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NIX THE FIX! Say NO to higher monthly fixed charges!

There’s a disturbing trend happening in Indiana. As a result of slow electric load growth due to many factors (including economic downturns, increased energy efficiency, and decreased costs of distributed generation, most notably rooftop solar), Indiana’s electric utilities are seeking to increase fixed monthly charges on customers’ bills.

 

Put another way, the utilities want to charge you more before you use one single kWh of electricity. Utilities prefer to collect costs in fixed charges because it reduces their risk that lower sales will adversely impact their revenues and profits.

 

The Problem with Higher Fixed Charges

 

Other businesses with fixed costs – the oil industry, hotels, and grocery stores for example – do not impose mandatory fees to cover their fixed costs. Instead, these costs are reflected in the product price, and consumers can control how much they spend by how much they purchase. The same should be true for electric consumers.

 

  • Fixed costs are unfair. They hit low electricity users harder than high electricity users. Bills will increase by a much higher percentage for customers living in small apartments and homes than for those living in spacious homes.

     

  • Fixed costs are inequitable. Low income customers bear a disproportionate burden. Fixed fee increases consume a larger share of the incomes of those who are the least able to pay, most notably vulnerable populations on fixed incomes like seniors and people with disabilities.

     

  • Fixed costs are anticompetitive. Higher fixed charges reduce the economic return from saving energy and generating your own electricity at home with solar panels or other types of distributed energy technology. The utility steals a portion of your bill savings to pad its profits.

     

  • Higher fixed costs also cause you to lose much of your ability to control your electric bill. When you have to pay more each month regardless of how much electricity you use, you have less control over your family’s energy costs. The illustrative example below from the excellent “Caught in a Fix” report by Consumers Union and Synapse Energy Economics displays the inequity of higher fixed charges. The full report can be found at http://consumersunion.org/news/new-report-from-consumers-union-exposes-problems-with-fixed-charges-on-electricity-bills/.

     

 

Indiana Fixed Charge Case Studies

 

  • NIPSCO filed a rate case in October 2018 in which they are seeking to raise the monthly fixed charge from $14 to $17. That case is still pending before the IURC. Previously, NIPSCO filed for approval in October 2015 to raise their monthly fixed charge from $11 to $20. However, the IURC approved a settlement which increased NIPSCO’s monthly fixed charge to $14. CAC opposed that settlement and appealed to the Court of Appeals, but ultimately lost. It should be noted that while NIPSCO did not seek this approval in that rate case, NIPSCO indicated in testimony that they believed a $83.95 monthly fixed charge was appropriate. 

     

  • Indianapolis Power & Light (IPL)  filed a rate case in late 2017 in which they were seeking to increase the monthly fixed charge from $17 to $27. The IURC approved a settlement between CAC, IPL and other parties which held the monthly fixed charge flat at $17. Previously, IPL received approval in March 2016 to raise their monthly fixed cost from $11 to $17. CAC also appealed that decision, but also ultimately lost in the Court of Appeals.  

     

  • Indiana Michigan Power (I&M) filed a rate case in July 2017 in which they were seeking approval to increase their monthly fixed charge from $7.30 to $18, an astonishing 147%. CAC reached a settlement in that case with I&M and other parties. The settlement established a monthly charge of $10.50 for most residential customers, well below what the company was seeking. I&M intends to file a new rate case in mid-May 2019 in which they will undoubtably seek to increase the monthly fixed charge.CAC will intervene in that case and oppose any proposed increase to the monthly fixed charge.  

     

  • Vectren Electric filed a so-called “grid modernization” 7-year plan in February 2017, in which they initially sought approval to increase their monthly fixed charge an average of $2 per year. Vectren entered into a settlement with the OUCC and the Vectren Industrial Group.  The IURC approved the settlement in September 2017, which will allow Vectren Electric to increase their monthly fixed charge 50¢ every six months, or $1 every year for the next 7 years. CAC opposed that settlement. As a result of the IURC approving that settlement, Vectren’s monthly fixed charge has increased by $1.50 since December 2017.  It is now $12.50, soon to be $13 (as of 4/29/19).

     

  • Duke Energy Indiana has indicated that they intend to file a rate case sometime in the summer of 2019. CAC intends to intervene in this case, and is expecting that Duke will seek a significant increase to the monthly fixed charge of their customers.

 

 

Read the Fact Sheet

Campaign Tools

Contact the OUCC and make your voice heard! Tell the OUCC:

  • You oppose increases in your fixed monthly charges.
  • You oppose the OUCC entering into settlements which allow utilities to increase monthly fixed charges.
  • To fight for small business and residential customers to ensure that bills are affordable, just, and reasonable.

Indiana Office of Utility Consumer Counselor
Attn: Bill Fine
115 W. Washington St.
Suite 1500S
Indianapolis, IN 46204
uccinfo@oucc.in.gov
(888) 441-2494 phone

Contact your State legislators! Tell them:

  • Residential and small business ratepayers need relief now.
  • High fixed charges take away consumers’ control over their energy costs and are anti-competitive.
  • To author or sponsor legislation which places a reasonable cap on residential customer monthly fixed charges of $10. Provide them the following suggested language for the cap on monthly customer charges:

    "Effective immediately, the Indiana Utlity Regulatory Commission shall only authorize an electricity supplier to set a fixed charge on each residential customer account in an amount not to exceed ten dollars ($10) per month. Beginning January 1, 2020, the maximum allowable fixed charge may be adjusted by no more than the annual percentage increase in the Consumer Price Index for the prior calendar year. 'Fixed charge' means any fixed customer charge, basic service fee, flat distribution charge, or other charge not based upon the volume of electricity consumed, but not including demand charges, which are not covered by this provision."

To look up and/or e-mail your legislators, visit: http://iga.in.gov/legislative/find-legislators/

Indiana Senate
200 W. Washington Street
Indianapolis, IN 46204-2786
(800) 382-9467
 

Indiana House of Representatives
200 W. Washington Street
Indianapolis, IN 46204-2786
(800) 382-9842

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