OUCC Says IPL Rate Increase Unnecessary

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INDIANAPOLIS -

The Indiana Office of Utility Consumer Counselor recommends Indianapolis Power & Light's request to raise nearly $97 million through a rate increase to pay for its new natural gas plant in Morgan County be denied. The OUCC is instead recommending a smaller increase of only $4.9 million.

The consumer advocate agency's advice was detailed in testimony with the Indiana Utility Regulatory Commission after a six month analysis of the request. “Between the rate increase IPL received only two years ago and the evidence filed in this case, there is no justification for the size of the requested increase or for IPL’s proposed changes to its customer charges,” said Indiana Utility Consumer Counselor Bill Fine. “Our careful analysis of the data shows that the utility already has nearly ample revenue to provide safe, reliable service to its central Indiana customers while providing appropriate returns to shareholders.”

Instead, the OUCC recommends: 

  • A flat, monthly customer charge of $11.25 for each residential customer. (IPL proposes, in this case, to raise this charge from $17.00 to $27.00 for residential customers using more than 325 kilowatt hours (kWh) per month. Customers using fewer than 325 kWh now pay an $11.25 flat charge that would rise to $16.00 under the utility’s request.)
  • Maintaining IPL’s flat, monthly customer charge for small commercial customers at $30.00. This charge would rise to $40.00 under the utility’s request.
  • Recognizing and appropriately applying federal income tax decreases as a result of the 2017 Tax Cuts and Jobs Act.
  • Reducing IPL’s authorized return on equity to 9 percent. The utility’s current authorized return is 9.85 percent, and it is requesting an increase to 10.32 percent in this case.
  • Recognizing that IPL’s current revenues can cover the construction and financing costs for its newly built Eagle Valley Generating Station in Morgan County.
  • Recognizing lower operating costs due to staff reductions since IPL’s last rate case in 2016.
  • Denial of IPL’s proposed increase in vegetation management expense.

IPL will give its rebuttal testimony on June 21, and an evidentiary hearing is scheduled for July 16. The IURC decision on the increase is expected later in the year. For more specifics on IPL's proposed rate increase, click here. IPL Chief Executive Officer Craig Jackson recently appeared on Inside INdiana Business with Gerry Dick. You can view that interview by clicking the link below.

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