Citizens Energy seeks to withdraw application to supply water to LEAP District

Indianapolis-based utility company Citizens Energy Group has filed a request with state regulators to withdraw its proposal to supply up to 10 million gallons of water per day to a planned advanced manufacturing district in Boone County.

The move comes five months after the company’s board of directors voted to form a subsidiary, Citizens Water Resources Holdings, to acquire, own and operate water systems to supply water for companies that set up shop in the LEAP Lebanon Innovation and Research District, a planned 11,000-acre development west and north of Lebanon.

The Indiana Economic Development Corp., the state’s quasi-public economic development agency, is overseeing the development of LEAP, which stands for Limitless Exploration/Advanced Pace.

Citizens spokeswoman Laura O’Brien said ongoing discussions with the IEDC have resulted in “material modifications” to the initial filing with the Indiana Utility Regulatory Commission, prompting the company to withdraw a petition that was “no longer reflective of the present situation.” She also said the company “remains hopeful” that it can continue to work with the IEDC and Lebanon to build water utility infrastructure for the LEAP District.

“Citizens Energy Group remains committed to mutually beneficial regional water supply planning solutions that optimize resources used to serve customers in the City of Indianapolis and other Central Indiana communities, including the City of Lebanon and the LEAP District,” O’Brien told IBJ in an emailed statement. “To date, we have been proud to be a collaborative partner with the IEDC and Lebanon.”

Michael Allen, an attorney for the utility company, wrote in an Oct. 5 regulatory filing that the issues that caused Citizens to earlier request a stay “have not been resolved.”

When asked about Citizens’ request to withdraw its petition, IEDC spokeswoman Erin Sweitzer said that Lebanon currently has the water supply to serve the short-term and intermediate needs of the LEAP District, including two planned manufacturing sites from Eli Lilly and Co., which will be served by the existing Lebanon Utility system.

“The Citizens filing was related to a potential short-term need for additional water that Citizens could have provided from their current water supply. The need for this short-term water has been satisfied, thus, Citizens’ need to supply the additional water–and relatedly need to file with the IURC–became moot so Citizens moved to withdraw the request,” Sweitzer said in an emailed statement to IBJ.

An IURC spokesperson said in an email that the agency had not yet issued a decision on the utility company’s request. The agency did not immediately respond to follow-up questions about when it planned to issue an order or whether there was a deadline to respond.

Olivia Rivera, a spokesperson for the Indiana Office of Utility Consumer Counselor, a state agency that represents ratepayer interests in cases before state and federal utility regulators, said that because Citizens asked the IURC to dismiss the case without prejudice, the utility company can refile a revised request at any time.

Jeffrey Harrison, CEO of Citizens Energy Group, said in earlier written testimony that the utility company wanted to “insulate existing and future ratepayers” from any risks associated with the project.

“They are not willing to expose the ratepayers to rate increases to help pay for this thing,” said Kerwin Olson, executive director of Citizens Action Coalition, an Indianapolis-based consumer and environmental advocacy organization.

The estimated $200 million project would require several infrastructure upgrades, including the construction of 33 miles of pipeline, three booster stations and other improvements, Jeffrey Willman, vice president of water operations for Citizens Energy Group, told Citizens board members in May. The funding would come from the Indiana Finance Authority’s State Revolving Fund Loan, which the Indiana Economic Development Corp. agreed to pay back in five years.

Boone County was chosen as the location for the LEAP District due to its close proximity to Indianapolis and Purdue University along Interstate 65, but the county does not have enough water on its own to support a massive large-scale manufacturing park, according to hydrologists.

The IEDC first approached Citizens in March 2022 about developing utility infrastructure needed to supply water to the district, according to written testimony from Harrison, the Citizens CEO. The initial amount of water was slated to be six million gallons per day by 2026, increasing to 10 million gallons per day by 2027.

The IEDC, under the Republican administration of Gov. Eric Holcomb, has been exploring multiple water solutions for future LEAP developments, including tapping into a Wabash River aquifer and transporting as much as 100 million gallons of water per day to Boone County. The water would then be treated and piped into a tributary of the White River or the Eagle Creek Reservoir.

Local officials in West Lafayette and Attica, both of which are located along the Wabash River, have passed resolutions declaring their opposition to the proposal.

The controversial project has prompted state lawmakers representing the Lafayette region to draft legislation that would create a permitting process and require a deeper public review of any effort in the state to pump more than 10 million gallons per day from a community’s aquifer.

The IEDC last month released the results of early testing of a Wabash River aquifer which concluded that two test wells could support a maximum pumping rate of 45 million gallons daily, well shy of the 100 million gallon mark. Further testing at a second site is needed in order to determine if the 100 million-gallon target can be reached, according to the report.

Democratic lawmakers at the Statehouse have called for more oversight of the IEDC, which was given a record amount of funding in the 2023-2025 state budget.

“We’re giving them money at levels they’ve never seen, and for projects that are very expansive and, from our perspective, hard to find,” said Rep. Ed Delaney, D-Indianapolis. “They may have a 5,000-page description of this project, but they’re not sending it across my desk at the Statehouse. So I’m trying to figure out what’s going on as best I can.”

Olson said his organization is concerned that the water infrastructure required to support the LEAP District could negatively impact energy, water, and wastewater ratepayers.

“You’re not only talking about getting water to an area with no water, you’re talking about incredibly dirty manufacturing facilities that have a lot of wastewater discharge,” Olson said. “Where’s that going to go? Who’s going to treat all of that? What’s in all that wastewater? We’re talking about facilities that are going to require an awful amount of energy, capacity and power. Where’s that going to come from? Who’s going to pay for that?”