Indianapolis Power & Light Co. has reached a settlement with the Indiana Office of Utility Consumer Counselor and other parties regarding its proposed electric rate increase. As part of the agreement, IPL would hold its fixed, monthly charge for most residential customers at the current $17 level.
The OUCC says IPL’s proposed plan would have seen that charge rise to $27 for customers using more than 325 kilowatt hours per month. For customers using less than 325 kWh per month, the monthly residential charge will rise from $11.25 to $12.50, instead of the proposed $16.
The agreement would increase IPL’s overall operating revenues by $43.9 million. The utility has originally requested a $124.5 million in December, but later adjusted the request to $96.7 million following the passage of the Tax Cuts & Jobs Act. It was further reduced to $88.3 million in June.
The utility is seeking the rate increase to help cover the cost of its $600 million natural gas plant in Morgan County, which officially opened earlier this month.
"Preventing a major increase in the monthly customer charge is a high priority for us, and we have achieved that through this agreement," said Indiana Utility Consumer Counselor Bill Fine. "We weighed new evidence presented during the case and considered the significant litigation risk as we and nearly all of the case’s intervening parties reached a settlement resulting in a substantial and justifiable overall reduction to IPL’s request."
Additional consumer benefits from the settlement agreement include:
- The utility will have a 9.99 percent authorized return on equity (ROE). IPL had sought to raise its authorized ROE to 10.32 percent.
- All issues regarding tax relief due to the federal Tax Cuts & Jobs Act will be resolved.
- IPL will contribute $150,000 in shareholder funds to the Indiana Community Action Association to expand low-income weatherization projects.
- Using $650,000 in shareholder funds, IPL will initiate a three-year pilot program to forgive low-income customer arrearages.
- IPL will implement its proposed “roundup” program on a three-year pilot basis, and contribute $100,000 in shareholder funds for operational costs. The program, similar to those offered by many rural electric membership cooperatives (REMCs), will allow customers to round their bill payments up to the next dollar, with the difference going to low-income customer assistance.
"This proposed settlement represents a compromise among the parties that has IPL at the forefront of implementing energy solutions that take into account affordability for our customers while moving towards a cleaner energy future," said Craig Jackson, chief executive officer of IPL. "We will continue to make smart investments to provide customers with the safe and reliable service they depend on."
The settlement must still be approved by the Indiana Utility Regulatory Commission. The settling parties are scheduled to provide testimony by July 23 and the IURC will hold a settlement hearing on August 9.
You can learn more about the case by clicking here.