"We have apologized profusely," he said. "We're doing everything we can to make sure that the water that gets to our customers meets all the requirements for safe drinking water."
Henning conceded that some privatization deals have disappointed customers because, in the push to win contracts, some companies took on too much risk. "We were kind of hitting each other in the head to get that next contract," Henning said. "I think now the companies that are still in pursuit of this marketplace are doing so in a much more refined, less risky and more mature way."
The industry's prospects for growth may hinge on whether Veolia's $1.5-billion contract with Indianapolis is judged a success.
Tim Hewitt, who took over as president of Veolia Water Indianapolis a year into the contract, said the company's early difficulties stemmed from a flawed billing system and other inherited problems that took time to fix.
But troubles have persisted, including the shutdown of the White River Treatment Plant in January 2005 and the federal grand jury investigation.
Roger Edlin, then the night shift operator at the White River plant, said the emergency developed when a computer glitch turned off a pump that adds disinfectants to the water. The problem overwhelmed the system, Edlin said, because Veolia had taken two reservoirs out of service and cut back on cleaning and repairing the plant's filters.
The company blamed Edlin for the shutdown and fired him. Edlin contends in a lawsuit that Veolia executives brought on the crisis by slashing maintenance and staffing to boost their bottom line.
Seven other current and former employees said in interviews that Veolia's budget tightening had left the waterworks in poor condition.
"You're sitting there holding your breath, hoping that your last pump didn't go down," said Jim Bullington, a plant operator who took early retirement in December 2004.
The company said its detractors simply can't accept the technological and managerial innovations Veolia brought to a tradition-bound work environment. Evidence of the company's progress, Veolia officials said, can be seen in a 2004 customer survey that showed 83% of customers were "totally" or "mostly" satisfied.
Hewitt said Veolia has invested in new equipment and fine-tuned operating procedures, improving water quality and allaying customers' long-standing concerns about the taste and odor of their tap water.
