INDIANAPOLIS, Ind. - The state's largest electricity provider wants to modernize its infrastructure, but it's a plan that comes with a price for customers. The Indiana Regulatory Commission is taking comments on Duke Energy's $1.87 billion infrastructure improvement case, which includes the mandatory installation of smart meters for every customer in their service territory. Tyson Slocom, director of Public Citizen's Energy Program, says the costs of the devices outweigh any consumer benefits. "This is kind of like forcing everyone to buy an iPhone even if all you're going to do is make local phone calls with it," says Slocom. "It's very expensive equipment that's not going to be used efficiently by all households." Those in favor of smart meters say they can help consumers monitor their usage and streamline services, but Slocum says it's a premature installment of costly advanced technology. He adds, it should be offered to customers as a voluntary option. Duke Energy estimates the plan will increase rates an average of one percent every year from 2016 to 2022. If the request is approved, Duke Energy would have a tracker that allows it to raise rates when costs go up. Kerwin Olson, executive director with Citizens Action Coalition, says about 30 percent of Duke's bills are already comprised of trackers, and customers can't afford any more rate increases. "Ratepayers are struggling to get by on a day-to-day basis," he says. "Duke as a company is pretty healthy and financially strong and a lot of these projects Duke Energy needs to do to provide reliable electricity service and the customer shouldn't have to bear all the risks and all of the costs that come along with this." Olson adds, the average monthly electric bill of Duke Energy customers has increased by almost 10 percent in the last year, and nearly 56 percent in the last 10 years. State utility regulators are taking public comments on the case before and during a hearing this Wednesday in Bloomington.
DUKE ENERGY INFRASTRUCTURE PLAN
Duke Energy has filed a new case with the Indiana Utility Regulatory Commission (IURC), seeking approval of a long-term plan for electric transmission, distribution and storage system improvements, including incremental rate recovery of those costs as the projects proceed. The utility refers to the program as its Transmission and Distribution Infrastructure Improvement Plan (T&D Plan). Duke Energy filed its request filed under a law (Senate Enrolled Act 560) passed by the Indiana General Assembly in 2013. An IURC public field hearing is scheduled for Wednesday, November 12, 2014 in Bloomington. Please see the OUCC's October 31 news release for details. The OUCC also issued a September 17, 2014 news release inviting written consumer comments
A brief summary of the 2013 law
Indiana Code 8-1-39 allows electric and natural gas utilities to submit 7-year infrastructure improvement plans for IURC approval. It requires the IURC to rule within 210 days once such a request is filed.
- Once a 7-year plan receives IURC approval, the utility may request incremental rate increases every 6 months to pay for the projects. The rate adjustment is referred to as the Transmission, Distribution and Storage System Improvement Charge (TDSIC). The IURC has 90 days to rule on such a request.
- TDSIC rate increases are limited to no more than 2 percent of total retail revenues each year.
- The TDSIC rate mechanism (or tracker) allows the utility to recover 80 percent of the costs as they are incurred. The remaining costs are deferred until the utility's next base rate case, which must be filed before the end of the 7-year period.
Duke Energy's request Duke Energy its 7-year system improvement plan on August 29, 2014. The plan is pending as IURC Cause No. 44526.
- Petition (13 pages)
- Testimony: Birmingham-Byrd (32 pages)
- Testimony: Atkins (90 pages)
- Testimony: Kramer (11 pages)
- Testimony: Schneider (32 pages)
- Testimony: Williams (124 pages)
- Testimony: Davey (37 pages)
All public filings in the case are available by visiting the IURC's Electronic Document System and entering docket number 44526. According to the utility's testimony and exhibits:
- The 7-year plan includes nearly $1.87 billion in capital improvement projects.
- Projects throughout Duke Energy's Indiana service territory include automated metering and communication devices, breaker and relay replacements, replacement of aging infrastructure (including transformers, substations, poles, and lines), vegetation management, and other proposals.
- If approved by the IURC, construction would start in 2015 with the first rate increase of approximately 0.9 percent taking effect in 2016. The annual rate increase amounts from 2017 through 2022 would vary by year, ranging from 0.8 percent to 1.3 percent annually. The projected average annual percentage increase over the 7-year term is about 1 percent.
The OUCC and intervening parties are expected to file testimony on November 12, 2014. The IURC has until March 27, 2015 to issue an order.