Joint Board Meeting of Citizens Energy Group and CWA Authority - August 25, 2025

The joint board of directors for Citizens Energy Group and CWA Authority Inc. met on August 25, 2025, to approve routine items, discuss a major water utility acquisition, review budgets and forecasts, approve executive compensation adjustments, and hear reports from committees and a community stakeholder. All votes were unanimous unless otherwise noted.

Consent Calendar

• Approved amended minutes of the December 11, 2024 joint meeting, correcting an omission (added resolution for prepaid natural gas agreement and second amendment to steam services contract).
• Approved minutes of the May 28, 2025 joint meeting.
• Certified that the executive session on May 28, 2025 was limited to the item in the public notice.
• Approved Fuel Cost Adjustment 78, Gas Cost Adjustment 167, Distribution System Improvement Charge 4, a resolution authorizing management to submit a notice of intent to file a rate case with the IURC, and an extension of the AES gas transportation contract.
• Approved the appointment of Melissa Lawson as Executive Director of Customer Operations (to succeed retiring VP Curtis Pop), effective October 1, 2025.

Public Comments & Testimony

• A public hearing was held on the proposed acquisition of the Whitestown Water Utility. Three calls for public comment yielded no speakers.

Discussion Items

• Water Resources Executive Committee Report: J.A. Lacey presented the Whitestown Water Utility Acquisition Opportunity. Whitestown serves over 6,000 customers with 9% annual growth; Citizens has supplied 100% wholesale water since 2028. The $37 million asset purchase agreement includes transferring customers to Citizens’ retail tariffs, with no impact on Whitestown employees. Expected IURC approval by March/April 2026. Benefits include enhanced reliability for Citizens and 18–33% rate savings for Whitestown customers.
• Compensation and Finance Committee Report (Part 1): Christy Hicks recommended approving an interest rate hedge and a bond resolution (up to $40 million) to fund the Whitestown acquisition, pending IURC approval.
• Compensation and Finance Committee Report (Part 2): Director Hicks presented the FY2026 budget and 2025–2030 forecast. Total O&M costs projected to increase 6% in 2026 due to commodity prices and tariffs, then 3% annually. Debt remains at $2.8 billion. Gas covers operating/capital needs with existing rates; Steam needs new debt for growth; Water and Wastewater plan rate increases. Also proposed: a $410,000 gas rate decrease as customer benefit distribution, and capital contributions of up to $8 million from Citizens Gas and up to $5 million from Citizens Water to Citizens Resources.
• Executive Compensation: External consultant WTW presented benchmarking. Citizens’ executive base salaries average 5% below utility market 50th percentile; total cash is 7% below; total direct compensation (including long-term incentives) is 43% below. Proposed adjustments include 4% base salary increases for most executives and higher increases for those with larger gaps, plus slight increases in short-term incentive targets to bring base and total cash to market. The short-term incentive plan for FY2026 retains four focus areas: customer satisfaction, employee engagement, financial integrity, and performance excellence.
• Audit and Risk Committee Report: Director Good reported Q3 FY2025 financial statements (net income $56.9 million, down $2.5 million from prior year due to higher water operating expenses). External auditors expect a clean report. Insurance markets stable; excess liability and fleet saw premium increases. Internal audit completed “meter to cash” review with no significant issues. FY2026 audit plan approved.
• CFO Report: Craig Jackson updated FY2025 projections—net income $6 million under budget (2.2% below). Primary drivers: $3 million lower other income (Warm Heart Warm Home contribution timing, lower CWA interest) and $2 million higher interest expense. CapEx delays of $5.5 million pushed to FY2026. Approved disposition of funds estimate for FY2026 and consolidation of thermal lines of credit (increased from $50M to $75M).
• President/CEO Report: Jeff Harrison highlighted a peer review by the American Gas Association, new steam/chilled water service to downtown buildings, the Deep Rock project (over 7 billion gallons of sewage prevented), lead service line replacements (over 3,800), and community events. Citizens Reservoir supplied 1.1 billion gallons during drought.
• Strategic Planning Update: Sabina Carter presented four FY2026 initiatives: (1) develop business plan for Citizens Foundation (umbrella for utility assistance programs), (2) implement employee experience journey mapping, (3) bring vacuum excavation in-house, (4) create a single technology platform for new service applications. Board requested future updates on the foundation.
• Community Stakeholder Presentation: Deanna Woodruff, COO of Martindale Brightwood Community Development Corporation, detailed the CDC’s programs (employment services, home repair, affordable housing development, small business support). She praised Citizens for financial support, board member Jennifer Bailey’s participation, and partnership on the Quality of Life Plan. Citizens was recognized as a consistent community partner.

Key Outcomes

• Approved all consent agenda items unanimously (all ayes, no opposed).
• Approved three resolutions for the Whitestown Water acquisition: (1) formation of Citizens Water Resources Whitestown LLC and filing with IURC, (2) interest rate hedge resolution, (3) bond resolution for up to $40 million.
• Approved Citizens Energy Group and CWA Authority Inc. FY2026 budget and 2025–2030 forecast.
• Approved FY2026 customer benefit distribution (gas rate decrease of $410,000).
• Approved capital contributions: $8 million from Citizens Gas to Citizens Resources, $5 million from Citizens Water to Citizens Resources.
• Approved executive compensation adjustments (base pay and short-term incentive plan) effective October 1, 2025, and FY2026 short-term incentive plan.
• Approved FY2025 third quarter financial statements for Citizens Energy Group and CWA Authority.
• Approved disposition of funds estimate for FY2026.
• Approved thermal line of credit consolidation resolution (increase to $75 million).

Note: The transcript references an audit committee meeting held on August 20, 2025, while the board meeting date is given as August 25, 2025. This discrepancy is noted but does not affect the actions taken.