Indiana Utility Regulatory Commission and Indianapolis Power & Light and Energy & Environment and Utilities and Utility rates

IPL: Changing tree-trimming policy could cost utility $100M

January 13, 2010

Indianapolis Power & Light Co. says changes to its controversial tree-trimming policies could cost the utility—and ultimately ratepayers—$100 million.

The eye-popping figure is buried in mounds of documents submitted as part of an evidentiary hearing conducted this month by the Indiana Utility Regulatory Commission, which is reviewing IPL's policies. The three-day hearing, held in response to complaints that regulators received from homeowners who say IPL is too aggressive when trimming trees near power lines, concluded Friday.

A ruling requiring IPL to change its tree-trimming procedures would “cripple” the company, Barnes & Thornburg attorney Teresa Morton asserted in case documents.

“A total cost of $100 million or more is easily conceivable,” wrote Morton, who is representing IPL in the case. “Not only would such an eventuality strike a crippling blow to IPL’s efforts to maintain a safe and reliable system through its current well-developed approach to tree trimming and removal, it would likewise be a crippling financial blow to IPL, ultimately borne by customers.”

The $100 million is an estimate of what it would cost IPL to purchase utility easements from as many as 400,000 customers in order to properly trim or remove trees interfering with power lines, Morton said.

IPL is the only regulated electric utility in the state that has a written clause in its charter, or tariff, allowing it to enter private property and trim or remove trees without the homeowner’s permission.

An IURC administrative law judge heard testimony from both sides during the hearing and will decide later whether IPL keeps its current tariff. The IURC is accepting post-hearing briefs—similar to closing arguments in a normal trial—until the end of May.

In December, the group of homeowners that filed the complaint against IPL won a partial victory when the IURC temporarily prohibited the utility from shearing trees without consent.

The group wants the IURC to make the temporary order permanent and to set uniform trimming guidelines that every utility would need to follow. One of the group’s biggest complaints is that IPL trims well outside the existing easements on which the trees are planted, said lawyer Jerry Polk, who represents the homeowners.

“When [IPL is] sending out crews to do routine maintenance, [it] should get the property owner’s consent; that’s the big sticking point,” Polk said. “The other is how far [crews] can go in [a property], and it’s inconsistent from utility to utility.”

Representatives of the other large, state-regulated utilities—Columbus, Ohio-based American Electric Power; Charlotte, N.C.-based Duke Energy; Merrillville-based Northern Indiana Public Service Co.; and Evansville-based Vectren Corp.—attended the evidentiary hearing as well.

Polk argued that those utilities are more willing to compromise with homeowners to avoid disfiguring trees and, in some instances, will even remove problem trees and plant replacements in another part of a homeowner’s property.

IPL countered in an e-mailed statement that its tree-trimming policy is critical to continuing safe delivery of electricity.

“This is an important matter before the commission, as significant changes to IPL's vegetation-management process could potentially be costly to our customers,” the utility said. “IPL's obligation to provide safe, reliable service requires maintaining proper clearances around power lines, and tree trimming is crucial to the continued delivery of this vital service.”

The debate surrounding IPL’s tree-trimming efforts stems from a class-action lawsuit filed in 2002 by nine Driftwood Hills residents who complained that IPL purposely defaced their northeast-side neighborhood by mauling trees touching power lines.

An agreement reached through mediation directed IPL to contact homeowners four months in advance of a scheduled pruning. Company representatives also are to meet with homeowners to explain the process and options if trimming is not desired.

Even so, Charles Goodman, whose complaint against IPL helped launch the IURC investigation, said he arrived home in 2005 to find one side of a sugar maple tree lopped off.

“I didn’t realize when I started this that it would get so damn big,” the 69-year-old said. “Why should a nobody like myself, a retired senior citizen, be the one to find this stuff out and expose it?”

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