Dear Citizens Customer:

As we begin our 132nd year of service to the people of Central Indiana, Citizens Energy Group employees are more inspired than ever to create value for our customers and communities.

We have created a culture that has empowered them to enhance service in ways that put the customer first. We are making it easier for customers to pay their bill by expanding the number of payment sites across Central Indiana and offering new online service options. By implementing self-service options and digital communications, we are allowing customers to manage their accounts on their terms rather than ours. As we work to enhance service, we are extremely focused
on helping customers in need and on driving efficiency to hold down costs.

Safe, Reliable, Affordable Energy

As other natural gas utilities make large investments to meet new federal pipeline safety standards, our natural gas system already meets the new standards thanks to more than $650 million of investments since 1984. We have achieved industry first-quartile performance in our efforts to eliminate third-party damage to our system. Further, in 2018, we have continued to demonstrate our commitment to safety by adopting a Pipeline Safety Management System in Gas Operations.

Due primarily to lower natural gas prices, the average annual residential gas bill of Citizens customers has declined more than 40 percent, or $500, since 2009. Our natural gas utility also has created value by receiving regulatory approval to acquire control of Heartland Gas Pipeline, producing annual customer savings of $1.59 million. In addition, Gas Supply sourced and subsequently contracted gas portfolio services through a three-year asset management agreement providing a 20 percent savings of $500,000 directly to customers. Finally, we executed a prepaid gas transaction providing a $740,000-per-year discount to gas retail customers. 


Conversion of the Perry K Steam Plant to natural gas, ongoing efficiency efforts and regulatory approval of a special gas transportation rate have allowed us to reduce customer steam bills by 15-18 percent from 2014 rates.  Clean, reliable service from our thermal energy utility allows business, institutional and industrial customers to focus on their mission rather than energy production.

Clean Water for Our Community

Our wastewater utility is creating tremendous value for the environment with the opening of the first 10 miles of the 28-mile DigIndy Tunnel System in December 2017. Over the first year of operations, DigIndy has prevented more than 600 million gallons of sewage from entering the White River and Eagle Creek. Over the next seven years, we will complete the remaining tunnel segments to eliminate up to 99 percent of sewer overflows to area waterways. Cleaner rivers and streams will drive economic and neighborhood development, while enhancing recreational opportunities across Central Indiana. Thanks to our value engineering process, DigIndy and related federally mandated projects are now more than $400 million below the original budget while improving expected environmental outcomes.

Our ongoing wastewater system investments have resulted in Citizens filing a rate case with the Indiana Utility Regulatory Commission (IURC). The increases we are proposing to phase in over three years are essential to stay the course on our obligations to complete the federally mandated DigIndy Tunnel System and to continue rehabilitating our aging sewer system in order to prevent failures such as those that occurred downtown this past summer.

As we clean up area waterways, Citizens is inspired to create value by ensuring affordable water supply through innovative projects, such as our newly proposed Citizens Reservoir, near Geist Reservoir, as well as our new water intakes along the White River and Fall Creek. In addition, our water employees are working  to enhance water quality and efficiency through the Partnership for Safe Water, a nationwide peer-review program focused on improving the quality of water delivered to customers by optimizing water system operation.

Helping At-Risk Customers

The urgency of our focus on creating value and holding down costs is magnified by persistent poverty. Our affordability initiative is directed at working with community partners to better identify at-risk customers, which will allow us to make those customers aware of available assistance programs. In our current wastewater rate case with the IURC, Citizens is seeking permission to create a Low-Income Customer Assistance Program that would provide a 10, 18 or 25 percent discount on wastewater bills for customers who qualify – similar to a discount program now provided to our natural gas customers. At the same time, we are proposing to create a wastewater infrastructure fund to help low-income customers with investments that can reduce their wastewater bills, such as infrastructure repairs and the installation of low-flow water appliances.

Your Hometown Utility Experts

As our employees show daily dedication to creating value for customers, they are giving back to the communities where they live. Our highest profile community service event, Sharing the Dream, celebrated its 10th anniversary by returning to Brookside Park where over 300 Citizens employees provided about $900,000 of improvements to the facilities. Working with multiple partners, we have provided more than $3 million of improvements to 10 Indy Parks facilities across the city over the past decade.

We also are thrilled with one of the biggest community redevelopment achievements in our company’s history: the recent transfer of the site of our former manufactured gas and coke plant on Prospect Street and neighboring property to the City of Indianapolis for the construction of the Community Justice Campus. This redevelopment project meets our primary goal of revitalizing the area by returning the site to uses that will create jobs.

