IURC approves Vectren smart meters, a new bill tracker, and a massive Vectren rate hike
On September 20, 2017, the Indiana Utility Regulatory Commission (IURC) approved a settlement reached between Vectren, the Office of Indiana Utility Consumer Counselor (OUCC) and the Vectren Industrial Group. This approved settlement provides Vectren with a new bill rider, or “tracker ”, which will raise your rates $446.5 MILLION to pay for investments to their transmission and distribution (T&D) system. The plan was enabled by a bill (SEA560) that Vectren successfully lobbied Indiana State Legislators to pass in 2013. Governor Mike Pence signed the engrossed bill into law on April 30, 2013.
Vectren claims that the settlement will increase rates between 0.72% to as high as 1.65% every year until 2024. Adding insult to injury, Vectren was approved to recover a portion of those increases in a fixed monthly charge through, rather than a charge per kilowatt hour consumed. The settlement will allow Vectren to raise the monthly fixed charge on your electric bill by $1.00 every year beginning in 2017 and continuing through 2024. CAC and our partners at Valley Watch argued against the increased fixed cost. The IURC rejected our arguments.
The settlement will also allow Vectren to install expensive, invasive, and unnecessary smart meters in all 152,000 homes and business in their Indiana service territory. The IURC approved Vectren’s request for up to $51 MILLION from ratepayers to pay for the smart meters. This $51M is in addition to the $446.5M for the T&D replacements and upgrades. Vectren will not add the additional $51M to customer’s rates until they file a new base rate case before the IURC, which will likely not occur until 2023 or later.
CAC and Valley Watch objected to the smart meters. We believe that Vectren should be required to offer the smart meters to customers as a voluntary option. Ratepayers should not be forced to pay for a smart meter they don’t need and they don’t want. Additionally, many concerns have been expressed about privacy and cyber security related to the installation and use of smart meters. We argued that all of these concerns must be addressed prior to any approval for a smart meter rollout. The IURC rejected our arguments.
This settlement gives them excessive profit to do something they are supposed to be doing anyway: provide reliable electric service. The projects included in the $446.5 plan by Vectren are investments Vectren is required to make to meet their legal obligation of providing reliable electricity to their captive customers: distribution system upgrades and replacements as well as improvements to substations, transformers, circuit breakers, poles, and lines. This new bill tracker shifts the burden of cost and risk of running a monopoly utility company from voluntary investors to captive ratepayers. As a result, the utilities guaranteed rate of return should be reduced to reflect the reduction in risk. Despite this reduction in risk for Vectren, the settlement approved by the IURC gives Vectren their full 10.4% rate of return.