Indiana agency recommends 60% reduction in Duke Energy proposed rate increase

After hearing from consumers, a state agency is coming out in opposition to Duke Energy's proposed rate increases.

The Indiana Office of Utility Consumer Counselor (OUCC) is recommending a 60% reduction in Duke Energy's request, including no increase to the monthly residential customer service charge and a reduction in Duke Energy's authorized return on equity.

The OUCC, as well as the nonprofit Citizens Action Coalition, detailed their recommendations in news releases on July 12, a day after the deadline for legal filings in the rate case now before the Indiana Utility Regulatory Commission (IURC).

As a utility, Duke Energy must seek regulatory permission to increase fees to its electricity customers in Indiana. This includes time for public comment — three of the four hearings for the public have happened with another in New Albany expected soon — as well as input from other agencies and consumer groups. A total of 74 Duke Energy customers have spoken at the three public field hearings the IURC conducted in June.

Duke Energy, Indiana's largest utility, has about 900,000 customers in 96 Indiana counties.

What Duke Energy propsed:Duke Energy is seeking rate increases. Here's how much it could cost you.

The utility has requested a two-step increase in electric rates, with the first in March 2025 and the second in January 2026. The increase would raise the flat-rate connection charge for residential customers from $10.54 to $13.70 each month. Duke Energy also proposes raising the electricity consumption portion of a customer's bill. The increases would raise the base rate by 16.2% and about 19% overall.

The various commissions, agencies and Duke Energy were combing through the pages of testimony on Friday, July 12. The next step in the process is rebuttal from Duke Energy, due on Aug. 8, followed by an evidentiary hearing set to begin on Aug. 29. During the hearing, both sides can cross-examine witnesses and IURC officials can ask questions. After the hearings, the IURC will make a decision, which is expected in early 2025.

Angeline Protogere, Indiana spokesperson for Duke Energy, said the utility is still reviewing the testimony.

"Our request centers on the $1.6 billion in improvements we’ve made in a modernized electric grid to reduce power outages, hundreds of miles of new power lines, environmental responsibilities, investments in reliability at our power plants, and increased electric grid security in the wake of attacks nationally," she said in an email. "We made these long-term investments while keeping our daily operating expenses flat since 2020."

Areas where OUCC believes costs, charges should be reduced

In its testimony, the OUCC recommends keeping Duke Energy's monthly residential customer service charge at the current $10.54 per month. OUCC also recommends keeping small commercial customer service charges at their current levels.

"We don't believe it's necessary to raise that charge," said Olivia Riviera, news contact at OUCC. "Keeping it low is beneficial to customers."

The OUCC recommends reducing Duke Energy's return on equity, or stockholder profits, to 9%. Duke Energy's current authorized return is 9.7%, which was approved in 2020. The utility is requesting a return on equity of 10.5%.

"We're comparing it to other utilities" and their return on equity, Riveria explained, adding the OUCC recommendation is "pretty consistent with recommendations in other cases" currently pending before the IURC.

OUCC officials also want Duke Energy to decrease its proposed depreciation expense and reduce the "numerous line items" of operating and maintenance expenses the utility lists. The agency included nearly 3,000 written consumer comments and petition signatures in its filing.

The OUCC also recommends the IURC deny the request to recover $92.1 million in coal ash remediation costs, stating in a news release that "the utility is requesting recovery now under a different legal theory."

Indra Frank is the coal ash adviser for the Hoosier Environmental Council. Frank's testimony, filed on behalf of Citizens Action Coalition, concerning Duke Energy's coal ash closure plans in Indiana, states that: “Duke has engaged in risky and imprudent coal ash disposal practices decades after the risks were known, and their current and future closure proposals perpetuate practices of leaving coal ash in unlined structures in flood-prone areas and in many cases with perpetual contact with groundwater.

“The IURC should require Duke to perform a comprehensive evaluation of current and future costs for each of its coal ash disposal sites, so that the IURC can evaluate the cleanup methods that will best serve Duke’s customers in the long run. The IURC should not force consumers to pay for cleaning up coal ash that Duke disposed of in an unsafe and imprudent manner.”

What Indiana's Citizens Action Coalition recommends

In its function to help low-income and other Hoosiers who have trouble keeping up with their bills, Citizens Action Coalition (CAC) also recommended no increase for Duke Energy's monthly residential service charge to customers.

Ben Inskeep, CAC program director, said one of his biggest recommendations is that Duke Energy develop a rate for all its income-qualified customers to ensure they don't see huge bills they can't afford. Although Duke Energy offers a program for low-income customers in the winter, Inskeep said customers must sign up for it through their local community action agency and many don't know it's available or how to participate. Also, the program, funded by Low Income Home Energy Assistance Program block grants, runs until the funds are gone. Federal funding for the program was about $6.1 billion during COVID, but has decreased to $4.1 billion, which is distributed to all U.S. states, Inskeep said.

"This is a health and safety issue," he said. "We need better protection for these customers. Electricity is an essential service," and being able to afford it along with other necessities is getting more difficult for many Hoosiers.

"The (Indiana Utility Regulatory) Commission needs to act and stand up for consumers," he said.

CAC also opposes the block rates Duke Energy currently uses. Having a flat per-kilowatt hour rate is better for consumers, Inskeep said. Right now Duke Energy customers pay the highest rate for the first 300 kilowatt hours they use. The rate is lower up to 1,000 kilowatt hours and anything beyond that is at the lowest tier. Inskeep said the practice, besides encouraging more energy use, negatively affects lower-income customers and people living in smaller households.

Duke Energy has proposed a time of use rate available to all customers, with the lowest rates from midnight to 4 a.m. Inskeep said that would help industrial customers much more than residential ones, who need heating and air-conditioning during the day. "I'm totally fine with offering this option," he said, adding it's not something that will help low-income customers.

Contact Carol Kugler atckugler@heraldt.com