Indiana Appeals Court affirms IPL rate increases

The Indiana Court of Appeals rejected a challenge Wednesday to an Indiana Power & Light rate increase that will raise the monthly charge 68 percent for some customers, but not all.

The rate increase took effect March 31, 2016, after IPL announced that it would hike rates for the first time in 20 years. But opponents said the two-tiered rate system would encourage waste and have a disproportionate effect on poor customers.

The court, however, ruled Wednesday that it did not have the authority to order the Indiana Utility Regulatory Commission to reconsider the rate hike simply because it would impact some customers more than others.

“There is no statutory requirement that the impact upon particular subgroups be separately addressed,” wrote Judge L. Mark Bailey, affirming the lower court's decision to approve of the rates.

Opponents of the hike called the Court of Appeals decision "extremely disappointing," and said they are considering their next legal options.

More on IPL increases:Electric bills could rise by $10 a month under IPL rate hike request

Citizens Action Coalition, a group that advocates for fair energy policies, and a collection of other civic groups sued IPL after it proposed that the fixed customer charge, a flat fee for access to the electrical grid, would rise from $6.70 per month to $11.25 per month for customers using up to 325 kilowatt hours, and from $11 to $17 for customers using more than 325 kilowatt hours.

Not only did CAC and other "intervenors" contest the rate hikes, but the manner in which the hikes were calculated. 

Because customers consuming greater than 500 kilowatt hours incrementally pay less than the lower-usage customers for the energy charge portion of their bills, the rate scheme incorporates a "declining block rate." In short, the per unit price goes down when energy use goes up.

Declining block rates punish people who use less energy, said Kerwin Olson, executive director of Citizens Action Coalition.

"These rates are contrary to the notion of energy efficiency," Olson said, adding that Indiana is essentially encouraging households to use more energy.

During a nine-day evidentiary hearing, joint intervenors including the Indiana Coalition for Human Services, Indiana Association for Community Economic Development, National Association of Social Workers Indiana Chapter, and Indiana State Conference of the National Association for the Advancement of Colored People challenged the rate increase based on its impact on poor people in the region.

The groups urged IPL to provide a 25 percent subsidy for low-income households, to be paid by the incremental usage increases by other customers. 

IPL presented testimony that the most cost-justified rate would be a fixed-rate with gradual increases.

On March 16, 2016, the commission issued its final order approving IPL’s proposed rate increase and rejecting the proposals for a low-income customer subsidy and service interruption reporting requirements. 

IPL, an investor-owned public utility, provides electrical service to approximately 470,000 customers in and around Indianapolis. 

Call IndyStar reporter Fatima Hussein at (317) 444-6209. Follow her on Twitter: @fatimathefatima.