Sunday, August 25, 2019 1:00 am
I&M proposal gets thorough public vetting
No one wants to see the lights go out. But utilities don't get to decide unilaterally how much to charge. A report by the state's Office of the Utility Consumer Counselor last week was a dramatic reminder of what a bad idea that would be.
In May, Indiana Michigan Power, which last year was granted a $96.8 million rate hike, asked the Indiana Utility Regulatory Commission for permission for a $172 million increase, which would raise the average residential customer's bill by $21.11 a month. As some of those who spoke at a public hearing here last month made clear, one feature of I&M's plan would strike hardest at the poor and those on fixed incomes who are already struggling to make ends meet. The fixed portion of that bill – a charge that isn't affected by how much electricity a customer uses – would go up by 43% if the latest request were approved.
In a discussion with our editorial board last month, Toby Thomas, I&M's president and CEO, said the company cares about the disadvantaged and does all it can to avoid rate hikes, but that the equipment upgrades and other costs the new rate request would cover were essential to replace aging equipment, modernize and ensure reliable service.
“The investments, from my perspective, are needed,” Thomas said. “If they were discretionary and we could wait years and years, we would. This system can't wait that long, and that's the reason we're making these investments.”
The consumer counselor's office, though, found the utility had not proven most of its case. Many proposed new expenditures were discretionary or unnecessary, the office said, and others could be paid for under I&M's existing rates. Its report to the regulatory commission recommends slashing all but $2 million from the utility's $172 million request.
The power of the report may be seen in the 19-page, meticulous dissection of one of I&M's “must-have” expenditures: replacing 400,000 automatic meter readers with “smart readers” that can quickly alert the utility to service problems and give consumers quicker feedback on how much electricity they're using.
“Technologically,” Thomas told us last month, “it allows us to see what's going on in the system with a great deal of granularity. And the two-way communication also will allow us to give customers better information, to better affect how they use the service.”
But Anthony A. Alvarez, a utility analyst for the consumer counselor's office, concluded the utility had not shown that installing the automatic readers was either cost-effective or necessary. I&M, Alvarez testified, estimates 35% of the automatic meters will have reached the end of their “design life” by the time the new meters would be deployed. “However, if any of the 35% are tested and proven to be operating satisfactorily, they can be placed back in service,” Alvarez said. “That means that more than 65% of I&M's meters are in good working condition.” Present rates, he noted, already include the costs of testing and maintaining meters.
Among other recommendations, the report also urges the commission not to allow I&M to raise fixed residential charges from $10.50 a month to $15 or add a “bulk discount” that would discourage energy conservation.
I&M will have the opportunity to respond to those recommendations, and the Utility Regulatory Commission will hear much more from intervenors, the counselor's office and the utility before it rules, months from now. It's a fair and thorough process that serves both the electric company and the public.