As Indiana’s largest locally headquartered utility, Citizens will always be inspired to enhance customer service and ensure our utilities are improving quality of life and economic development across Central Indiana.


Inspired to Provide Safe, Efficient Energy

Citizens’ natural gas and thermal energy utilities are among the best maintained and operated energy utilities in the nation.

Due to ongoing investments, Citizens’ natural gas system is 99% new plastic and protected steel that already meets current federal pipeline safety standards. Since 1984, Citizens has replaced 2,453 miles of bare steel service lines and 737 miles of bare steel or cast iron gas mains. We also have improved safety by enhancing communication efforts to reduce third-party damage to our pipelines by 67 percent since 2009. The value of our natural gas investments is illustrated vividly in the ongoing study by the Environmental Defense Fund (EDF) of methane emissions by natural gas utility systems.

Using a Google Maps car equipped with methane detection equipment, EDF has surveyed 12 cities across the U.S. for methane leaks. In Boston, where 45 percent of the gas system is cast iron pipe more than 50 years old, thousands of leaks were found, equating to one leak per mile driven. Likewise, in Chicago, where 37 percent of the gas system is cast iron more than 50 years old, thousands of leaks were found equating to one leak for every three miles surveyed. Here in Indianapolis, EDF found a total of five small leaks on our system equating to one leak for every 200 miles driven, which have now been fixed.

As Citizens has upgraded the safety and reliability of its gas system, we have leveraged lower natural gas prices through long-term contracts to reduce the average annual residential gas bill by $500 over the past decade. During fiscal year 2018, Citizens’ average residential natural gas bill ranked third lowest among the 18 gas utilities operating in the state, according to a monthly survey conducted by the IURC. Citizens’ average annual natural gas bill is now the fifth lowest among 20 snow belt cities located in the northern half of the U.S.

Our thermal energy utility is delivering great value through the continuing benefits of converting our Perry K Steam Plant to natural gas and ongoing efficiency efforts. This year we completed an overhaul of the house turbine generator at the Steam Plant that will increase annual electric power production sales to the electric grid to produce revenue that holds down steam rates. Our thermal utility is now better positioned to serve its current customers, while supporting new customers in the growing downtown area.

Inspired by Cleaner Waterways

Through our value engineering process, we are leveraging innovation to complete DigIndy and related projects to not only lower costs, but also to improve the environment.

The first 10 miles of DigIndy and the new Southport Pump Station are now functioning just as designed by preventing hundreds of millions of gallons of sewage from overflowing into the White River and Eagle Creek across southern Marion County. Over the next seven years, similar results will be delivered to streams across the county as each segment of the tunnel opens. In late 2021, the nearly six-mile White River Tunnel will be completed to eliminate sewer overflows from just south of downtown north to Burdsall Parkway. By 2025, when the 28-mile DigIndy Tunnel network is complete, up to 99 percent of sewer overflows in Marion County will be prevented.

We also are using sustainable approaches to reduce potential sewer overflows. Working with partner organization Keep Indianapolis Beautiful, we are committed to planting 10,000 trees across Indianapolis over the next seven years to capture potential storm water while beautifying neighborhoods and improving air quality.

DigIndy is now becoming more visible as we construct new consolidated sewers and drop shafts across the city to collect the overflows and convey them to the tunnel for treatment. We are doing our best to minimize disruptions to neighborhoods, businesses and traffic as we complete this important work.

Value engineering and process improvements also are continuing to drive savings and improve customer satisfaction as we complete the Septic Tank Elimination Program (STEP). By shifting from a gravity system to one utilizing low-pressure systems
, we have reduced the cost to impacted homeowners and the utility. While we continue to restructure the mix of our suppliers and contractors, we expect additional savings as we complete the remaining 3,000 prioritized homes by 2025.

With part of the tunnel now open, our wastewater employees are more focused than ever on efficiency to lower costs and improve performance. Our efficiency efforts have accelerated since insourcing our wastewater operations from a previous contractor 18 months ago.


Inspired to Provide High Quality Water

Our water utility employees also are focused on process improvements to enhance quality and drive efficiency. Over the past year, our employees have been participating in a valuable peer assessment through the Partnership for Safe Water, a voluntary effort among six national drinking water organizations and more than 200 water utilities. The Partnership provides our employees with tools to assess the performance of treatment plants and distribution systems and to develop plans to improve performance beyond proposed regulatory levels.

Citizens has entered all four surface water treatment plants and the water distribution system into the Partnership assessment program, demonstrating our full commitment to providing safe, high-quality drinking water.

