City-County Councilors urge the city to buy AES amid rate hike, sale talks

State of play: The Council adopted a resolution Monday night urging AES Indiana to withdraw its rate increase request or, if it doesn't, for the Indiana Utility Regulatory Commission to reject it.

• AES filed a regulatory rate review with the IURC in June to increase rates by 13.5% over the next year and a half.
• If approved as is, the rate hike would roll out in two phases with the first being a 7.5% increase in April and the second a 6% increase in January 2027.

The latest: The parent company of AES is reportedly in advanced discussions to sell to a subsidiary of BlackRock Inc. Private equity firms like BlackRock are increasingly buying up utility companies just as AI is driving up electricity demands.

What they're saying: Councilor Jared Evans doesn't think it's a coincidence that AES wants to raise rates at the same time it's in talks to sell — he thinks they're trying to pad their profits to boost the sale price.

• "It's just ridiculous," Evans told Axios. "I mean, the people are so over this."
• "And it's just so frustrating. I think this is a role that government needs to step [into]. I don't think utilities should be for-profits."

The other side: AES Indiana says the rate increase is needed to meet higher costs from inflation and make improvements to the grid.

• "If approved, AES Indiana anticipates to remain among the lowest rates of any investor-owned utility in Indiana," Mallory Duncan, a company spokesperson, told Axios in an email.
• Duncan didn't comment on the council's statement, beyond saying the city was "in a better position to discuss its own processes."

Between the lines: A source close to the city told Axios that municipalization of the utility would be a "Herculean effort" and may not necessarily lead to lower or more stable rates for residents, anyway, because of the need for regular infrastructure improvements.

• Even if the city could make a bid for AES, it's unclear if the utility would be willing to sell off the Indianapolis portion and there's nothing in state law to boost its chances against BlackRock, which is reportedly offering $38 billion.
• The state granted exclusive franchise rights over various service areas to utility providers in the 1980s, and AES holds the rights for the Indianapolis area.

• Those would transfer to BlackRock, if the reported sale goes through, and there's nothing the state or IURC could do to stop it.

Zoom out: There are dozens of small nonprofit municipal-owned utilities around the state.

Kerwin Olson, executive director of Citizens Action Coalition, said they generally have lower rates than for-profit models.

• Olson said Indianapolis taking over the electric utility would likely be great for ratepayers, but doubted its ability to make an attractive offer against BlackRock.

Still, Evans and fellow Councilor Jesse Brown have urged the city to make it happen and several others said they could support the idea if it's financially viable.

• "I think it's worth exploring," Councilor Michael-Paul Hart said. "I agree, there shouldn't be profits on the utility rates. We've got to do everything we can to try and keep those rates low for the people of Indianapolis."

The bottom line: "My attitude is this: If you can find billions of dollars in bond issuances for stadiums, then you can sure as hell find some money to buy a utility that's going to improve the quality of life for everybody who lives in [the city]," Evans said.