Indiana Utility Wants to Raise Electricity Bills as the Company Accommodates More Solar, Wind, and Natural Gas

Customers of Indiana Power and Light will see their electricity bills increase by 10 percent as the utility company continues to shift from coal to wind, solar, and increasing natural gas if the rate increase is approved by Indiana utility regulators.

According to the Indianapolis Star:

“At Indianapolis Power & Light Company (IPL), we have a responsibility to find the balance between cleaner energy solutions and affordability for our nearly 500,000 customers while maintaining reliable electric service. The investments we’ve made over the last few years toward a more balanced energy mix comprised of natural gas, coal, wind, and solar have allowed IPL to provide cleaner, smarter, and affordable generating resources for our customers.”

Notice the company’s statement did not say more affordable generating resources. The article continues:

“Responding quickly to environmental mandates, IPL significantly reduced its dependence on coal. In fact, IPL’s coal-fired generation has decreased to only 43 percent of its total generation resource mix from nearly 80 percent in just 10 years. To achieve this, IPL retired six coal-and-oil-fired units, converted certain existing coal-fired units to natural gas, and built the Combined-Cycle Gas Turbine (CCGT) natural gas plant, an approximately $600 million investment approved by the Indiana Utility Regulatory Commission (IURC) in 2014 that reduces sulfur dioxide, nitrogen oxide, and particulate matter emissions by 98 percent. These investments were made in a conscious effort to balance the impact on the environment and affordability for our customers [emphasis added].”

Balance is the key word here, because despite claims that renewable energy sources are more affordable than existing resources, the price people pay for their electricity continues to climb.

“If approved, a typical residential customer using 1,000 kilowatt hours per month will pay approximately $11.50 more per month or about 10 percent. IPL encourages all customers to use our rate calculator on to see their specific bill impacts.”

The way the utility is increasing the cost to ratepayers is noteworthy because part of the increase in cost will be assessed as a customer charge, and not an increase of the per-kilowatt cost of electricity:

” Customer charge: A residential customer’s bill includes two parts: a customer charge and a volumetric energy charge. IPL’s proposal to increase the customer charge is fair for all customers and lowers the total bill for those with the highest electricity needs and costs, including low income customers, as compared to not increasing the customer charge. These customers include those that depend on electricity to heat their homes. IPL’s rate design includes a smaller customer charge for customers that use less than 326 kwh per month.”

Increasing the customer charge masks the true per-kilowatt hour cost of shifting away from renewable energy, which is bad from a transparency standpoint.

Another problem with this approach is that it limits the ability of customers to lower their bills by reducing their electricity consumption because they must pay this charge regardless of how much electricity they use.

The impact of specific policies will have on the cost of electricity is already incredibly vague, but utility companies are able to shift costs around to make it even more difficult to understand how their actions affect the budgets of businesses and families as they try to keep the lights on.