INDIANAPOLIS – A state agency is recommending a significant reduction of AES Indiana’s request for an 8.4% base rate increase.
The Indiana Office of Utility Consumer Counselor (OUCC) is instead recommending a 1.2% increase based on its analysis. The OUCC, a state agency representing the interests of consumers in cases presented before the Indiana Utility Regulatory Commission, indicated that 14 witnesses filed testimony with the IURC this week.
The OUCC said its attorneys and technical experts spent more than three months reviewing AES’ request. Public comments during hearings on the increase also played a role in the recommendation.
The OUCC included more than 1,500 written consumer comments in its filing. About 40 customers spoke at two public IURC field hearings earlier this year.
“The consumer comments we received regarding affordability and reliability factored heavily into our analysis and recommendations, particularly in the context of the extended storm outages this summer,” said Indiana Utility Consumer Counselor Bill Fine in a news release.
Several customers expressed concerns about storms in late June that left thousands without power. At the height of the outages, 80,000 customers went dark, and some didn’t get their power back for five days. Advocacy groups appealed for an investigation into the matter.
As for the base rate increase, here are the OUCC’s key recommendations:
- Keeping AES Indiana’s monthly customer service charge for most residential customers at $16.75. The utility proposed raising the charge to $25.00 in this case.
- Decreasing the utility’s authorized return on equity to 9.1%. AES Indiana’s current authorized return of 9.99% was approved in 2018. The utility is proposing a 10.6% return.
- Reducing the utility’s proposed depreciation expense and reducing numerous line items from the utility’s proposed amounts for operating and maintenance expenses.
- Requiring specific consumer protections to be in place before the utility implements its proposal to carry out disconnections for non-payment remotely. AES Indiana is asking the IURC to waive rules requiring utilities to make in-person visits to a customer’s property before shutting service off. The OUCC’s proposed protections include requiring the utility to obtain updated contact information for at least 80% of its customers and follow specific guidelines to inform customers of the change prior to implementing.
- Approval of the utility’s proposed economic development rider, subject to reporting requirements.
AES had said the base rate increase would help it cover operational costs “as a result of inflationary impacts on operations and maintenance expenses, investments in reliability and resiliency improvements, and enhancements to customer systems.”
The utility said the increase would be its first since 2017.
“If approved, the current AES Indiana rate increase request in front of the IURC will allow investments that will improve reliability, customer experience, and continue the transition to more sustainable energy solutions,” the company said in a statement released earlier in October.
The Citizens Action Coalition, a consumer advocacy group, asked the IURC to reject AES’ request outright, saying it would “impose an extraordinary additional financial burden on Indianapolis families who are already struggling to cope with an acute unaffordability crisis.”
The group took AES to task for its rate request and also said an analysis of nonpayment disconnections found “AES Indiana has far more disconnections than any other utility in the state and that the number of disconnections was much higher in 2021 and 2022 than prior years.”
Ben Inskeep, the group’s program director, offered testimony in the AES case. He and the CAC asked the IURC to:
- Reject AES Indiana’s request to increase its disconnection and reconnection charges and instead eliminate or reduce these burdensome charges that further hurt struggling households.
- Reduce or eliminate AES Indiana’s late payment charge.
- Reject AES Indiana’s request to force customers to pay for the Company’s expenses related to filing for a rate increase, like experts and lawyers; membership dues in trade associations and chambers of commerce; charitable and civic contributions; and coal ash disposal at coal mines.
- Establish a new Residential Economic Development Rider designed to encourage local economic development by promoting economic stability through bill discounts applied to qualifying residential customer bills.
- Direct AES Indiana to treat residential multi-family customers as a separate customer class with a lower customer charge given it likely costs the utility a lower amount to serve multi-family customers, and multi-family customers should see that reflected in their rates and bills.
- Direct AES Indiana to work with stakeholders to develop better programs and policies addressing the needs of customers who have a member of their household with a medical condition during power outages.
AES has until Nov. 8 to file its rebuttal. An evidentiary hearing is scheduled for Dec. 4, with the final order from the IURC expected in spring 2024.