Duke Energy’s rates should be cut, not raised, Indiana agency says

Duke Energy Indiana’s request to raise electricity rates on 800,000 customers by an average of 15% should be denied, and instead the utility should cut rates by hundreds of millions of dollars, the Indiana Office of Utility Consumer Counselor is recommending.

The state office, which acts to protect utility consumers, said in testimony filed Nov. 1 that Duke Energy’s request is unjustified and would present a hardship to many customers.

It’s an unusual rebuke from the Utility Consumer Counselor Bill Fine, who often recommends that state regulators cut a utility’s proposed rate increase, but rarely says the entire hike should be denied.

“At some point, it becomes crucial to review whether the scales have become imbalanced and weigh too heavily in the utility’s favor,” Fine’s office said in written testimony.

The OUCC said that Duke Energy’s request to increase annual revenue by $394.6 million was unjustified, and that it should actually take steps to cut annual revenue by at least $130.4 million. It did not say how much that would reduce a typical customer’s monthly bill.

The recommendation comes in the wake of several public hearings in which customers urged state regulators to keep rates down, saying they could not afford to pay the higher bills.

The state consumer agency said it received hundreds of comments about the “immediate financial impact these high-dollar requests would have on their monthly utility bills.”

The utility, based in Plainfield, has said it needs more money to improve the reliability of electric service, offset costs of generating cleaner energy and serve a growing customer base.

“We are still reviewing the testimony, but we strongly disagree with many of the claims, and we’ll be filing testimony in response,” Duke said Thursday in a written statement. “Rate cases are legal proceedings, so it’s not surprising there are adversarial positions like this.”

But the OUCC said Duke Energy has “over-reached” in several ways, including its forecasts for operating and maintenance expenses and net plant investment. It said its own benchmarking analysis showed that several of Duke Energy’s plant investments and operating and maintenance expenses are not in line with historical expenditures.

It also pointed out that even though Duke Energy hasn’t submitted a request in 15 years to increase base rates, it currently has 12 riders, or special fees, for various projects and expenses that it passes along to customers.

“This should under no circumstances be considered a standard base rate case,” the OUCC said in testimony filed with the Indiana Utility Regulatory Commission. “DEI’s case is replete with requests that will reduce Duke’s and its shareholders’ risks.”

As of Oct. 2, a typical Indiana Duke customer using 1,000 kilowatt hours per month pays $72.10 in base charges and $47.84 in tracker charges, the consumer office pointed out.

Several other consumer and citizens groups are also opposing Duke Energy’s rate request, calling it unreasonable.

“The fact is that Duke Energy wants to raise rates merely because electricity sales are stagnant and, therefore, they’re not making as much money as they want to,” said Kerwin Olson, executive director of Citizens Action Coalition of Indiana. “Without an increase in electricity sales, the only way they can increase revenues is to increase rates. We are grateful that Counselor Fine and the OUCC are holding Duke Energy accountable and working to protect captive Hoosier consumers from the excesses of an out-of-control monopoly utility.”

Last year, Duke Energy Indiana had operating revenue of $3.04 billion, up less than 1% from 2017.

The OUCC’s comments are just the latest in a case that has already had numerous twists and turns. Last month, a group of customers, consumer activists and environmentalists complained that Duke Energy’s rate filing was incomplete and confusing, and asked the state to order the utility to provide additional information.

But the IURC rejected that request, saying that Duke Energy had met its obligations to provide relevant information, and that the outside parties had waited too long to file their motion.

Duke Energy serves customers in 69 of Indiana’s 92 counties. It is a unit of Duke Energy Corp., based in Charlotte, North Carolina.

“We’ve added more than 100,000 customers—the equivalent of a small city–to our system since our last base rate request, and we’ve had to build to serve them,” Duke said. “We’re also transitioning to cleaner power and making our energy grid more reliable to reduce power outages. And we’re giving customers more convenient options like the ability to monitor their energy usage and pay their bill with a credit or debit card.

“We didn’t take this step lightly, and we have worked hard to keep our rates reasonable, and in fact our overall average rates are the lowest in the state today. “