The Indiana Office of Utility Consumer Counselor is asking state regulators to reconsider their decision granting AES Indiana a $71 million rate increase, arguing the Commission got it wrong on everything from shareholder profits to who should pay the utility’s lawyers.
The OUCC filed its petition for rehearing and reconsideration Tuesday with the Indiana Utility Regulatory Commission, challenging the Commission’s June 17 order in the utility’s second base rate case since 2023.
That order approved — with modifications — a settlement between AES Indiana, its largest industrial customers, Walmart, Rolls-Royce, and the City of Indianapolis. The OUCC and the Citizens Action Coalition refused to sign on, with the consumer counselor’s office arguing the utility’s rates should actually be cut. The Commission trimmed the settlement’s agreed 9.75 percent return on equity to 9.5 percent and adopted the OUCC’s lower vegetation management budget, bringing the increase down from the $90.7 million the settling parties negotiated and well below the $192 million AES Indiana originally requested.
Not far enough, says the OUCC.
Among the sharper arguments in the 13-page filing: ratepayers shouldn’t foot the bill for AES Indiana’s rate case expenses — roughly $3 million — when the Commission rejected the very analysis that money bought. The utility’s hired cost-of-capital expert recommended a return on equity between 10.2 and 11.2 percent; the Commission found the reasonable range topped out at 9.9 percent. If the expert’s work product was unreasonable, the OUCC argues, the expense of producing it can’t be recovered from customers under the Commission’s own two-part test.
The petition also contends the Commission approved a return at the middle of its own range rather than the bottom, despite more than 7,000 consumer comments and well-documented problems with the utility’s new billing system, and that it allowed AES Indiana to keep collecting money for regulatory assets and rate case expenses even after those costs are fully recovered — something the Commission expressly prohibited in the City of Anderson’s rate case last November.
“Affordability is my utmost priority, and I believe the IURC needs to reexamine its position on things like shareholder profit and rate case expense,” said Indiana Utility Consumer Counselor Abby Gray. “Hoosiers should not be paying for expensive attorneys and other unreasonable expenses so that shareholders can pad their pockets. Ratepayers have been tightening their belts for years; it’s time for utilities to do the same.”
The OUCC also challenged the approved base cost of fuel, a $4 million payroll adjustment it says ignores more than 100 chronically vacant positions the utility has been billing ratepayers for, and a 20 percent contingency factor in plant decommissioning estimates that it argues rests improperly on prior settlements the Commission itself said can’t be used as precedent.
The Commission is not required to grant the petition, and rehearing requests in major rate cases rarely succeed. The filing does, however, preserve the OUCC’s options for an appeal to the Indiana Court of Appeals.
AES Indiana serves roughly 532,000 customers in Indianapolis and surrounding counties. New Phase 1 rates take effect following the utility’s compliance filing, with a second increase scheduled for January 2027.
Editor’s note: AES Indiana is an underwriter of Indy Politics.
