FORT WAYNE – Fort Wayne spent more than $1 million on legal and other fees since 2007 to settle the dispute with Indiana Michigan Power over the former city electric utility.
City officials Wednesday released how much money was spent negotiating the $39.2 million settlement with I&M announced last month. In total, the city paid 10 firms nearly $1.2 million from 2007 through Oct. 28. The vast majority of the fees were paid to legal firms.
Kumar Menon, director of City Utilities, said although the amount of fees paid was great, in reality it amounted to less than a years worth of lease payments from I&M to the city.
For those fees, the city is getting nearly $40 million.
The return on investment is pretty significant, he said.
The public utility wasnt the only one paying during the legal battle.
Sarah Bodner, I&M spokeswoman, previously said the company was represented by Barnes & Thornburg and several in-house attorneys. The company paid the law firm $876,599 last year, according to its annual report filed with the state.
The report does not specify how much of that money was paid for the city lease negotiations, and Bodner said the company would likely make that information public only if asked by the state.
Tim Haffner, corporate counsel for the city, said the private utility was well represented with attorneys and experts during the negotiations.
Haffners firm, Baker & Daniels, earned $412,013 since negotiations began in 2007. He said the fees included his hours and that of other attorneys at the firm.
The city also hired Michael Cracraft, from Hackman Hulett & Cracraft. Haffner called Cracraft one of the most experienced regulatory lawyers in the state; his firm was paid $183,430. The city used Wayne Turner and Gregory Neibarger, of Bingham McHale, to provide litigation expertise, Haffner said, at a cost of $270,775.
Fees paid to firms not providing legal services were also released, including $104,375 to H.J. Umbaugh for financial information and $70,143 to NOVI to help the city understand what it would take to get back into the electric business.
Haffner said the citys willingness to investigate taking back the electric utility from I&M helped reach a settlement.
Menon said City Utilities paid the fees using revenue from the citys previous lease with I&M. The fees do not include what will be paid to mediator John Whiteleather, and Haffner said some additional legal fees could be incurred during the state approval process.
Under a lease signed in 1974, the citys electric power grid – formerly run by City Light & Power – was leased to Indiana & Michigan Electric Co. for 35 years. That lease expired Feb. 28 without resolution of whether the city still owned the right to serve customers in their utility district or simply the old infrastructure.
Under the settlement, I&M will own the former city electric infrastructure and the right to serve all customers. It will pay the city $39.2 million over 15 years with $5 million paid immediately upon City Council and state approval.