Indianapolis Power & Light Co. wants to invest $1.2 billion over seven years to upgrade its local energy grid, and said it will seek permission to increase customer rates starting next year to recover those costs.
The rate increases, if granted by the Indiana Utility Regulatory Commission, would likely be about $1.50 a month for the typical household customer in the first year. That monthly amount would increase by $1.50 each year, or by about $10.50 over the seven years, IPL spokesman Fred Mills said Thursday.
The utility filed a plan this week with state regulators to upgrade and replace aging equipment and hardware. If the regulators approve the plan, IPL can begin making the investments and then seek to recover the costs through special fees, called trackers, added onto customer bills. IPL would have to get permission for each round of increases.
The company said the project would mean fewer outages, improved reliability and “a more resilient system to face growing energy needs.”
“To continue meeting customer energy needs for generations to come, it is critical that we upgrade, replace and modernize the infrastructure, technology and equipment used to provide electric service,” Vincent Parisi, IPL president and CEO, said in a written statement.
The move comes just a year 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.
Some utility watchdog groups say they will oppose IPL’s request to raise customers’ bills. Citizens Action Coalition of Indiana said that maintaining the grid was “a cost of doing business,” which the utility should pay for out of its own budget, without adding new fees.
“It’s the job of utility companies to provide efficient, reliable and safe service to the public,” said Kerwin Olson, CAC’s executive director. “That’s their obligation under the law and that’s what customers pay for every month.”
IPL said some of the improvements will include a “self-healing grid,” which will allow it to isolate problems automatically and re-route power around the problem, reducing the duration of service interruptions to many customers.
It will also include new transformers, breakers, batteries and other aging equipment at substations.
IPL, a unit of Virginia-based AES Corp. has 490,000 customers in central Indiana.