Veolia over troubled water 

Water company springs leaks

Water company springs leaks

Last January, a boil-water emergency in Indianapolis led to class cancellations for 40,000 students and cost schools, restaurants and hospitals thousands of dollars for bottled water alone.
The Riverside Pumping Station

This costly false alarm showed that the computer system installed two years ago by Veolia — the French company managing water in Indianapolis — had no safeguards to flag mistaken readings. Roger Edlin, a 25-year veteran plant operator, said he was fired for doing something required by law. “My license says I have to shut down [in that situation]. … I can’t put out bad water.”

Mayor Peterson covered for Veolia in the media saying, “There was no system in place to catch the error … it points out what has to be changed.” Peterson avoided mentioning Veolia by name during the media reports that followed the incident, referring to the “Indianapolis Water Company.” But this emergency hasn’t been the only incident that has raised questions about Veolia’s quality of service.

• Veolia workers recently inadvertently tapped a high-pressure sewer line, sending raw sewage through a newly installed water meter and into a Northside residence.

• Last year, a main break in Fishers was allowed to flood property for a full day because Veolia didn’t want to pay overtime to crews on Sunday. Veolia denied that overtime was even a consideration, but an internal memo from three months earlier states, “We must manage and reduce overtime significantly — be prepared to have overtime challenged if you approve it for your reports.”

• Due to lack of personnel, Veolia is reported to be behind on replacing 40,000 aging water meters. Another possible cause of this backlog is that meter replacement can’t be charged to the city so Veolia foots the bill. Worn out meters can make it appear customers are using more water than they actually are.

• At the Fall Creek pumping station, two pump units remained un-repaired for over four months.

• The number of tests for bacterial contamination have been sharply reduced from when IWC ran the utility three years ago.

• Fire hydrants are poorly maintained and inspected. The Indianapolis Fire Department, for the first time, is considering an “Adopt-a-Hydrant” program so the public can help Veolia keep track of faulty or frozen hydrants.

• Veolia has taken steps to make sure the public remains in the dark about all the corporate problems employees witness in the future. Employees are currently being forced to sign confidentiality statements that allow the company to sue any employee who divulges Veolia business to outsiders.

Cutting costs, juggling numbers

In April 2002, the city purchased Indianapolis Water Company from NiSource for $515 million. On May 1, 2002, USFilter (now Veolia) took over management of the city waterworks with a $1.8 billion 20-year contract. This is the biggest contract in America for the French-owned company.

Immediately after Veolia took over, non-union employees learned that their benefits were being reduced. Since then, nearly 100 veteran employees have been forced out, including geologists, draftsmen, machine operators, supervisors and maintenance personnel. For 2005, Veolia plans to reduce the workforce by another 60 people, including 25 in the production department. Managers have been told by Veolia to fill only those vacancies that are “absolutely essential” and that even “essential” positions must be “overwhelmingly justified.”

Twenty-five-year Indianapolis water utility veteran Jim Bullington, who accepted a deal to retire this year as a plant operator, said Veolia repeatedly ordered him to cut back on chemicals used to clean the water. This was confirmed in an internal document, which shows that in spite of increased chemical costs, 8 percent less is budgeted for chemicals in 2005.

NUVO obtained a Veolia memo from the contract center manager titled “Work Order Crisis” that instructs the recipient to “cut down on the number of work orders out in the field” and “if we have a [meter] reading in the last 60 days, make a dummy order and estimate out.” This not only saves Veolia labor costs, but also enables the company to receive hundreds of thousands of dollars in “incentive” money from the city.

Another set of internal documents shows that Veolia managers might have actually altered reports in order to not lose a $294,000 payment for responding promptly to emergency calls. That payment has been awarded to Veolia every year in spite of numerous reports of missed deadlines. Carlton Curry, director of contracts and operations for the city, said that Veolia itself is allowed to monitor its incentive-related activities by submitting “a whole flock of reports,” which Curry “spot checks.”

When asked about managers changing response times and codes in the computer to avoid losing incentive money, Curry said, “Well, I guess we’ll never know …”

Roger Edlin, a 25-year veteran plant operator: "My license says I have to shut down ... I can't put out bad water." Edlin said he was fired for doing something required by law.

