Q&A about the regulatory rate review
June 29, 2023
Yesterday, we filed a petition for a regulatory rate review request with the Indiana Utility Regulatory Commission (IURC) to seek a rate increase to cover the rising operational costs associated with serving our customers safely and reliably. One question we’ve received from customers has been about the recent fluctuation in rates.
Didn’t we just announce a decrease – and now we’re announcing an increase? The answer is yes, and here’s why and what that looks like.
The decrease is happening due to changes in our fuel costs (Fuel Adjustment Charge) that we pass along to customers. Recently, customers have experienced a decrease in the fuel charge as a result of lower fuel and purchased power costs, which are adjusted every quarter. These lower fuel charges are expected to continue through November bills. AES Indiana’s base rates, however, only change periodically through a Commission rate review process, which we just initiated this week, and will not result in any change in customer bills until next summer, when we expect a Commission order. AES Indiana customers have not seen a change in base rates since 2018.
To clarify the two different rates:
Fuel Adjustment Charge
The Fuel Adjustment Charge (FAC) is the amount utilities apply on bills based on the varying market price of fuel and purchased power costs. These costs are filed and approved by the Indiana Utility Regulatory Commission each quarter, and they fluctuate — up and down — based on that market cost of fuel and purchased power. These varying costs are passed through to customers on a dollar-for-dollar basis.
AES Indiana customers have recently experienced a decrease through the FAC. These numbers shown below are based on a residential customer using 1,000kWh:
- In June 2023, we filed our third FAC decrease in customer bills. Customers will see a bill decrease of approximately 5% or nearly $6 for the months of September, October and November 2023.
- In March 2023, we filed our quarterly FAC, which resulted in a bill decrease of approximately 16.5% or nearly $23 for the months of June, July and August 2023.
- In December 2022, we filed our quarterly FAC, which resulted in a bill decrease of approximately 4% or more than $6.58 for the months of March, April and May 2023.
Base Rate Review
A base rate review is a formal process that utilities initiate when base rates no longer cover the cost of delivering reliable service. Changes in costs most often result from upgrading infrastructure and increased operations and maintenance expenses. AES Indiana files a base rate review with the IURC for their review, which typically takes about a year. AES Indiana last filed for a base rate review five years ago in December 2017, which went into effect in 2018.
A second question is how and when will the proposed base rate review increase impact my bill?
Under the current proposal, AES Indiana residential customers using 1,000kWh per month would see an increase of approximately $17, which is about 13% per month compared to current base rates. If yesterday’s rate review request is approved by the IURC as proposed, customers will not see that increase reflected in their bills until the summer 2024.
Customers can use AES Indiana’s bill calculator to estimate can plan for the impact on their bill based on expected electricity usage and the new base rates. The bill calculator can be found online at aesindiana.com/rate-review.