Group recommends a significant reduction in IPL’s requested rate hike


By Max Bomber

An agency that represents customers says Indianapolis Power & Light doesn’t need to raise customer rates as much as it has proposed to keep customers safe and electric service reliable.

The Indiana Office of Utility Consumer Counselor has recommended that state regulators approve only 8 percent of IPL’s proposed rate increase.

The consumer counselor’s office says the Indiana Utility Regulatory Commission should give the company just $5.9 million in new revenue, as opposed to the $67.7 million in rate increases the company requested.

The consumer counselor filed testimony on Monday saying the IPL should be required to perform a management audit, initiate a performance benchmarking program, and retain an independent third party to audit the utility’s asset management system.

IPL officials said in a statement that they are reviewing the consumer counselor’s testimony and will respond formally to the regulatory commission by Sept. 4. But they said generally, “IPL’s requested rate increase will cover the rising operational costs of providing safe and reliable electricity, as well as enhanced customer service functions.”

The utility says the average IPL customer would pay about $8 more per month under its proposed rate increase.

IPL’s requested rate request and the IURC’s investigation into the company’s infrastructure have been combined into one case. IPL has until Sept. 4 to file a rebuttal testimony. An IURC evidentiary hearing – to have a group of witnesses or experts testimony and documentation presented to the court in order to reach a decision on the matter – is scheduled to start on Sept. 16.

According to the consumer counselor’s testimony:

There is no evidence that IPL, in recent years, has spent more money on its downtown network than its typical expenditures for routine maintenance. However, the company has had a 2.5 percent decrease in dividends to its parent company – IPALCO Enterprises – between 2010 and 2014. That’s more than $126 million.

There have been 14 fires or explosions in IPL’s downtown underground network since 2010. However, data show hundreds of cable failures and other network failures over the last 12 years.

IPL is moving too slowly to install Swiveloc manhole covers, which are designed to stay in place in the event of an underground explosion. As of March, IPL had only replaced 374 downtown manhole covers out of 1,214 – a rate of only 31 percent.

IPL’s flat monthly customer charges of $11 for customers using more than 325 kilowatt hours (kWh) and $6.70 for customers using less than 325 kWh should remain where they are. The utility has requested permission to raise those charges, respectively, to $17 and $11.25.

The IPL Downtown Network responded in a statement saying, it remains “focused on the installation of locking manhole covers on all 1,214 manholes within the downtown network by the end of this year. To date, 832 lids have been installed.”

But the consumer counselor’s office said “the evidence presented by our 14 witnesses shows that IPL has the revenues necessary to provide safe, reliable service to all of its customers, and to make the underground infrastructure upgrades that are strongly needed,” said Indiana Utility Consumer Counselor David Stippler in a statement. “However, the evidence also tells a story of misguided leadership and misplaced priorities, with critical downtown infrastructure needs taking a back seat to shareholder dividends.”

IPL’s current base rates received IURC approval in 1995. Since then the monthly bill for an IPL residential customer using 1,000-kilowatt hours has risen by more than 43 percent through various rate adjustment mechanisms, or trackers, which are used to reimburse the company for some construction, pollution control and other costs.

According to Duke Energy, one kilowatt‐hour of electricity is enough to:

  • Watch television for 10 hours
  • Wash 12 pounds of laundry
  • Listen to the radio for 20 hours
  • Vacuum for an hour
  • Cook breakfast for a family of 4
  • Work on computer for 5‐10 hours

“Reliable electricity service is a necessity of life. Without electricity, residents cannot participate effectively in present-day society or be secure from threats to health and safety,” said National Consumer Law Center Senior Policy Analyst John Howat in a statement “All IPL customers, including those with low incomes, should have access to reliable and secure sources of electricity.”

Howat and advocates for the poor filed testimony in the case that said vulnerable Hoosier households living at or below 150 percent of the federal poverty level have a disproportionately high energy burden and therefore experience difficulty paying their bills.

Howat’s testimony said people over the age of 65 and households headed by an African American use less electricity on a monthly basis than the average household. Therefore the rate hike will only cause more low-income residential customers to experience loss of electricity service at a higher rate than the median and higher income households.

He said an electric bill increase will contribute to Indiana’s already rising poverty rates.

But IPL said its rates already are lowest among Indiana’s investor-owned utilities and lowest among the 20 largest cities in the nation.

Max Bomber is a reporter for a news service powered by Franklin College journalism students.