Should Indiana Michigan Power customers be outraged that the company collected their money to pay for an energy efficiency program but held on to a portion of the money? Absolutely. Should Hoosiers push state regulators to pull the plug on that conservation program? Probably not.
A recent audit of Energizing Indiana, a state-mandated energy efficiency program, found that the utility companies involved collected $74.4 million from their customers to finance the program but only spent $42.4 million.
A decade ago, Indiana utility companies were responsible for running their own conservation programs and, as one might imagine, they were not very aggressive about reducing energy consumption.
Having utility companies run energy efficiency programs is like having Dolly Madison and Frito-Lay run weight loss programs, said Kerwin Olson, executive director of the Citizens Action Coalition.
Olson’s consumer advocacy group lobbied the Indiana Utility Regulatory Commission for years to find a more effective strategy.
In 2009, state regulators issued an order creating Energizing Indiana. It involves six of the state’s largest utility companies; Duke Energy, Indianapolis Power and Light, Northern Indiana Public Service Co., Vectren, Indiana Municipal Power Agency and I&M.
State officials said that the extra money the utility companies collected from customers will have to be returned, but it’s unclear exactly how those refunds will happen.
I’m glad this is getting coverage because it’s a big deal, Olson said. The coalition spent a long time advocating for more investment in energy efficiency with the (Office of Utility Consumer Counsel), and while Energizing Indiana is not exactly the model for the program that we would prefer, it is a good program.
He said Vermont provides a better model for energy efficiency programs. There, the money is given directly to a third party to run the programs. That way you don’t have the utilities holding the money and playing the middleman.
One issue is the utility companies are collecting the full cost of these programs before it’s spent, he said. Ratepayers should not only be able to get a refund on that money, they should get back that interest.
Tracy Warner, a spokesman for I&M, said the IURC will ultimately decide how the money will be refunded, but I&M’s $2.2 million surplus will likely be used to offset spending for next year. And customers would see that reflected in the fee appearing on bills.
I&M saved 47 million kilowatt hours through Energizing Indiana, Warner said. I&M is and has been an advocate for tying the funding for the program with the results.
Energizing Indiana officials reported achieving 73 percent of their goal for the amount of electricity saved.
The projected savings are 416.7 million kilowatt hours, compared to more than 30 billion that the federal government says Indiana consumes in a year.
Program officials assert that Energizing Indiana failed to meet its goals in the first year because the goals were too aggressive and they needed more ramp-up time.
An external audit performed by TecMarket Works concurs with that assessment.
I don’t think anyone should prejudge the efficacy of these programs, Olson said. Because, honestly, the state of Indiana had done so little with energy efficiency it’s going to take a lot to get these programs up and running and to get the pieces in place. It’s just taking some time to get the foundation laid to get these things happening. But at the same time it’s very disappointing that we are leaving money on the table that could be spent to help ratepayers.
The audit results do not show that Energizing Indiana is a failure, but they do indicate some tweaking of the program is in order to ensure that the money Hoosiers are investing is being spent as effectively as possible.