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Despite facing a shrinking budget, Mayor Tom Henry spent $45,000 to tell residents why the city is battling Indiana Michigan Power over the value of the city’s former electric utility.
According to city staff, a letter signed by Henry, dated Nov. 4, was sent to 100,300 City Utilities customers. The letter outlined the city’s reasons for the ongoing negotiations with I&M.
The mailing cost $45,002.03 and was paid from City Utilities revenues.
Kumar Menon, City Utilities director, said the letter was important to ensure people receive accurate information about what the city is doing.
Under a lease signed in 1974, the city’s electric power grid – formerly run by City Light – was turned over to Indiana & Michigan Electric Co. That lease expires in March.
Henry has said the city will seek bids from electricity providers to get the best deal for residents and customers, prompting public sparring between I&M and the city. At stake in the negotiations is how much I&M is willing to compensate the city for its former electric utility.
City officials previously said the difference between the sides was between $50 million and $100 million. Henry’s letter said the city’s utility could be worth up to $100 million.
“I am determined to stand up for our utility and your rights,” Henry wrote. “I will fight to get the best deal possible for our community.”
The two sides have gone through two mediation sessions with a third scheduled for Dec. 14. Since the first mediation session, I&M has sued the city, and the mediator has asked the two sides not to speak publicly about the dispute.
Menon said he didn’t feel the mayor’s letter broke that gag order because it wasn’t attacking I&M but simply explaining the city’s actions. He called it an attempt to eliminate some of the misinformation people are discussing, noting city residents will continue to get good, reliable electricity service regardless of the provider.
But the $45,000 expenditure is a concern, said City Council President Tom Smith, R-1st, especially since the same information was recently published as a guest editorial in The Journal Gazette.
“If it was published in the newspaper, that should have been enough,” he said.
Smith said people he talks to are becoming concerned with the rising cost of the battle with the private utility. The city last week revealed it has spent nearly $300,000 on legal fees for the dispute.
During the recent budget hearings, the council cut two full-time positions and one part-time position from the city’s 2010 budget to save money.
While the city often sends information to residents along with their monthly utility bills, Menon said this letter was sent separately so people didn’t ignore it.
“We want the mayor to have a clear direct message,” he said.
Similar letters were sent by Helen Murray, president and chief operating officer of Indiana Michigan Power, to I&M customers after she wrote an opinion piece for The Journal Gazette that appeared July 31.
