Indiana regulators rule utilities can’t charge consumers for lost revenue during pandemic

Indiana regulators have shot down a controversial request from 10 utilities to charge customers for electricity they did not use during the pandemic.

The Indiana Utility Regulatory Commission voted unanimously Monday to deny the request by utilities, who had said they needed to recover millions of dollars in lost revenue over the last few months as businesses closed their doors and factories cut hours and used less electricity.

“Asking customers to go beyond their obligation and pay for service they did not receive is beyond reasonable utility relief based on the facts before us,” the commission said.

In a related matter, the commission prohibited Indiana utilities from disconnecting any customers—or collecting late fees, convenience fees, deposits, and reconnection fees–through Aug. 14. The disconnection moratorium had been set to expire Tuesday. The commission also ordered utilities to offer payment plans of at least six months to all customers.

It was a rare setback for Indiana utilities, which often get much of what they request from state regulators. The ruling followed a huge uproar from ratepayers and elected officials, who called the utilities’ request to charge customers for electricity they didn’t use undeserved special treatment, and unfair to thousands of other businesses across the state that are dealing with a loss of revenue.

More than 2,300 people sent emails to the Indiana Utility Consumer Counselor in recent weeks, making it one of the largest number of complaints for any single case in at least a decade.

The outpouring of reaction underscored that Indiana utility customers are in no mood for another rate increase, especially as an untold number of businesses are reeling from revenue they lost after Gov. Eric Holcomb ordered non-essential businesses to close their doors for months and people to stay at home.

The utility consumer office said the utilities did not present evidence they were facing financial emergencies.

“The order is also an important first step in granting consumer protections,” Consumer Counselor Bill Fine said in a statement. “We recommended including commercial and industrial customers within the protections and are pleased with the Commission’s decision to include them. The utilities will be filing monthly data going forward, and our team will be reviewing that data very closely.”

Citizens Action Coalition of Indiana, a consumer group, on Monday applauded state regulators for rejecting the utilities “absurd and self-serving request.”

“It’s circumstances like these that consumers rely on regulators to protect them from the inherent greed of monopoly utilities,” said Kerwin Olson, the group’s executive director. “We’re pleased that the IURC answered this call and put consumers first.”

He also expressed appreciation to regulators for extending the shut-off moratorium, and pointed out that the state left the door open for a further extension in the future after more data and evidence is collected over the next few months.

Indiana utilities have been fighting hard for the right to recover tens of millions of dollars in lost revenue at the same time they are facing higher expenses and escalating consumer debt as a result of a state moratorium of disconnecting utilities during the pandemic.

A group of 10 utilities that filed the petition—including Indianapolis Power & Light Co. and Duke Energy Indiana—say they are dealing with a challenge tougher than any storms.

The utilities asked the IURC for permission to implement something called “deferred recovery” of lost load and revenue reductions associated with the pandemic. In particular, they want assurances they can return to the commission in the future and recover the revenue through higher rates.

“COVID-19 is an unexpected occurrence, totally outside of the control of utilities,” they said in a June 10 joint filing with the IURC. “In fact, it is more unexpected and unprecedented than other extreme costs which are typically afforded deferred accounting treatment, such as restoration costs after a hurricane or a severe ice storm, or cost associated with a major project, like generating plants.”

The Indiana Energy Association, a trade group that represents investor-owned electric utilities, said it is reviewing the IURC order.

“In the meantime, I would add that  throughout this pandemic, Indiana’s utilities have provided continuous service and flexible bill arrangements for customers, including an early decision to voluntarily suspend service disconnections to ensure that families and businesses would not have to worry about having electric or gas service because they could not pay during this crisis,” said Danielle McGrath, the association’s president.

The other petitioners were Northern Indiana Public Service Co., Indiana Michigan Power Co., Indiana Gas Co., Indiana Natural Gas Corp., Midwest Natural Gas Corp., Ohio Valley Gas, Southern Indiana Gas & Electric Co., and Sycamore Gas Co. Two of them—Indiana Gas and Southern Indiana Gas & Electric—do business as Vectren Energy Delivery Indiana.