AES, of Arlington, Va., took money out of Indianapolis Power and Light for its own corporate growth and could do the same with DP&L, also a profitable utility, Ingalls warned the PUCO. That would increase DP&L’s debt and take away money that it could use to invest in its operations, he said.
“Dayton Power and Light, like IPL, generates an enormous amount of cash and is conservatively leveraged — meaning that a lot of value can be taken from Dayton Power and Light immediately to support other AES ambitions,” Ingalls wrote.
The PUCO could rule later this year on the deal, which would make DP&L and its parent company part of AES, an electricity generation and distribution company with operations on five continents. The merger is also subject to review by the Federal Energy Regulatory Commission.
“I am not suggesting that AES should not be allowed to acquire DPL, for that decision is yours, in part,” Ingalls wrote to the PUCO. “I am suggesting that if the acquisition is allowed, you should exercise extreme caution, put substantial consumer protections in place, and be prepared to faithfully hold Dayton Power and Light accountable for their consumer/public obligations despite influences from their parent company.”
The Indianapolis utility has scrimped on maintenance during AES’ ownership and that may have contributed to a series of explosions in underground utility cable vaults within downtown Indianapolis in recent years, including a May 31 blast just outside the Indiana State Capitol building, Ingalls has told Indiana and Ohio state utility regulators. Indianapolis Power and Light denies that, and says its system is safe.
Ingalls was with AES 14 years, including serving as a plant manager and part of the company’s transition team during the IPL takeover. Ingalls claimed that he brought IPL’s problems to the attention of AES Chief Executive Paul Hanrahan and its board of directors, and that resulted in his separation from AES.
Ingalls has sued AES and the Indianapolis utility, since leaving AES in 2004. No court has upheld any of his claims against the companies, AES spokesman Lucas Bushman wrote in an email response to the Dayton Daily News. The Indianapolis utility maintains its infrastructure in accordance with good utility practice, Bushman wrote.
Downtown Indianapolis has experienced the underground explosions on five occasions from Feb. 17, 2010, through May 31 this year, The Indianapolis Star reported. No one has been seriously injured in those explosions, which in some cases belched flames and sent manhole covers flying, but downtown Indianapolis merchants say they are worried. The utility traced several of the blasts to overheated or short-circuited cables.
The Indiana Utility Regulatory Commission has demanded and received answers from Indianapolis Power and Light about its maintenance programs as the commission decides whether to order changes in the utility’s maintenance program. IPL said its annual maintenance spending since 2002 has swung between $3.4 million and $4.8 million, including $4.3 million in 2010.
Ingalls, of Greenwood, Ind., said he has informed Indiana regulators of his concerns that IPL, under AES ownership, cut back on staffing and maintenance, undermining its response to repairing storm damage and underground cable vaults. IPL has underreported its income in an effort to avoid government regulatory scrutiny, Ingalls wrote.
The Indiana Utility Regulatory Commission has never found the Indianapolis utility’s accounting procedures to violate any state rules or orders, the company’s spokesman wrote.
The PUCO reviews letters from Ingalls and others, but gives more weight to evidence submitted at hearings to evaluate merger proposals, commission spokesman Matt Butler said.
Ingalls said he would testify before the PUCO if asked to do so.
Ohio Partners for Affordable Energy, which advocates for low-income consumers and has filed to intervene in the AES/DPL case, is interested in learning more about how AES managed the Indianapolis utility, said Dave Rinebolt, executive director of the advocacy organization.
“Certainly, the experience of that company over in Indianapolis is relevant to the proceedings involving DPL,” Rinebolt said.
DP&L does a good job of working with low-income customers, and that should continue if AES takes over, Rinebolt said. In addition, any operational savings due to the merger should be shared to some extent with all customers in the form of lower rates, he said.
Indiana consumer advocates said AES’ purchase of the Indianapolis utility and its parent company IPALCO harmed the public. The utility cut 400 people from its work force of 1,900. Complaints about its efforts to restore electricity after a July 2001 storm led to a settlement with regulators establishing service quality and performance standards, with potential penalties of up to $7 million. Consumer watchdogs said the utility’s performance has improved since then.
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