Proposed bill would simplify process for utility companies to pass upgrade costs on to customers
House approves bill 75-21
Last Updated: 266 days ago
INDIANAPOLIS - Hoosiers could see incremental bumps in their gas and electric bills as utilities upgrade their power delivery infrastructure under a measure approved Tuesday by the Indiana House.
The bill allows for "trackers" to cover the costs of power lines, substations, transformers, pipes and more. After a shortened regulatory process, utilities could tack those costs onto ratepayers' bills.
That would be a departure from the state's current requirement that, to adjust their rates to cover such costs, power companies first go before the Indiana Utility Regulatory Commission for a "base rate case" that can last more than a year.
Under Senate Bill 560, utilities would have to get the commission's approval for a seven-year plan that includes tracking the costs for those infrastructure improvements -- and they'd have to go through another base rate case before the end of that seven-year period.
"This is a balanced bill. It allows utilities to replace and upgrade aging infrastructure while doing as little as possible to consumers' pocketbooks," said Rep. Eric Koch, the Bedford Republican who chairs the House Utility Committee and sponsored the measure.
It passed on a 75-21 vote, with Democrats making up most of the opponents. They cautioned that trackers such as the ones Indiana already allows to cover the costs of federal regulations and more can drive prices upward.
"Over the last 10 years, the average monthly electric bill has gone up 49 percent; the average monthly gas bill up 33 percent," said Rep. Matt Pierce, D-Bloomington. "I think trackers have a lot to do with it. We've made it very easy for utilities to come in and get these increases."
He acknowledged that the measure -- which is sure to affect rates, although to what extent is not yet clear -- is "really dense stuff. You look at it and your eyes glaze over."
But, Pierce said, utility-related measures impact Hoosiers just like taxes do, because ratepayers can't drop one utility company in favor of another.
"These are billion-dollar impacts, and quite honestly, I don't think we maybe do our homework as well as we should," he said.
The bill is championed by the Indiana Energy Association, the lobbying group for utility companies that is led by former Indiana Secretary of State Ed Simcox -- the Republican who played MC during Gov. Mike Pence's inauguration, a recent prayer breakfast where Pence spoke and more.
It was opposed by a number of large industrial businesses, but those companies dropped their complaints after Koch made a series of changes to the bill during the House committee process. It is still opposed by the Citizens Action Coalition, a consumer advocacy group.
Authored by Senate Tax and Fiscal Policy Committee Chairman Brandt Hershman, R-Lafayette, the bill initially would have limited the new trackers to 3 percent of utilities' revenue. The House dropped that number to 2 percent.
It also includes tax incentives for utilities to expand their natural gas, water and broadband delivery into rural parts of Indiana.
Rep. Ryan Dvorak, D-South Bend, said Indiana is out of step with its neighbors.
"The chickens are going to come home to roost on this issue," he said, noting that other states have launched coordinated efforts to drive down utility rates. "Indiana has gone the other way. We've done everything we can to make it easy for utilities to raise rates, and they have. They've gone up consistently every year. This is not a good thing for the state of Indiana.
"Voting for this bill means rates are going to go up again. That's important for everybody to realize. I don't know how we're going to stop this freight train down the road."
Rep. Kreg Battles of Vincennes, who is the top-ranking Democrat on the House Utility Committee, supported the bill.
He said allowing utilities to phase in rate increases to cover infrastructure costs will create jobs and ultimately spare ratepayers the "tens of millions of dollars" in attorneys' fees that utilities spend on base rate cases.
"This truly was a great attempt at finding a balance. Was it the perfect balance? Probably not. But I will tell you that every single party's interests were addressed," he said.
Rep. Ed DeLaney, D-Indianapolis, also voted for the bill but said he will be watching any changes that are made in a joint House-Senate conference committee in the coming weeks.
"I'm going to vote for this," he said, "but if it gets one bit worse, it won't get a second vote."
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