Henry Karlson, a professor of criminal law at IU Law School, said, “If you modify records to leave out relevant information and then use that as a basis for claiming a payment, that would be classic fraud.” Karlson suggested that if this issue is dealt with, “It would have to be done by a grand jury and that’s the prosecutor’s call.”

Who is running the place?

Since Veolia took over in Indianapolis, many veteran employees have been replaced by people loyal to Veolia with sketchy credentials in running a water utility the size of Indianapolis’.

Veolia’s president, Tim Hewitt, formerly worked for United Way and Indiana Gas Co. Neither the vice president of operations, David Gadis, nor director of production, Alyson Willans (transferred here from England two years ago), has a state water license. Gadis has a background in insurance and finance. Willans’ second in command is David Hill who used to operate a well field but has little experience with surface water plants.

According to Danny Robertson, a plant operator and 34-year veteran of this utility, “everyone had a license before.” Former purification/pumping directors had the highest state water license and decades of experience. Before Veolia took over, Robertson said that plant operators “could call a director and get an answer right now.” Robertson noted that today inexperienced Veolia “directors don’t know what to do when an emergency happens … They say, ‘I’ll have to get back to you’ … then the three of them would have a conference call and a half hour or hour later you might get an answer, which was usually ‘Do what you think is best.’” Former plant operator Edlin confirmed this state of affairs.

The day of the boil water advisory in January, Edlin claims that over 10 hours into the meltdown, Willans and Hill were clueless. “They had no idea what a crisis they were in … the plant was going dry with 20 percent of the filters gone and the reservoirs at Riverside out of service for weeks … they aren’t very knowledgeable in an emergency.”

These charges may be hard to document, because Robertson also noted, “Veolia didn’t like to put anything in writing.” Regardless of that, what these two veteran plant operators say offers a clue as to why Veolia managers took 12 hours “trying to get a handle on the situation” during the January emergency.

Success story?

Veolia touts Indy as a success in its sales pitch to other cities. But as the national watchdog organization Public Citizen warns in a recent research report: “Communities, and the public employees that communities trust to deliver safe and clean water, don’t need a success like Indianapolis.”

Public Citizen’s report concludes, “Despite Veolia’s global track record of corruption, broken promises, environmental degradation, price gouging … and secrecy, the world’s largest water company continues to enjoy support within powerful pockets of financial and political circles.”

Is Veolia doing a better job here than it is doing elsewhere? That’s difficult to answer because no official independent performance audits have been conducted during the first three years of Veolia’s 20-year contract, and none are planned.

That’s a bad idea, according to Clarke Kahlo, president of the Hoosier Environmental Council, a member of the Citizens Water Coalition. “These revelations clearly warrant a complete and independent investigation and a full audit of Veolia’s reporting and claims for payments,” he said.

Will Indianapolis invest in an independent audit of Veolia? Will the mayor or a city-county councilor request a performance audit by the city’s internal audit agency? Will the prosecutor investigate allegations of corporate crime with the same enthusiasm he pursues street criminals? The safety of Indianapolis’ water supply may depend on the answers.

Customer feedback
According to Veolia, one of its greatest accomplishments is how well the company has dealt with taste and odor problems in Indy’s water. A company press release concerning the customer satisfaction survey done for Veolia last year by Robert Hurd & Associates boasts that 83 percent of all customers were satisfied with their service. The press release goes on to say that only 26 complaints about water quality were received in 2004. What the press release didn’t mention was that out of 749 customers surveyed, 247 (33 percent) wrote negative comments about the quality of their drinking water. Comments such as: “I don’t drink it because it stinks and looks dirty”; “It tastes like chlorine and mud”; “Tastes like a wet dog smells”; “It smells like sewer”; “Tastes like shit … not drinkable and I have to buy bottled water”; “Unless we run it through a filtration system, it has an oily surface … you can see a rainbow and it looks like scum on the surface.” These comments raise the question of how Veolia could only report 26 complaints and receive all of its $1.5 million in incentive pay for successfully treating taste and odor problems while one-third of the customers surveyed think the water is of questionable quality. The answer according to Curry is that if the water passes certain lab tests run by Veolia itself, it doesn’t matter if it “stinks and looks dirty.” Veolia’s spokesperson dismissed the 247 negative survey comments saying those problems most likely “were not that serious” otherwise the respondents would have lodged “formal complaints” with the company. —JM

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