Indianapolis residents will see their electricity rates spike this summer with a temporary surcharge – and if the state approves a second proposed increase, utility rates will be higher for the rest of the year.
AES Indiana, which provides power to Marion County and parts of the surrounding counties, is charging consumers more to compensate for higher fuel prices last winter.
The Indiana Utility Regulatory Commission on May 27 approved AES’s request to raise prices. A household using 1,000 kilowatt hours of electricity per month, slightly more than the national average, should expect to pay an additional $9.52 per month, according to AES’s filings with the IURC.
And on June 12, AES asked the IURC to raise prices again starting this fall by $8.04 per month for a household using 1,000 kilowatt hours.
The IURC will likely hear the request, which would apply to electricity bills for September through November 2026, in August, according to commission spokesperson Emily Duncan.
When AES requested the first increase, it signaled that it would maintain the price hike in the fall to spread out the costs of winter storms, rather than hitting consumers all at once in the summer. An analyst at the state’s Office of Utility Consumer Counselor recommended at the time that the IURC approve the plan to split the rate increases across the two periods.
The higher costs will be collected through the Fuel Adjustment Clause, a “tracker” that allows Indiana utilities to charge customers more when the prices of coal, natural gas, and other fuels go up. Trackers are separate from the base rate, which accounts for utilities’ infrastructure and operating costs.
Meanwhile, AES is in the midst of a clash with the IURC over the utility’s request to significantly hike the base rate. The utility has asked for an increase of $193 million, while regulators have urged the company to trim that by $21 million. The IURC will issue a decision in the rate case by June 24.
Currently, the typical AES Indiana consumer pays roughly $150 per month for electricity.
The Fuel Adjustment Clause accounts for the gap between what utilities expected to pay for fuel and what they actually paid. Because Winter Storm Fern sent coal and natural gas prices soaring in late January this year, AES was forced to pay more to generate power than it anticipated.
In order for utilities to appeal to the clause, state law requires them to prove that they are doing their best to buy fuel and generate power at the lowest possible cost. Utilities must also demonstrate that increases in fuel expenses have not been offset by decreases in other operating costs.
When the IURC approved the summer increase, its members agreed that AES had made all reasonable efforts to keep costs down.
But Ben Inskeep, program director at the consumer advocacy group Citizens Action Coalition, said that the fuel adjustment clause may pose a structural problem for attempts to keep fuel costs low. If utilities can just pass higher fuel costs on to consumers, they may be less likely to switch to renewable energy sources or seek out other ways to keep prices stable, he said.
“Utilities don’t really have a dog in the fight,” Inskeep said. “Utilities don’t have the proper financial incentives to avoid these volatile fuels that can lead to these large price increases.”
A spokesperson for AES did not respond to a request for comment on Tuesday afternoon.
Ways to save on electricity bills this summer
With price increases on the horizon, Indianapolis households can take various steps to keep costs down.
Inefficient air conditioning is a big driver of higher bills during the summer, said Christin Willman, who leads weatherization trainings for contractors through the Indiana Community Action Association.
Willman said that cool air often escapes through poorly insulated places in attics and crawl spaces, around windows, along dryer vents and near entry points for gas and electrical lines. Sealing those areas with spray foam can improve efficiency, she said.
Homeowners should also examine their ductwork for gaps or cracks, Willman said. Ducts can be sealed using HVAC-compliant tape or mastic, which bears a “181” UL designation.
Keeping thermostats in the 74 to 76 degree range rather than turning your home into a refrigerator can also save money. If you have a programmable thermostat, you can set it to raise the temperature when you’re out of the house, Willman said.
Turning off the lights and replacing incandescent or fluorescent light bulbs with LEDs can also keep your energy usage down, Willman said.
This article originally appeared on Indianapolis Star: Indy households to see higher electricity bills this summer
Reporting by Tilly Robinson, Indianapolis Star / Indianapolis Star
USA TODAY Network via Reuters Connect
By Tilly Robinson, Indianapolis Star | USA TODAY Network
