconnected Asked to Contact Utility Immediately
INDIANAPOLIS – Citizens Energy Group is asking customers whose utility services have been turned off for non-payment to call the utility at **(317) 924-3311 **to have their service reconnected. Citizens will work to reconnect customers as soon as possible.
“Because of the importance of hand washing and hygiene during the COVID-19 emergency, Citizens urges all customers without water and/or natural gas service to call us immediately,” said Jeffrey Harrison, President & CEO of Citizens Energy Group. “During this serious public health emergency, Citizens is working to do everything it can to help customers in need.”
Citizens will accept whatever payment customers can make to reconnect their service and will use assistance from various sources to help with the outstanding balances until those funds are depleted. Because of the nature of this crisis, preference for reconnection will be given to water and wastewater customers first, then natural gas customers.
Citizens also is suspending utility disconnections during the COVID-19 public health emergency, in accordance with an executive order issued on March 19 by Indiana Governor Eric Holcomb. The utility had previously announced suspension of all utility disconnections through April 15. Citizens is waiving deposits, late fees and reconnection fees during this period as well.
It may take some time to turn services back on, but Citizens employees will work as safely and quickly as possible. For the safety of our customers and employees, Citizens asks that customers not approach our employees while they are performing this work. We request that customers follow social distancing recommendations issued by the U.S. Centers for Disease Control and Prevention that call for maintaining a 6-foot distance between people.
Citizens urges customers to utilize the various self-service functions available on its website at www.CitizensEnergyGroup.com, given the expected increase in call volume to its Contact Center. Citizens also encourages anyone who would like to help provide financial assistance to customers in need to donate via Warm Heart Warm Home.
“We appreciate the patience of our customers as we process these reconnect orders. Citizens stands ready to continue providing safe, reliable utility service to the community as it endures the hardships of the COVID-19 emergency,” said Harrison.
Citizens Energy Group provides safe and reliable utility services to about 800,000 people in the Indianapolis area. Citizens operates its utilities only for the benefit of customers and the community.
Dan Considine
(C) 317-519-1515
media@citizensenergygroup.com
Service Interruptions Due to COVID-19 Not Expected
INDIANAPOLIS – Citizens Energy Group is well prepared to ensure its vital utility services are not interrupted during the COVID-19 emergency.
Water from Citizens continues to be safe for our customers. According to the United States Environmental Protection Agency (U.S. EPA) and the Centers for Disease Control and Prevention (CDC), COVID-19 has not been detected in drinking water. Conventional water treatment methods that use filtration and disinfection, such as those used at Citizens, should remove or inactivate the virus that causes COVID-19.
Citizens operates multiple water and wastewater treatment facilities serving Indianapolis and the surrounding area. These facilities continuously meet or exceed U.S. EPA requirements and are well equipped to continue providing safe, reliable service to customers.
As always, Citizens urges customers to call (317) 924-3311 if they suspect a natural gas leak at their home or business. Citizens personnel are prepared to immediately come on site to inspect for a leak and will follow special procedures during their visit to ensure the health and safety of customers.
Citizens has suspended utility service disconnections until April 15. All customers are urged to do their best to stay current on their utility bills. Customers who need assistance should call Citizens at (317) 924-3311. Representatives will work with individual customers to determine whether they qualify for assistance and/or set up flexible payment arrangements.
For answers to frequently asked questions and for updates as they arise, visit www.citizensenergygroup.com/COVID-19.
Citizens Energy Group provides safe and reliable utility services to about 800,000 people in the Indianapolis area. Citizens operates its utilities only for the benefit of customers and the community.
Dan Considine
(C) 317-519-1515
media@citizensenergygroup.com
Fitch Ratings assigns an 'A+' rating to the following Indiana Finance Authority (IFA) bonds issued on behalf of CWA Authority, IN (CWA):
--Approximately $40.5 million first lien wastewater utility revenue bonds, series 2019A (CWA Authority Project) (Green Bonds).
The 2019A bonds are being sold to fund various CWA wastewater system (the system) capital improvements, repay draws under a line of credit, fund a debt service reserve surety policy and pay costs of issuance. The bonds are expected to sell via negotiation the week of Sept. 23, 2019.
Fitch also upgrades to 'A+' from 'A' the rating on the following outstanding IFA bonds issued on behalf of CWA:
--$559.8 million in outstanding first lien wastewater utility revenue bonds, series 2014A 2015A and 2016A (CWA Authority Project);
--$41.9 million in outstanding second lien wastewater utility refunding revenue bonds, series 2016B (CWA Authority Project).
