Indiana regulators agree to hear utility request to raise rates in wake of pandemic losses

Two weeks after 10 Indiana utilities asked state regulators for permission to charge ratepayers for millions of dollars in revenue the utilities stand to lose because of the COVID-19 pandemic, the state has agreed to consider the matter.

The Indiana Utility Regulatory Commission on Wednesday ordered an investigation into the impact of the pandemic on utilities and ratepayers, opening the next stage in a matter that has gained widespread interest. Thousands of consumers have written letters and emails protesting the request from Indianapolis Power & Light Co., Duke Energy Inc. and other electric and gas companies across the state to recover revenue shortfalls from consumers.

The IURC investigation also will consider a request from the Indiana Office of Utility Consumer Counselor seeking certain ratepayer protections, including an extension of utility disconnections beyond the state’s June 30 moratorium and the waiver of all deposits, late fees, convenience fees and reconnection fees.

The IURC did not say whether it would extend the shutoff moratorium, but instead requested further information from utilities and other interested parties.

The two matters will be rolled into one investigation, and the IURC said it will conduct the probe in two phases. In the first phase, it is requesting information from all parties regarding disconnections, utility fees, and customer payment arrangements. It said it will issue an order prior to the June 30 disconnection moratorium.

In its order, the commission stated, “…it would be unreasonable to expect that the financial, health, and other hardships currently being experienced as a result of the COVID-19 pandemic would immediately disappear upon expiration of any public health declaration or disconnection moratorium.”

The second phase of the investigation will consider the utilities’ request to recover lost revenue from consumers in the form of higher monthly bills. The IURC hinted the matter is complex and could require a lengthy investigation.

“The commission anticipates that impacts due to the COVID-19 pandemic may not be fully understood for months, if not years, as the effect is ongoing,” the order said.

The utilities had filed a joint petition on May 11 saying the pandemic is unprecedented and is causing a “substantial adverse financial impact” on their business. The utilities said they are seeing labor costs rise in the form of overtime, sick time due to prolonged illness, and employee sequestration.

They also claimed they are paying high costs for cleaning supplies, health care, testing and temperature checks, personal protection equipment, and equipment and supplies to enable employees to work from home. Other costs include uncollectible or bad debt expenses associated with some customers’ inability to pay bills.

The utilities added that many businesses might not be in a position to reopen after the emergency recedes. They also said production, supply chains and markets have been disrupted.

It is still unclear how much an average consumer’s monthly bill might increase under the request. Under the plan, the utilities would file rate cases with cost and revenue impacts from the pandemic that could be reviewed and approved by regulators in future rate cases.

Citizens Action Coalition of Indiana, a consumer advocate on utility matters, had mixed reaction to the IURC’s decision to combine both matters into a single investigations. On one hand, it said it was pleased that regulators might take steps to protect consumers, although it was disappointed regulators didn’t immediately extend the shutoff moratorium.

“Furthermore, they leave the door open to the outrageous possibility of the utilities collecting lost revenues caused by load reductions,” Citizens Action said in a statement. “We were hopeful that the commission would reject that request outright and are disappointed with their decision to allow that issue to remain on the table.”

The Indiana Energy Association, a trade group that represents investor-owned utilities, including IPL and Duke Energy, said it was “appreciative of the commission’s quick response” and added it will continue to work with its customers “during this challenging time.”

A collection of municipal and not-for-profit utilities also filed a petition this week to intervene in the matter. They include Richmond Power & Light, Crawfordsville Electric Power & Light, Gibson Water and Schererville Water.

The new group of utilities said they wanted to protect their interest in the matter both as jurisdictional utilities and, for some, as customers of the investor-owned utilities. If they are granted intervenor status, they will be allowed to file evidence and question witnesses before the commission.