Saturday, July 6, 2013

Citizens Energy Rewards CEO By Doubling His Pay, Handing Out Other Perks While Asking for Large Rate Increase

The Indianapolis Star has an excellent article detailing how Citizens Energy is increasing pay and perks for its executives while asking for a huge rate increase:
Dozens of gold rings. A $6,500 holiday lunch catered by the Ritz Charles. And $2.9 million for the CEO.

Those aren’t the biggest factors behind Citizens Energy Group’s decision to seek a 14.7 percent increase in water rates, but they’re the ones raising eyebrows.

The company, which provides water to about 300,000 Indianapolis-area residents, wants state regulators to approve the rate hike primarily to fund big-ticket infrastructure improvements.

Most agree those upgrades are badly needed. The long-neglected water system had 730 water main breaks last year and some sections date back to the 1800s.

But other expenses, including big paychecks and large raises for Citizens executives, are prompting concerns about the company’s stewardship of ratepayer dollars — and raising questions about its promise to keep rates low.

An Indianapolis Star review found that Citizens CEO Carey Lykins earned $2.9 million in 2012 — nearly double what he made the previous year and more than triple what the leaders of other large municipal gas utilities earned. About $600,000 of that was base salary. The rest was executive and short-term incentive pay.

 Other executives at the company also saw big raises in 2012, with compensation for the company’s top 14 officials growing 54 percent, for a total of $11.2 million, according to filings in the rate case and information the company provided to The Star.
...

 Citizens ranks fourth for number of customers, according to the American Public Gas Association. But when it comes to compensating its top executive, Citizens dramatically outpaces its counterparts.Utility chiefs in San Antonio, Philadelphia, Memphis, and Omaha earned $206,000 to $820,000 last year — not even close to Lykins’ $2.9 million.
To see the rest of the lengthy article, click here.

As I've said before, the sale of the water and sewer utilities didn't net the public a dime.  The utilities were previously owned by the city, i.e. the residents of Indianapolis.  Citizens is a public trust owned by the public that consumes its services. The two sets of owners are virtually identical.  The sale was the equivalent of a wife taking out a loan to buy her husband's car. Citizens took out a 30 year loan to pay the city the cost of the utilities. We the public have to pay that back.  Apparently in addition to much higher rates, Citizens has used the opportunity to dramatically increase executive compensation and perks.

3 comments:

Sadie Pepper said...

Another lie the Republicans perpetrated on the American people. Privatization is cheaper. I'm sure Cato will blame the "lefties" for it.

Paul K. Ogden said...

Not sure can call it "privatization" when Citizens is not a private company.

Sadie Pepper said...

You know what I mean, smartass.