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IPL reaches settlement that significantly shaves proposed rate hike

July 19, 2018

Indianapolis Power & Light has agreed not to raise the fixed monthly rate it charges most of its residential customers, under a rate-case settlement it reached with the Indiana Office of Utility Consumer Counselor and other stakeholders.

Under the agreement announced Thursday, the utility will leave its fixed rate for residential customers who use more than 325 kilowatt hours per month at $17. IPL had proposed raising it to $27.

The monthly residential charge for customers who use less the 325 kilowatt hours per month will rise from $11.25 to $12.50. IPL had proposed raising it to $16.

IPL, which has 490,000 customers, is still expected to see an overall increase in operating revenue of $43.9 million, down from the $124.5 million it sought when it originally proposed the rate hike in December.

The utility said the increase would mean a typical residential customer using 1,000 kilowatt hours monthly will pay about $5 more per month, or about $118. Earlier proposals would have increased that bill to almost $125.

“Preventing a major increase in the monthly customer charge is a high priority for us, and we have achieved that through this agreement,” Indiana Utility Consumer Counselor Bill Fine said in a written statement. “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.”

The settlement still requires approval of the Indiana Utility Regulatory Commission. A settlement hearing is scheduled for Aug. 9.

IPL agreed to contribute $1.2 million toward the creation of additional customer programs to assist low-income customers. Under those programs:

— 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, will allow customers to round their payments up to the next dollar, with the difference going to low-income customer assistance.

Stakeholders who agreed to the settlement after opposing earlier proposals included the Citizens Action Coalition of Indiana, the City of Lawrence, Indiana Coalition for Human Services, Indiana Community Action Association, the Kroger Co., Rolls-Royce Corp., the Sierra Club, the University of Indianapolis and Wal-Mart Stores and Sam’s East.

The other stakeholder was IPL Industrial Group, a coalition of Allison Transmission, Cargill, Eli Lilly and Co., Indiana University Health, Ingredion, PepsiCo, Praxair Surface Technologies and Vertellus Integrated Pyridenes.

After originally requesting a $124.5 million operating-revenue increase in December, IPL adjusted the proposed amount to $96.7 million in February after passage of the federal Tax Cuts & Jobs Act.

It lowered the amount to $88.3 million in rebuttal testimony filed in June.

The utility said it needed the additional money to pay for an assortment of capital improvements and environmental programs.

“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,” IPL CEO Craig Jackson said in written comments. “We will continue to make smart investments to provide customers with the safe and reliable service they depend on.”

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