INDIANAPOLIS – At a time when budgets are already tight, things could get worse for AES Indiana customers to the tune of a nearly 19% rate increase this fall.
The utility company has asked the Indiana Utility Regulatory Commission (IURC) to approve its request for a rate hike. The request came to light Friday when AES filed its Fuel Adjustment Clause tracker. The clause allows utilities to adjust customer prices based on fluctuations in fuel costs.
During testimony before the IURC, an AES official said the proposal would result in “an increase of $24.39 or 18.90% for an average residential customer using 1,000 kWh per month,” with the majority of the hike coming from projected increases in fuel costs.
If the higher rates are approved, they would go into effect in September 2022 and last through November 2022.
AES said fossil gas will be 288% higher during the period covered in its request when compared to 2021. Factors such as supply concerns, the war in Ukraine, embargoes on Russian commodities and export demand from the liquefied natural gas market are driving up energy costs, the utility said.
“This significant increase in natural gas prices for the forecast period is the primary driver for the fuel factor proposed in this proceeding,” according to the filing.
The request comes amid rising concerns about the Midwest’s power grid this summer. AES said it had joined an initiative to strengthen power grid resilience.
According to documents filed with the IURC, AES reported a net operating income of nearly $224 million during the twelve-month period that ended on April 30, 2022.
AES Indiana noted that the issue of higher costs was not isolated to Indiana. The utility company provided a statement about the proposed rate increase:
The Fuel Adjustment Charge (FAC) mechanism reflects changes in fuel and purchased power costs to meet a utility’s load requirements. The FAC is set and approved by the Indiana Utility Regulatory Commission (IURC) in the FAC proceedings which occur on a quarterly basis. The FAC ensures customers ultimately experience the actual cost of the fuel and purchased power in their rates. In some cases, this results in credits to our customers.
The FAC factor does not result in any profit to AES Indiana.
Natural gas prices have increased significantly, 288% higher, for the forecast period of September 2022 through November 2022, versus the same forecast period one year ago. This is a major driver in the increase of $24.39 or 18.90% for an average residential customer using 1,000 kWh per month compared to our last filing.
The issue of higher cost is not limited to AES Indiana as market events and high prices are impacting utilities across the US.
If approved by the IURC, AES Indiana’s current proposed factor of $37.858/MWh will be in effect September, October, November 2022. The major drivers of this increase include the forecasted fuel costs and a portion of the FAC 135 variance already approved to be included in this current FAC 136 factor. The recent Eagle Valley outage is not impacting this increase and is not a part of this variance.
AES Indiana maintains its commitment to reliably serve our customers with the least reasonable cost options today and into the future.