Fishers plans to buy portion of Hamilton Southeastern Utilities for $90M

While many cities are selling their wastewater systems to utility companies, the city of Fishers is bucking the trend and wants to spend $90 million to buy the part of Hamilton Southeastern Utilities that serves the city.

The utility filed a petition Thursday with state regulators, seeking to transfer the sanitary sewage assets to the city and fold them into the city’s sewer system.

Fishers said it supports the transfer and does not expect to increase sewer rates as a result of the acquisition. It plans to finance the purchase with sewage revenue bonds.

Fishers said it wants more control over sewer service in the city to contend with continuing rapid growth. Hamilton Southeastern serves about 25,000 customers in Fishers, generally in the eastern part of the city. Fishers serves about 6,500 customers that are generally in the western part of the city.

Fishers currently treats all sanitary sewage for the entire city, including those served by HSE Utilities, through its sewage treatment plant.

“Through this acquisition, the city can make a strategic investment to provide its community with complete ownership over all sewer assets within Fishers,” Mayor Scott Fadness said in written remarks.

He added that being able to finance the purchase without increasing rates, while maintaining the level of service, “is a real win.”

City spokeswoman Ashley Elrod said the city did not have the money decades ago to provide sewage collection to the entire city, but now has the wherewithal to do so. “As the city of Fishers grew, we developed our own treatment center,” she said. “It’s really just a result of different growth areas within the community.”

The Indiana Utility Regulatory Commission is expected to set a hearing to review the petition this fall. The city said it will seek approval of the acquisition with its Board of Public Works and Safety and City Council in coming months.

The city said it expects to close the transaction by the end of the year, and begin serving Hamilton Southeastern Utilities’ customers by Jan. 1.

The Indiana Office of Utility Consumer Counselor, which acts to protect utility customers, called the proposal “unique.”

“This proposal is unique in that a municipality is proposing to buy most assets of an investor-owned utility,” said OUCC Director of External Affairs Anthony Swinger in an email to IBJ. “The recent trend in Indiana has mainly gone the other direction. Having said that, the language in the petition indicates that the city and utility are taking an innovative approach, and we look forward to reviewing the details of the testimony that will be coming.

“As in all cases before the IURC, we will give this a proposal a thorough review, and we will formally weigh in by the testimonial deadline the Commission will set.

The Citizens Action Coalition, a utility watchdog group, said its initial impression of the sale was favorable.

“This is good news,” CAC Executive Director Kerwin Olson said in an email. “It’s very refreshing to see the ownership of these critical assets return to a public ownership model and buck the recent trend of privatization.”