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Court lets IPL rate increases stand

April 5, 2017

An approved rate change for Indianapolis Power & Light customers will stand after the Indiana Court of Appeals rejected the appeal of various advocacy groups on Wednesday.

In December 2014, Indianapolis Power & Light Co. filed a petition with the Indiana Utility Regulatory Commission for a base-rate increase that would incrementally raise the fixed customer charge and the energy charge to customers. Because customers using more than 500 kilowatt hours incrementally paid less than lower-usage customers for the energy charge portion of the bill, the rate scheme included a declining block rate.

During a nine-day evidentiary hearing, joint intervenors Citizens Action Coalition, Indiana Community Action Association, Indiana Coalition for Human Services, Indiana Association for Community and Economic Development, National Association of Social Workers Indiana Chapter and the Indiana State NAACP opposed the increase to the fixed monthly charge and presented testimony against the DBR on the grounds it penalized low-volume customers and, thus, did not promote energy conservation.

Instead, the intervenors urged the adoption of a 25 percent subsidy for certain customers, to be funded by an incremental usage increase on other customers. Additionally, they called for IPL to provide them with data on service interruption events pertaining to low-income customers.

IPL then presented testimony that the most cost-justified rate design would be a straight fixed-rate/variable rate, and proposed gradualism as opposed to a total conversion to that methodology within one rate proceeding. Further, IPL testified that eliminating a DBR would not mirror costs in that it does not cost twice as much to produce twice as much electricity.

The IURC approved IPL’s proposed rate increase in March 2016, rejecting the intervenors’ proposals. After the commission denied petitions for reconsideration, the joint intervenors appealed in Citizens Action Coalition of Indiana, Inc., et al. v. Indianapolis Power & Light Company, et al., 93A02-1604-EX-804.

The intervenor’s argument against the DBR focused on the fact that it disproportionately harmed elderly, black and low-income customers by allowing for a volumetric charge decrease after the first 500 kilowatt hours of usage and that it deterred conservation. Thus, on appeal they argued that the IURC’s order was “deficient because the Commission failed to make basic findings of fact or a conclusion of law as to whether DBR has a deleterious effect on energy conservation and energy efficient programs sponsored by the utility.”
 
The intervenors asked for the order to be remanded to the IURC for a determination on whether the DBR rate structure is “deleterious,” but Judge L. Mark Bailey, writing for a panel of the Indiana Court of Appeals, said in a Wednesday opinion that the IURC, which has legislative functions, does not have the authority to issue such declaratory rulings.

“Even assuming that DBR has a disproportionate negative impact upon certain groups of customers, the Commission is required by statute to approve rates that are fair and reasonable inclusive of the entire customer base,” Bailey wrote. “There is no statutory requirement that the impact upon particular sub-groups be separately addressed.”

Further, the intervenors argued the IURC did not make sufficient findings to support its rejection of their request for a 25 percent subsidy and mandatory service interruption reporting, but the appellate panel also rejected that argument.

“Joint Intervenors are not entitled to specific findings on propositions they have injected unless it is a matter material to the rate decision,” Bailey wrote. “In other words, the Commission does not have to justify to Joint Intervenors why it rejected a subsidy outside general rate making principles and a reporting obligation.”
 

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