City sends I&M default notice

FORT WAYNE, Ind. (WANE) - When it comes to leasing Fort Wayne's electric utility, Indiana Michigan Power is not holding up it's end of the bargain. That's according to Mayor Tom Henry, who announced Wednesday the City of Fort Wayne had sent a letter of default to I&M officials.

Representative Win Moses (D-Fort Wayne) joined the Henry in his announcement. Moses attempted unsuccessfully to pass legislation at the Indiana State House that would solidify the City's ownership of the electric utility.

The City leased the utility to I&M in 1974. That lease expires next year. Since the 70's, I&M officials say they have made more than $86 million in improvements to the system, improvements that would be very hard to remove if they had to return the system to the City in it's original condition.

In June, the city announced the City had chosen to exercise it's option to take the utility to the open market through a competitive bidding process. Since then, Henry says I&M has "held hostage" information that would allow them to make that transition.

"For much too long, I & M has acted like they own the electric utility, but they are only renters," said Henry. "Fort Wayne's electric utility is a potential $100 million dollar community asset. That's an asset that belongs to us, not to American Electric Power of Ohio."

Moses says,"We like them, they're nice people. They work hard. We're proud of what they've done, but when they're trying to take our money, we have to draw the line and say no more."

The letter of default lays out three reasons why the City believe I& M hasn't met the terms of the lease agreement.

It says I& M has failed to provide emergency services. The letter explains the company failed to provide emergency backup electric service to the City's Three Rivers Filtration Plant and St. Joe Dam Pumping Station. The City says it had to pay eight million dollars to address those issues.

It also says the company has refused to coordinate with the City concerning the use and waste of leased property. This claim explains that I&M "unilaterally replaced or retired facilities and equipment undermining the ability to guarantee the delivery of a viable, independent electric utility system to the City upon conclusion of the lease.

Finally, the letter of default accuses I&M of refusing to provide information to help make the transition of services once the light lease is up.

I&M Communications Director Susan Moorman Rowe told NewsChannel 15 those claims are false.

"We are not in default of the lease, and yes, we were disappointed that the City has taken this latest action which appears to be moving resolution of the lease toward litigation. We absolutely want to continue to be the electric provider in the City of Fort Wayne and hope to do so." She continued, "We also hope to be able to work with the city to come to a resolution to the lease."

Moorman Rowe says I &M will now respond to the city's letter with one of its own.

She says under the terms of the lease agreement, the company has 60 days to do so.