The Indiana Office of Utility Consumer Counselor, or OUCC, said Wednesday that it recommends officials deny a rate hike proposed by AES Indiana and instead called for a rate reduction.
The counselor, who acts on behalf of utility customers, said AES Indiana is requesting a $192.9 million base rate increase from the Indiana Regulatory Commission, or IURC, but that the office’s analysis showed that a $21.2 million reduction of the current base rate instead was warranted.
The Indianapolis-based utility said the rate increases are needed to cover rising operational costs, including tree trimming along power lines, and future investments.
The OUCC recommended reducing monthly customer service charges for most customers from $17 to $11.25. The OUCC said AES is proposing to raise the charge to $20. The advocacy office also recommended reducing service charges for small commercial customers.
The recommendation comes one week after Gov. Mike Braun announced he had appointed Abby Gray as the new commissioner of the Utility Consumer Counselor’s office. At the same time, he issued a mandate for the office: review utility companies’ profits to identify “cost-saving measures to ease the financial burden on Hoosiers.”
AES’ justification for rate hike
AES Indiana provides electricity to more than 530,000 residential, commercial and industrial customers in a 528 square-mile area in and around Indianapolis.
“AES Indiana has not demonstrated sufficient evidence for an increase in this rate case, which it filed less than 14 months after receiving Commission approval in its last rate case,” Indiana Utility Consumer Counselor Abby Gray said in a written statement. “My team is recommending additional reductions that would reduce the utility’s current rates and help lessen the burden on ratepayers.”
AES Indiana on Wednesday said it would file rebuttal testimony early next month.
“AES Indiana takes seriously its responsibility to provide safe, reliable, and cost-effective electric service to more than 530,000 customers in Central Indiana. We deeply value customer feedback, and as part of the regulatory process, we are reviewing the OUCC and other intervenors’ testimony filed yesterday regarding the proposed rate review,” AES Indiana spokesperson Mallory Duncan said in an email.
OUCC’s testimony also recommends reducing AES Indiana’s return on equity, a measure of its profitability, to 8.5%, down from its current authorization of 9.9% and proposed 10.7%.
Other recommendations, according to the OUCC’s news release, included “keeping vegetation management costs at their current levels based on the utility’s performance.”
When AES sought the rate review in June, the utility said factors influencing the proposed rates included tree trimming, storm response, infrastructure investments and inflation.
The utility’s request also seeks rate recovery for 105 vacant positions. The OUCC’s testimony recommends the elimination of more than 100 “phantom hires” in the company’s budget.
Gray: Customers report ‘serious hardships’
The OUCC said it has received more than 6,700 written comments from consumers, “highlighting serious hardships many customers are facing,” Gray said.
AES said the rate review framework with the regulatory commission ensures transparency around the company’s investments.
“When we filed our case earlier this year, we included evidence that demonstrated the need for continued prudent investments. These investments allow us to build a reliable and resilient electric system that delivers long-term value to more than 530,000 customers while preserving our position as one of the lowest rates of any investor-owned utility in Indiana,” Duncan wrote.
The Citizens Action Coalition also called for the IURC to reject AES Indiana’s proposed rate increase.
The advocacy group AES Indiana’s proposed rate increase would impose an extraordinary additional financial burden on Indianapolis families.
“The Commission should take strong action to protect residential ratepayers experiencing inexcusably poor service at increasingly unaffordable rates,” Citizens Action Coalition Ben Inskeep said in a written statement Wednesday. “AES Indiana’s residential customers have grown beyond exasperated with AES Indiana’s persistent billing and autopay issues, the woefully inadequate customer service, and overall response to AES Indiana’s mismanaged billing and autopay systems.”
The final IURC decision is expected next spring.