IPL reaches settlement in rate hike case; customers will see their bills increase

ipl building

Indianapolis Power & Light reached a settlement regarding the utility’s proposed rate hike–and customers will likely see their bills increase by the end of the year.

The Indiana Office of Consumer Counselor, IPL and other parties were involved in arranging what they called a “comprehensive settlement agreement resolving all issues in the utility’s pending rate case.”

IPL said the impact on customers using 1,000 kilowatt hours per month will be $5.18. The new rates would go into effect by the end of the year.

If the Indiana Utility Regulatory Commission (IURC) approves the agreement, IPL would keep the fixed, monthly residential customer charge at $17 for customers using more than 325 kilowatt hours per month. The utility had wanted to raise it to $27. Customers using less than 325 kilowatt hours per month will see their monthly charge increase from $11.25 to $12.50. IPL wanted to raise it to $16.

Under the deal, IPL’s operating revenues would increase by $43.9 million. The company asked for a $124.5 million increase when it filed its case in December. That was adjusted downward to $96.7 million in February 2018 after the federal Tax Cuts & Job Act and then further reduced to $88.3 million in June 2018.

Other terms of the agreement:

  • The utility will have a 9.99 percent authorized return on equity (ROE). IPL had sought to raise its authorized ROE to 10.32 percent.
  • All issues regarding tax relief due to the federal Tax Cuts & Jobs Act will be resolved.
  • 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 (REMCs), will allow customers to round their bill payments up to the next dollar, with the difference going to low-income customer assistance.

The IURC may accept, deny or modify the settlement before it goes into effect. Testimony from parties involved in the settlement is set for July 23, with a settlement hearing with the IURC scheduled for Aug. 9.

Parties involved in the settlement include IPL, the Citizens Action Coalition of Indiana (CAC), the City of Lawrence, Indiana Coalition for Human Services, Indiana Community Action Association, IPL Industrial Group (Allison Transmission, Cargill, Eli Lilly and Company, Indiana University Health, Ingredion, PepsiCo, Praxair Surface Technologies, and Vertellus Integrated Pyridenes), the Kroger Company, Rolls-Royce Corporation, the Sierra Club, the University of Indianapolis, and Wal-Mart Stores and Sam’s East.