Ten Indiana utilities are asking state regulators to allow them to charge ratepayers for revenue they stand to lose because of the COVID-19 pandemic.
The gas and electric utilities, including Indianapolis Power & Light Co. and Duke Energy Inc., filed a joint petition Friday with the Indiana Utility Regulatory Commission, saying they are expecting to see “significantly reduced load and revenue” as a result of businesses closing their doors or moving operations to remote status.
The utilities are asking for permission to collect lost revenue from customers. They also want to charge customers for all “bad debt expense incurred” associated with government orders to not disconnect utility hookups due to nonpayment.
The petition did not spell out how much they expect to lose in revenue from the pandemic, or how much customer bills could increase if regulators grant their wish. But they said the pandemic is unprecedented and is causing “substantial adverse financial impact” on their business.
“Many businesses have had to make difficult decisions to reduce and, in some cases, suspend their operations, which in turn has created significant financial challenges for residential customers. … It is unknown at this time how long the event will last, whether it will recur, or how significant the impact will be on Indiana customers and the utilities that provide them with essential services,” the petition said.
In response, a consumer group, Citizens Action Coalition of Indiana, blasted the request as “unprecedented utility greed.”
“It is disgusting that during these unprecedented times, they are more concerned with quarterly stock reports that with the health, safety and well-being of the Hoosier communities and consumers which they serve,” said Kerwin Olson, the organization’s executive director, in written remarks.
He said what the utilities are seeking is permission to allow them to categorize lower energy sales as an expense caused by the pandemic and to allow them to collect the lost revenue from consumers.
“In other words, the investor-owned utilities want to charge consumers for the energy that they did not sell because of the global pandemic,” he said.
The Indiana Energy Association, a trade group that represents utilities, said the petition seeks to defer the fixed-cost portion of energy production “that enables companies to have power available around the clock.” It does not include fuel costs.
The IEA also pointed out that at least 29 states have seen similar regulatory filings. Utility commissions in 10 states have opened dockets of a similar nature at the request of energy companies.
“There is no immediate impact on customers from this step,” the IEA said in an email. “The costs and revenue impacts would have to be reviewed and approved by state utility regulators in the context of a detailed, deliberative proceeding such as a company’s future rate case.”
It added that utilities have taken steps to help customers by waiving fees and offering flexible payments.
“The companies understand the financial hardship this pandemic is creating for customers and acted quickly to voluntarily establish a moratorium on disconnects due to nonpayment,” the IEA said.
Indiana also issued an executive order suspending such disconnections through June 4.
The Indiana Office of Utility Consumer Counselor also announced Monday it is asking the state to open a formal investigation into how utilities will deal with the impact of COVID-19 on utility rates and services, and on how they will deal with overdue utility accounts.
The OUCC wants the state to extend the suspension of utility disconnections “for an appropriate timeframe” beyond June 4. It also wants the state to waive all deposits, late fees, convenience fees and reconnection fees.
“The full impact of the pandemic’s economic consequences will slowly emerge throughout the months ahead,” said Indiana Utility Consumer Counselor Bill Fine. “This extraordinary and unprecedented situation calls for new protections to ensure that all Hoosiers have access to essential services, especially consumers who are suffering loss of income through no fault of their own.”
In addition, the OUCC also wants state regulators to review the “reasonableness, necessity and prudency” of any COVID-19-related cost recovery requests in future rate cases.
The utilities said they are seeing labor costs rise in the form of overtime, sick time due to prolonged illness, and employee sequestration.
They also claim they are paying high costs for cleaning supplies, health care, testing and temperature checks, personal protection equipment, and equipment and supplies to enable employees to work from home.
Other costs include uncollectible or bad debt expense associated with some customers’ inability to pay bills.
Altogether, the increased expenses are “having substantial adverse financial impacts” on the utilities, the petition said. The utilities added that many businesses may not be in a position to reopen after the emergency recedes, and that production, supply chain and markets have been disrupted.
In addition to IPL and Duke Energy, the petitioners included Indiana Michigan Power Co., Northern Indiana Public Service Co. and Vectren.
The smaller gas companies on the petition were Indiana Gas Co., Indiana Natural Gas Corp., Midwest Natural Gas Corp., Ohio Valley Gas Corp., Ohio Valley Gas, Southern Indiana Gas & Electric Co. and Sycamore Gas Co.
If state regulators grant the petition, each utility company will be ordered to track their COVID-19 related costs. The IURC will open a separate proceeding for each individual utility.
Indiana Gov. Eric Holcomb did not comment directly on the utility petition Monday afternoon, and said he trusted the IURC to handle the case correctly.