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Indiana regulators deny request by utilities to charge customers for revenue lost during pandemic

Moratorium on disconnections extended to Aug. 14
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Posted at 11:24 AM, Jun 29, 2020
and last updated 2020-06-30 15:32:33-04

INDIANAPOLIS — State regulators rejected a request from 10 Indiana utility companies to charge customers for electricity they did not use during the COVID-19 pandemic and announced an extension of the state's moratorium on disconnections through Aug. 14.

The Indiana Utility Regulatory Commission voted unanimously on Monday to deny the utilities' request. In May, Duke Energy, Indianapolis Power & Light and eight other Indiana electric and gas companies petitioned the commission for permission to recover revenue shortfalls.

"Under the regulatory compact, at a base level, utilities are obligated to provide safe, reliable service and customers are obligated to pay just and reasonable rates for any such service they receive," the IURC's order states.

"The balance of this Order seeks to work toward allowing customers to meet their obligation while providing utilities the reasonable relief they need to help such customers do so," the order continues. "However, 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.”

On May 11, the utility companies filed a 36-page petition with the IURC 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."

The request by the utility companies proved controversial. Kerwin Olson, executive director of the consumer advocacy group Citizens Action Coalition, said the organization applauds the IURC's decision to reject the utilities' "absurd and self-serving request."

"It’s circumstances like these that consumers rely on regulators to protect them from the inherent greed of monopoly utilities," Olson said. "We’re pleased that the IURC answered this call and put consumers first."

Danielle McGrath, president of the Indiana Energy Association, a trade association that represents electric utilities, said the companies are currently reviewing the order.

"In the meantime, I would add that throughout this pandemic, Indiana's utilities have provided continuous service and flexible bill arrangements for customers, including an early decision to voluntarily suspend service disconnections to ensure that families and businesses would not have to worry about having electric or gas service because they could not pay during this crisis," McGrath said.

Moritorium on disconnections extended

In the early days of the pandemic in March, Indiana Gov. Eric Holcomb signed an executive order that was later extended through June 30 that suspended all disconnections. Previously, several utility companies announced disconnection suspensions of their own.

With a deadline approaching that would impact thousands out-of-work Hoosiers, the IURC also ruled that disconnection suspensions of all utilities it regulates should be extended by 45 days past Tuesday's deadline through Aug. 14.

“Temporarily prohibiting disconnections until August 14, 2020 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.

On Tuesday, Holcomb issued an executive order that said unregulated utilities must also suspend disconnections until Aug. 14.

Additionally, 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.

"The Commission expects customers and utilities to communicate as soon as possible to set up payment arrangements as necessary so utility service can be maintained," the IURC wrote. "The Commission also encourages utilities not under its jurisdiction to consider implementing the practices provided in the Order, given the statewide impact of COVID-19."

Next phase of the IURC's investigation

The IURC deferred the utility companies' request in which they asked to increase operations, maintenance and pension expenses until they can be evaluated in Phase 2 of the investigation. The commission announced the two-phase investigation on May 27.

The commission added that utility companies are authorized to record how they are impacted by "any prohibition on utility disconnections, collection of certain utility fees, and the use of expanded payment arrangements, which may be considered for cost recovery in the future."

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