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The Indianapolis Department of Public Works announced Wednesday night that it has helped secure a settlement agreement with AES Indiana that would slash the amount of a proposed electricity rate hike sought by the utility.
Kyle Bloyd, chief communications officer for the DPW, said in a press release that the “intervention” by the department in the latest AES rate case before the Indiana Utility Regulatory Commission “will save millions of dollars for taxpayers and prevent a new base rate increase from the company until the next decade.”
The IURC, which said it expects to issue a final order on the rate case in spring 2026, will consider the settlement petition when it weighs the case.
In its original proposal, AES Indiana had requested a $192.9 million base rate increase from the IURC—a hike it says it needed to cover rising operational costs, including tree trimming along power lines, and future investments.
The two-phase original proposal called for raising rates an estimated 7.5% for typical residential customers by the second quarter of 2026 and another 6% by January 2027, or about $21 per month in total.
A settlement petition filed Wednesday with the IURC said the agreement would reduce the requested base rate increase by 47%, to $102.3 million.
In a press release issued Thursday morning, AES confirmed the settlement and said the reduced rate request would result in a residential customer using 1,000 kilowatt hours per month seeing a $10 increase to their bill. The rate adjustment averages 3.35% annually over a two-year period, it said.
AES Indiana said it has agreed to not implement new base rates until January 1, 2030, after this current rate request is implemented.
The DPW said the proposed settlement would “save the City of Indianapolis, and taxpayers, millions of dollars over the next several years by locking in rates at nearly half of what AES Indiana sought.”
The Indiana Office of Utility Consumer Counselor, or OUCC, which acts on behalf of utility customers, did not join the settlement. In September, the OUCC recommended the IURC deny AES Indiana’s proposed rate hike and instead reduce the current base rate by $21.2 million.
The OUCC also recommended reducing monthly customer service charges for most customers from $17 to $11.25.
Ratepayer advocacy group Citizen’s Action Coalition, which opposes the rate hike, also did not join the settlement.
AES. said the settlement, if approved by the IURC, would allow it to make “the necessary and prudent investments needed to reliably serve central Indiana today and into the future.”
“We have a deep commitment to operating efficiently and keeping rates as low as possible,” Brandi Davis-Handy, president of AES Indiana, said in written comment. “Throughout this process, we’ve listened to stakeholder feedback and evaluated tradeoffs we will make for future investments while minimizing the financial impact of delivering safe and reliable electric service.”
The DPW said the settlement would “guaranteee” the following:
- An approximately 50% reduction in AES Indiana’s sought-after rate increase for street lighting.
- AES Indiana is prohibited from seeking a base rate case increase prior to Jan. 1, 2030.
- Residential fixed monthly charges (which do not include variable charges, such as electricity consumption) do not increase and will remain at the same IURC-approved levels.
- Approximately $40 million in incremental uncollectible accounts expenses and $7 million in forgone late fees related to the customer information billing system issues shall not be recovered from residents through the revenue requirement established in this case or any future case.
“Because of this intervention from the city, AES will not be able to raise rates for many years,” DPW Director Todd Wilson said in the press release. “Our team went to bat on behalf of taxpayers, and the result is a win for the community.”
The settlement petition filed with the IURC listed several parties in the agreement in addition to the city and AES Indiana, including the AES Industrial Group, which is made up of Allison Transmission Inc., Eli Lilly and Co., Indiana University, Ingredion Inc., Marathon Petroleum Co. LP, and Messer LLC.
Also onboard are Walmart Inc. and Rolls-Royce Corp. The Kroger Co. did not join the settlement but said it had no objection to the agreement.
The DPW did not respond to a request for comment Wednesday night.
Jesse Brown, a Democrat on the City-County Council who has publicly expressed opposition to the AES rate hike, criticized the settlement.
Mayor “Joe Hogsett and The City of Indianapolis IGNORED the unanimous resolution that the City-County Council passed last week asking AES to withdraw from their case,” he wrote on Facebook. “Instead of joining with the consumer advocacy groups and the City-County Council, Hogsett decided to instead pursue a separate settlement against the interests of constituents.”
Editor’s note: This story has been updated to correct the decrease reflected in the new base rate proposal submitted by AES Indiana.
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It is a pipe dream that AES would drop their request for a rate hike, or that its regulator would not give it much of what it sought.
The city did electric consumers a huge favor with its negotiated deal.
so the increase is going to save us money. right.
my bill is already up 30% at least. so probably a 40-50% increase in total after this “savings”. ha
It sounds like the City is giving AES an assist, not working some great deal for consumers.
The Office of Utility Consumer Counselor has taken a MUCH tougher stance. “The Indiana Office of Utility Consumer Counselor, or OUCC, which acts on behalf of utility customers, did not join the settlement. In September, the OUCC recommended the IURC deny AES Indiana’s proposed rate hike and instead reduce the current base rate by $21.2 million.”
Isn’t the head of AES leading the City’s new economic development arm?
Keep an eye on those campaign finance reports…
Whenever a utility seeks a rate increase, we should require fixed allocation to burying utility lines on key corridors. Take for example the blocks of St. Clair immediately west of the Main Library and American Legion Mall, one of the most important civic settings in Indianapolis. The visual streetscape here is cut up and crowded in by an ungodly number of wretched wires and poles. Total vibe killer. It tells every visitor that we don’t care how the city looks.. And it impedes redevelopment of the ugly asphalt lots there. No self-respecting city should allow this. The remedy is simple: $10 million dollars a year from electric, phone and cable and internet providers would change the face of the city. Require AES and every utility pay now to fix their visible damage to the public realm. As long as we tolerate visual blight we cannot be a great city.