Senate Bill 472 – Utility Rates and Acquisitions
Authored by Sen. Eric Koch (R-Bedford)
This bill provides that an order affecting rates of service may be entered by the Indiana Utility Regulatory Commission (IURC) without a formal public hearing in the case of any public or municipally owned utility that serves less than 5,000 customers or has initiated a rate case on behalf of a single division of the utility and that division serves less than 5,000 customers and has an IURC-approved schedule of rates and charges that is separate and independent from that of any other division of the utility. (Current law permits the IURC to enter a service rate order without a public hearing only in the case of a public or municipally owned utility that itself serves less than 5,000 customers.) Changes the term “distressed utility” to “offered utility” for purposes of provisions regarding acquisition of water or wastewater utilities.
Chamber Position: Support in Part/Oppose in Part
The Latest: On Wednesday, Rep. Ed Soliday (R-Valparaiso), chairman of the House Utilities, Energy and Telecommunications Committee, offered an amendment during committee proceedings that would prohibit the IURC from issuing an order of approval for new generation or for the purchase of power. No testimony was taken on this amendment (a moratorium) – although there were considerable questions from the committee members. The amendment and bill passed out of committee by a vote of 8-4; the bill is now eligible for further action on the House floor.
Indiana Chamber Action/Commentary: Previously, the Indiana Chamber testified in support of the original bill and the task force amendment Chairman Soliday added. It tweaks existing law and adds some clarification to issues that have recently been litigated. It should reduce litigation costs of water/wastewater utilities going forward that would otherwise have been rolled into utility rates as an increase. It also promotes efficiencies in the process and economies of scale in water infrastructure.
But the new moratorium is simply unacceptable. Although no testimony was allowed this week on this addition, we informed the chairman and other committee members that the Chamber did not support the moratorium and flatly said it is a bad idea.
The moratorium would have a significant negative impact on Indiana’s energy costs that would be borne by business and residential ratepayers statewide. There are two pending cases before that IURC that have incurred significant fees in planning and administering to this point. The committee discussed on Wednesday that in one instance, there is a likelihood of the utility losing $500 million (that is not a misprint!) in tax credits for a project that it has already initiated. The result: The project will either die or continue with the ratepayers picking up any of those added costs. A likely additional impact would be financing issues for all utilities in Indiana. In the end, a higher cost of capital means higher rates.
This moratorium as written is just bad policy and shouldn’t happen! The Chamber and its allies are hard at work to try and derail this ill-advised curveball before it passes the full House, or at least get buy-in from the Senate that this can’t occur.
Resource: Greg Ellis at (317) 264-6881 or email: [email protected]