In late March, Citizens received notification that it had earned the Partnership’s distinguished Director’s Award for our White River Treatment Plant, which is our largest water production plant. The award is based on a peer-reviewed self-assessment of plant operations and water quality data and establishes Citizens as a high-performing provider of safe drinking water. This is a tremendous achievement. Teams are currently working on self-assessments for the Fall Creek Treatment Plant and the distribution system. Assessments of the White River North and TW Moses treatment plants are anticipated for completion in 2019. By enhancing water quality and efficiency, this program will address both our customer satisfaction and performance excellence goals.

As we focus on enhancing water quality, we are making important investments to ensure adequate water supply. Our new water intakes along the White River and Fall Creek will ensure adequate water supply during moderate droughts, such as the one that occurred in 2012. In addition, we are finalizing plans to convert a stone quarry in Hamilton County into the first new reservoir in Central Indiana in nearly 60 years. When complete in 2020, Citizens Reservoir will provide more than 3 billion gallons of additional water supply necessary to support population growth and economic development in the communities we serve.


Inspired to Help Customers in Need

Thanks to the Citizens Weatherization Program, Van Orman now has a warm home that has transformed his overall quality of life.

“Prior to my home being insulated by your program, the furnace would provide heat, but the overall climate in the house was miserably cold. Now that the walls have had time to warm up, the furnace hardly runs and I feel that not only will this help me afford to live, but it will also lift my emotional and mental state of mind,” said Orman.  “I now have a home that actually makes me feel good health wise and I never could’ve achieved this without your assistance.”

Helping customers such as Mr. Orman is part of the core mission of Citizens Energy Group. In addition to our weatherization program, Citizens is working with partners such as the United Way and Indiana 211 to assist low-income customers having difficulty paying their utility bills. During the winter 2017 heating season, about 22,500 Citizens low-income customers received approximately $4.1 million in financial assistance, including more than $1.3 million from our Warm Heart Warm Home Foundation and Citizens Gas’ Universal Service Program. In our current wastewater rate case before the IURC, we are proposing to expand efforts to help wastewater customers in need.

Citizens recently developed a model that harnesses existing data to identify customers at risk of falling behind on their bills and losing utility service. Implemented in September, the model allows us to target promotion of financial assistance programs, such as budget billing and flexible payment arrangements, via our various communication channels, including letters, emails and bill inserts. Using the model, our Contact Center associates are alerted when they are talking to an at-risk customer, enabling the associate to confirm eligibility for programs and assistance. This innovative use of technology is helping Citizens address affordability concerns in ways that previously were not possible.

Citizens also is educating all customers about how they can reduce their utility bills through easy water and energy conservation measures such as limiting lawn irrigation and turning down their thermostat during the winter. We also are encouraging customers to enroll in the Citizens Budget Plan to spread out the costs of winter heating and summer lawn watering throughout the year.


Inspired to Lead

Officers

(Left to Right:) Jennett Hill, Senior Vice President & General Counsel; Chris Braun, Vice President, Energy Operations; John Brehm, Senior Vice President, Chief Financial Officer; LaTona Prentice, Vice President, Regulatory & External Affairs; Jeff Willman, Vice President, Water Operations; Jeffrey Harrison, President & Chief Executive Officer; Curtis Popp, Vice President, Customer Operations; Sabine Karner, Vice President, Controller; Michael Strohl, Senior Vice President, Chief Customer Officer; Jodi Whitney, Vice President, Human Resources & Chief Diversity Officer; John Lucas, Vice President, Information Technology; Mark Jacob, Vice President, Capital Programs & Engineering.

Board of Trustees

(Left to Right:) John Krauss, Retired Director, Indiana University Public Policy Institute; Jackie Nytes, Chief Executive Officer, Indianapolis Public Library; Brian Williams, Program Director, Lilly Endowment; Daniel Evans, Retired President and CEO, Indiana University Health Partners, Inc.; Dennis Bland, President, Center for Leadership Development.

Board of Directors

(Left to Right:) Joseph Whitsett, Member at The Whitsett Group, LLC; Maria Quintana, President, Q2u Strategic Advisory Group; Phillip Terry, CEO, Monarch Beverage; Moira Carlstedt, President, Indianapolis Neighborhood Housing Partnership; Jeffrey Good, Managing Director for mAccounting; Anne Nobles, Retired Senior Vice President of Enterprise Risk Management and Chief Ethics and Compliance Officer, Eli Lilly and Co.; Daniel Appel, President, Gregory & Appel Insurance; Christia Hicks, Vice President of Human Resources, Eskenazi Health Services; and J.A. Lacy, President & CEO, LDI, Ltd.