State OKs $146M rate increase for Duke Energy

Indiana state regulators have decided to grant Duke Energy Indiana a $146 million increase in the utility company's base rates.

The Indiana Utility Regulatory Commission announced its decision today, noting Duke Energy had first sought a $395 million increase and later revised that downward to $362 million.

Duke Energy's request had been pending for some time, and the commission was bound by law to rule by July 1. The commission said Duke's last base-rate case was decided in May 2004.

Duke Energy said it is calculating average customer impact, which will take a couple of weeks. It will then file those numbers for commission review and approval. It likely will be a month before any increase is effective, a Duke spokeswoman said. The increase will be phased in over two years, the first step in 2020 and then the last the portion in 2021.

In a statement, Duke Energy’s Indiana president Stan Pinegar said, "The rate request was filed about a year ago and reflects important investments to serve a growing customer base and provide reliable and environmentally cleaner power.

We know this is a challenging time for customers. We have taken a number of steps as a company to help customers financially during this pandemic.

"We voluntarily suspended service disconnections for nonpayment, as well as a variety of customer charges, which continues today. We wanted customers to have peace of mind that their electric service would remain on at the height of the pandemic. We remain committed to working with customers who may be struggling financially."

The commission said it used various mitigation measures to reduce the impact of Duke’s proposed rate increase on Duke customers.

Those included lowering the utility’s authorized return on equity (ROE) from the Duke-requested 10.40 percent to 9.70 percent and changing the investment recovery methodology to reduce the near-term impact.

The commission said it also denied the utility’s request to implement an electric decoupling mechanism, which would have separated fixed costs from sales volume for residential and small commercial customers. The commission said that request was “not in the public interest because it would allow the company to recover revenues for reductions in energy consumption that were not caused by its conservation efforts.”

The commission said its decision also moves the cost recovery of the company’s Edwardsport integrated gasification project from standalone tracking into base rates.

The IURC's order said that in the future, as "older coal-fired units reach the end of their useful lives and are largely replaced by non-coal-fired units, Edwardsport will remain in a position to be a meaningful contributor to maintaining a diverse generation portfolio that will benefit customers and the grid as a reliable and non-intermittent energy source.”

Coronavirus request denied

In another matter, the regulators denied a request from utilities to charge ratepayers for revenue the companies expect to lose because of the coronavirus pandemic.

The IURC voted unanimously to deny the request by utilities, who had said they needed to recover millions of dollars in lost revenue over the last few months as businesses closed their doors and factories cut hours and used less electricity.

Duke Energy, NIPSCO, Vectren and other Indiana electric and gas companies had petitioned the commission for permission to recover revenue shortfalls.

“Asking customers to go beyond their obligation and pay for service they did not receive is beyond reasonable utility relief based on the facts before us," the commission said.

The utilities filed a 36-page petition with the IURC in May in which they claimed the effects of the pandemic, including government orders and businesses closing or moving to remote locations, “have resulted in significantly reduced load and revenues for some utilities.”

Disconnect suspension extended

The IURC also ruled that disconnection suspensions across the state should be extended by 45 days past Tuesday’s deadline through Aug. 14.

“Temporarily prohibiting disconnections ... is a balanced solution that allows both customers and utilities additional time to enter into reasonable payment arrangements to address any arrearages that may have accumulated and maintain essential utility services for the benefit of all customers, the utilities, and other stakeholders,” the order said.

The commission doubled the minimum requirement for extended payment plans by requiring utility companies to offer payment plans of at least six months to all customers.

Editor's note: This story, originally posted at 1:55 p.m., was updated and edited at 3:20  p.m. to add comment from Duke Energy.

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