IURC launches utility rate-making investigation
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Indiana's utility regulators are investigating rate-making practices that may make energy more expensive for Hoosiers.
Driving the news: The Indiana Utility Regulatory Commission launched investigations this week into two policies that are used, in part, to set utility rates — return on equity and trackers.
Zoom in: Return on equity is the percentage of profit an investor-owned utility is legally authorized to earn on shareholder-funded capital investments.
- Periodic rate adjustment mechanisms — also known as trackers — allow utilities to recover costs that include both routine expenses and investments.
The latest: The investigations stem from a new report examining energy affordability in the state, which includes 16 recommendations.
- Other suggestions are doubling ratepayer assistance programs and giving the IURC more oversight over utility company mergers and acquisitions.
What they're saying: "We applaud the IURC for taking a deep dive into issues that we believe are key drivers that led to the affordability crisis facing Hoosier ratepayers today," Kerwin Olson, executive director of consumer watchdog group Citizens Action Coalition, said in a statement. "We have long been critical of tracking mechanisms which allow monopolies to increase bills outside of a rate case and which reduce the discretion and flexibility of regulators."
Catch up quick: The report follows several months of review led by the commission to better understand some of the underlying drivers behind energy (un)affordability.
- In March, it brought the state's five largest electric investor-owned utilities in for a hearing.
- Over the next month, it held 10 public listening sessions that were attended by 700 people, according to the commission.
- It also received more than 2,000 email comments from Hoosiers.
"Where we are is uncharted territory," said commission member Andy Zay during an IURC meeting on Wednesday. "To all Hoosiers, we heard you. We are taking action to make Indiana more affordable."
What's next: While the IURC can make some moves on its own, other recommendations will take legislative action.
- One of them, eliminating sales tax on utility bills, would have the most "immediate, direct, and measurable impact" on affordability, the IURC said in its report.
- Energy affordability, a priority of Gov. Mike Braun's, will almost certainly be a topic during the 2027 legislative session when lawmakers write the state's next two-year budget.
- The fiscal year close-out shows that the state will have more than $1 billion in extra cash above what was forecast and budgeted for in 2025, which could put something like the sales tax elimination on the table.