Senate panel passes energy-efficiency utility bill

A Senate committee passed legislation along party lines Wednesday that could mean higher utility bills for customers in an effort to promote conservation.

Senate Bill 412, authored by the committee’s chairman, Jim Merritt, R-Indianapolis, is meant to replace the Energizing Indiana program, which the General Assembly canceled last year over the objection of environmental groups.

Energizing Indiana imposed a fee on the electric bills of all Hoosier households and businesses to pay for conservation efforts that included weatherization and other programs. Critics – including Merritt – said the program had become too expensive to administer.

The new proposal gives companies the authority to create and submit at least one energy-efficiency plan to the Indiana Utility Regulatory Commission every three years. The bill also allows the companies to make up lost revenue from the construction and expenses resulting from their plans.

The Senate Utility Committee amended SB 412 so that a third party must review a utility company’s energy-efficiency plan before it is sent to the Indiana Utility Regulatory Commission, which has final authority to approve it. The third party works independently from the company and the IURC to determine whether the plan and its projections are realistic and reliable.

The IURC can deny a company’s proposal. If denied, the company would then have to go back and fix what caused the denial and resubmit it.

Supporters say the legislation will be beneficial and allows for an individual assessment of each area in the state.

Dan Schmidt, energy and environment policy director for Gov. Mike Pence, said that each utility company knows the details of its consumer base better than anyone else. Schmidt said that having each company specifically tailor its plan to customers’ specific needs can create realistic results statewide since the companies know “what is achievable” for their consumers.

But Jesse Kharbanda, the executive director of the Hoosier Environmental Council, said the bill provides little incentive for companies to set high efficiency goals. Kharbanda said that an “energy efficiency portfolio standard” – which would create a basic plan for utilities to follow as opposed to creating their own – is a much more productive and successful route that is already being used in 26 states.

The proposed legislation also presents the option for a company to opt out of creating an energy-efficiency plan.

Companies that choose that path would simply not submit a plan. There would be no IURC for opting out and the company would then be given the option to create a plan for the next three-year period.

One of the most controversial parts of the bill allows companies to make up revenue lost to conservation efforts. The bill calls for the IURC to determine the “reasonableness” of lost revenues. If the IURC finds that they are reasonable, then the agency can award the utilities that amount.

Kerwin Olsen, executive director of Citizens Action Coalition, voiced his opposition to SB 412 and particularly the details surrounding the lost revenues. Olsen called the bill “unfair and unequitable” to customers.

Olsen said no other state handles lost revenue in such an “unfair” way. He provided statistics from multiple utility companies that compared their previous program budgets to the lost revenue they received and said the bill could allow for unlimited lost revenue collection.

What the legislation means for customer bills remains unclear. Schmidt said the bill won’t necessarily lower electric rates. But he said the reduction in consumption will result in lower bills. He also said the increased efficiency and the decrease in consumption could place a “downward pressure” on rates that would keep them from going as high as they might otherwise.

Critics aren’t convinced the plan will result in a cheaper bill. Olsen said that the bill is “anti-ratepayer,” and that loose restrictions on lost revenue could end up costing the customers more.

The bill passed the committee 7-3 and now moves to the full Senate for consideration.