IPL gets OK to spend $1.2B on grid upgrade, setting stage for seven years of rate increases

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Indianapolis Power & Light Co. has received state permission to spend $1.2 billion to upgrade its local energy grid, a move that sets the stage for seven straight years of rate increases to pay for the improvements.

The Indiana Utility Regulatory Commission issued an order Wednesday that will allow IPL to recover the costs through special fees, called trackers, added onto customer bills. However, IPL will have to get permission from state regulators for each round of increases.

The utility said it plans to file its first rate-increase request by July 1. The company said a typical household would likely pay an extra $1.50 a month in the first year. That monthly amount would increase by $1.50 each year, or by a total of $10.50 a month by the seventh year.

IPL said the project would mean fewer outages and the ability to isolate problems and re-route power, “reducing the customer impact and duration of service interruptions.”

The company plans to replace old equipment and with newer technology, including “smart meters,” new transformers, breakers and batteries.

“We are pleased with the IURC’s order because it allows us to modernize our electric system to continue meeting the rapidly changing needs of our customers throughout the Indianapolis area,” Vincent Parisi, IPL president and CEO, said in a written statement.

The move comes less than two years after IPL got permission to raise rates to pay for an assortment of capital improvements and environmental programs. In July 2018, IPL reached an agreement with consumer groups to raise monthly rates by about $5 on a typical residential customer, bringing the average monthly bill to $118.

Citizens Action Coalition of Indiana, a utility watchdog group, said it was “disappointed but not surprised” that state regulators approved the plan. Kerwin Olson, the group’s executive director, blamed the state Legislature for passing a law last year that allowed utilities to more quickly recover the cost of transmission and distribution by raising rates. He also criticized Gov. Eric Holcomb for signing the bill into law.

“It’s time that the blame for these ridiculous rate increases is directed at those truly responsible for bringing harm to Hoosier consumers,” he said.

IPL, a unit of Virginia-based AES Corp. has 490,000 customers in central Indiana.

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8 thoughts on “IPL gets OK to spend $1.2B on grid upgrade, setting stage for seven years of rate increases

  1. Sunset is something that occurs daily. As for rate increases, do not hold your breath. The only way to beat this for most people is to cut back your consumption of electricity. However, this increase adds insult to injury in the face of the coal bill being pushed through the legislature, which flys in the face of climate change.

    1. You’re funny, Rob B.! Sunset in this context meant “Will the rates go back to where they are now, i.e., is the presumption that they will have recouped all of their current infrastructure spending after seven years or is it perpetual?” The coal bill is wrong on so many levels. Sorry, but we can’t protect coal jobs at the expense of excessive pollution – typically an Indiana move.

    2. I admit that I’ve not followed the coal bill closely, but since I’m in the electric industry (historically mostly on the side of consumers though my company does work for all sides), I couldn’t help but chuckle to myself in response to come radio ads characterizing coal plants as expensive to consumers and renewables as the cheaper alternative. Fact check here is that renewables have been heavily subsidized. It is possible that a given renewable facility cost for a kilowatt of energy is cheaper to you on your electric bill, but only because the rest of the cost is hidden in your taxes. Also, part of what has hurt coal plants is a campaign by environmental groups to sue the plants over anything that they think won’t too easily be laughed out of court, thereby raising the cost to operate the plant in the hopes of driving them out of business. If you believe that the cost of climate change is not sufficiently being born by these plants, then maybe you are okay with it as a proxy for actually bearing that cost, but it is disingenuous for some to make it sound like coal plants don’t run cheaper than renewables. Also, the true cost of renewables is rarely actually calculated. Since wind and solar only work when the wind is blowing or the sun is shining, it really is true that you have to have other power plants using traditional fossil fuels available to run when that happens. And lest anyone think that I am a fossil fuel apologist, my company has made much of its money helping wind farms, in particular, maximize their revenues. Also, pressure on fossil fuels IS having an impact in that more effort is being put into energy efficiency and providing customers, especially large commercial/industrial customers, to reduce their consumption or shift it to non-peak times of the day. The average person is shielded from the true cost of electricity because of regulatory requirements to provide a fixed $/kW rate. In actuality, it is tremendously more expensive to provide electricity on those hot, humid Summer days when the wind isn’t blowing and everyone is cranking up their A/C. Solar might help you provided there aren’t clouds blocking it, and the heat persists for a while after the sun has set. Oh, and since this was actually an article about IPL, again I don’t know the details but if you want to have a grid of the future that can handle things like electric vehicles in everyone’s garage that not only draw more power than originally imagined for the typical home, but also may be used to inject power back onto the grid at times to help offset the times when the wind isn’t blowing and the sun isn’t shining, then utilities HAVE to upgrade. Their systems were designed under the fossil fuel paradigm of big coal plants delivering power one-way and customers that don’t respond to price let alone possibly injecting power back (not that this is likely to happen immediately but for the true grid of the future with house with solar on their roofs and batteries, incuding electric cars, in the house, then this will need to happen). I can’t say whether IPL is spending this money wisely, but if you want a fossil free grid, then there is going to be a meaningful cost either on your electric bill or hidden in your tax bill to make it happen.

    1. If you’re a pensioner, you no doubt also receive Social Security benefits, which increase annually with the cost of living. You also have the ability to decrease your home power usage, which typically is easier for retirees than it is for young families. I’m sure you will adapt.

  2. William S., disguising your lengthy irrational blathering IS a coal apologist. We recently changed over a coal plant on the south side to natural gas, and although it’s still a fossil fuel, that combined with solar, wind and other alternatives MUST be our absolute priority if we have any chance at all to save this planet. Climate change is THE existential threat to humankind, and the number one specific worldwide threat is coal.