The Rating Outlook is Stable.
Moody's Investors Service ("Moody's") has assigned a Aa3 rating to the
CWA Authority, Inc.'s $40.5 million First Lien Wastewater Utility Revenue Bonds, Series 2019A (CWA Authority
Project) (Green Bonds). Concurrently, Moody's upgraded CWA's outstanding senior lien and subordinate lien
revenue bond ratings to Aa3 and A1, from A1 and A2, respectively. After the 2019A issuance, CWA Authority,
Inc. will have approximately $1.8 billion of debt outstanding. The outlook is stable.
RATINGS RATIONALE
CWA Authority, Inc.'s (CWA) senior lien upgrade to Aa3 from A1 reflects the utility's successful implementation
of rate increases to recover costs, pay debt service, and maintain a sound financial position until the federally
mandated consent decree is substantially completed in 2025. The Aa3 rating also contemplates the consent
decree capital plan, which is several months ahead of schedule and roughly $400 million under budget. CWA
is managed by Citizens Energy Group (Citizens) through a charitable trust structure, and serves Indianapolis -
Marion County, IN (Aaa stable). Rates are regulated by the Indiana Utility Regulatory Commission (IURC),
which is unusual for municipal utilities. Despite CWA's rate regulated status, the utility has been able to secure
approval for rate increases cumulatively amounting to just shy of 75% since 2014, demonstrating the IURC's
credit supportive actions concerning CWA's rate increase requests. The wastewater bond indenture is closed
loop, is isolated from any of Citizens' non-core business operations, and the bonds are secured by a fully
funded debt service reserve.
CWA's subordinate lien upgrade to A1 from A2 reflects the same dynamics that led to the senior lien upgrade,
however subordinate lien debt service payments are made after senior lien payments in the flow of funds and
the subordinate lien has a lower rate covenant.
RATING OUTLOOK
The outlook is stable given our expectation for steady debt service coverage levels around 1.5x, no need for
significant rate increase requests to complete the consent decree capital plan and for the consent decree
capital plan to remain ahead of schedule and below budget.
FACTORS THAT COULD LEAD TO AN UPGRADE
- Once the consent decree capital plan is completed
- Debt service coverage ratio consistently above 1.75x
FACTORS THAT COULD LEAD TO A DOWNGRADE
- Debt service coverage ratio consistently below 1.25x
- Major construction delays associated with the consent decree capital plan
LEGAL SECURITY
The wastewater bonds are secured by the net revenues of the wastewater system. The indenture provides for
a 1.20x on all First Lien Debt Service Requirement (with adjustments for rate stabilization transfers) or 1.0x on
all required First Lien deposits. The indenture provides for a 1.10x on Second Lien Debt Service Requirements
(with adjustments for rate stabilization) or 1.0x on all required Second Lien deposits. The debt service reserve
consists of the lesser of 10% of par amount of bonds, maximum annual debt service, or 125% of average
annual debt service.
USE OF PROCEEDS
Finance the costs of improvements and additions to the wastewater system and fund a debt service reserve
for the CWA Authority, Inc. 2019A bonds.
PROFILE
Citizens Energy Group (Citizens) is the trade name of the Department of Public Utilities of the City of
Indianapolis, Indiana (Department). The Department was formed in 1929 to provide the governance structure
for the City of Indianapolis to act as a successor trustee of a public charitable trust (Energy Trust) providing
natural gas utility services in the City of Indianapolis and to own and operate other utility systems serving areas
within and outside the City of Indianapolis.
Citizens operates: the Gas Utility & Distribution System, the Thermal Energy System, the Water System and
CWA. Each system has issued debt independently secured by pledged revenues of each system to a separate
dedicated trust. These separate trusts are designed to insulate one trust from liability for obligations for
another trust, so they do not become jointly liable solely because the same entity is the trust of both. Each
indenture permits Citizens or CWA, as applicable, authority to use residual revenues for other purposes
permitted by the language of the respective indenture. Citizens' water indenture and CWA's wastewater
indentures, however, permit only the use of the excess revenues for the water and wastewater systems,
respectively.
The wastewater system is owned by CWA, a separate nonprofit corporation, which, through an inter-local
agreement entered into between Citizens and the City of Indianapolis, has the power to exercise all rights and
powers of the City, except the City's taxing power, and Citizens in connection with the provision of wastewater
utility services. The Wastewater System is managed by employees of Citizens under an operating agreement
between Citizens and CWA.
