Indiana water company cited for overpaying executives

Citizens Energy Group is under fire with utility regulators for raising its executives’ pay excessively

The Citizens Energy Group in Indiana has been cited by the Indiana Utility Regulatory Commission for overpaying its executives, and the Commission has launched a probe into the utility company’s business management practices.

According to the Indy Star, Citizens CEO Carey Lykins was in an unsavory spotlight in 2013 for his reported 2012 salary of $2.9 million, which was almost double his 2011 salary. Utility regulators summoned him to a public hearing to justify his salary, which he did, claiming it is a normal rate when compared to other utility executives. Regulators found his claims to be unfounded, and have since begun investigations into how Citizens Energy charges consumers and how it doles out executive pay.

The IURC thus far has reduced the amount the company can raise rates on its customers until its billing practices and customer services have been thoroughly probed. The excuse given for raising rates on citizens was the aging structure of the Indianapolis water system and the costs that Citizens Energy put out in order to bring the system back up to snuff. The issue at hand for the IURC is whether or not the rates went up exorbitantly, only to fill the pockets of the utility company’s executives, rather than wholly going to the improvement of the water system. Citizens Energy has issued backlash on the IURC’s stemming of its rate increases, claiming that lower rates will result in a poor infrastructure 

The Star notes that one in four customers hangs up before receiving help with Citizens Energy, and quotes Indianapolis’ Mayor Greg Ballard on the subject, who leaves the issue in the hands of the IURC: "Rates were always destined to go up, because of the aging infrastructure and the need to replace that…But they were going up much less because of Citizens' management than they would have otherwise.”

The IURC will have to determine whether or not Citizens Energy’s increased payrolls were a matter of business expansion, or if they were raised unfairly and have put unnecessary costs on customers.

 

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Contributing Author

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Juliana Kenny

Juliana Kenny is a contributor to InsideCounsel.com, covering a range of topics including patent litigation, conflict mineral laws, executive compensation, and antitrust regulation. Juliana earned B.A.s...

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