METHODOLOGY
The principal methodology used in these ratings was US Municipal Utility Revenue Debt published in October
2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of debt or security this announcement provides certain
regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series,
category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from
existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this
announcement provides certain regulatory disclosures in relation to the credit rating action on the support
provider and in relation to each particular credit rating action for securities that derive their credit ratings from
the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be
assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms
have not changed prior to the assignment of the definitive rating in a manner that would have affected the
rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on
www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related
rating outlook or rating review.
Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal
entity that has issued the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures
for each credit rating.
Thomas Brigandi
Lead Analyst
Project Finance
Moody's Investors Service, Inc.
7 World Trade Center
250 Greenwich Street
New York 10007
US
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Kurt Krummenacker
Additional Contact
Project Finance
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Citizens Energy Group delivered a record amount of natural gas to its customers during the extraordinarily cold weather from Tuesday through Thursday this week. On Thursday, the utility established a new one-day record for gas deliveries, eclipsing the previous single-day record set on January 1, 2018.
“Citizens met the needs of its customers during this record cold snap thanks to careful supply planning and the daily dedication of our employees,” said Jeffrey Harrison, Citizens Energy Group President & CEO.
Multiple suppliers and Citizens’ extensive natural gas storage capacity help ensure the utility has the natural gas its customers need during periods of peak demand. In addition, more than $650 million of system investments made over the past 30 years have made Citizens’ natural gas system one of the safest and most reliable urban gas utilities in the nation. The safety and integrity of the Citizens natural gas system is confirmed by an ongoing study by the Environmental Defense Fund and Google Maps, which found minimal leaks on the Indianapolis system compared to other cities across the U.S. The study can be found here.
Although the increased consumption from the cold snap may impact customers’ bill, the average annual residential gas bill in Indianapolis has declined more than 40 percent since 2009, or about $500.
“Citizens has been able to enter into long-term supply contracts that have helped us leverage falling natural gas prices to deliver significant savings to our customers,” said Harrison.
In addition to meeting the demands of customers as a primary heat source, Citizens is also meeting increasing demands for natural gas from Indianapolis Power & Light, which recently converted its second-largest electric generation plant, Harding Generating Station, from coal to natural gas.
Citizens Energy Group announced today it has completed mining more than half of the 28-mile DigIndy Tunnel System, which is now ahead of schedule and approximately $400 million below the original budget.
When complete in 2025, DigIndy will prevent up to 99 percent of sewer overflows now impacting area waterways when it rains as little as a quarter of an inch. Since opening the first 10 miles of the system on Dec. 29, 2017, DigIndy has prevented more than 500 million gallons of sewage from overflowing into the White River and Eagle Creek across southern Marion County.
“Citizens employees are working hard every day to find innovative ways to keep the DigIndy Project ahead of schedule and below budget, while maximizing benefits for our environment,” said Jeffrey Harrison, President & CEO of Citizens Energy Group. “DigIndy is now functioning just as it was designed. Keeping 500 million gallons of sewage out of area waterways over the past nine months is a tremendous accomplishment resulting from years of careful planning.”
Mayor Joe Hogsett commented that DigIndy is a “transformational project for Indianapolis. As DigIndy restores area waterways to their original splendor, it is enhancing recreational opportunities, while sparking economic and neighborhood redevelopment across our community.”
Harrison thanked the community for its understanding and patience as it completes the largest infrastructure project in Indianapolis history. “We recognize the impact the cost of DigIndy is having on customer rates and that’s why we are more focused than ever on leveraging innovation to hold down project and operating costs. We also appreciate the community’s patience as we complete disruptive surface projects associated with the tunnel system,” Harrison said.
The Indianapolis Department of Public of Works and IndyGo are working closely with Citizens to coordinate project schedules such as bridge replacements and the Red Line construction to minimize inconvenience for residents and motorists.
In addition to building the tunnel system 250 feet beneath the city, Citizens is constructing new consolidated sewers and drop shafts that will convey sewer overflows to the tunnel. Over the next seven years, residents will notice large cranes in areas of the city where drop shafts are being constructed. The utility has already more than doubled the capacity of its two advanced wastewater treatment plants to process volumes captured by the tunnel system.
To learn more about how the DigIndy Tunnel System will improve our community, visit www.DigIndyTunnel.com. For construction updates, follow us on Twitter: @DigIndy.
