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Republicans Stop Proposal To Limit Utility Rate Increases

By Brandon Smith

Posted March 18, 2015

Republicans rejected an attempt in a House committee Wednesday to limit what's called "lost revenue recovery" for utility companies in the state's proposed energy efficiency program.

If energy efficiency programs succeed, consumers use less energy, which means utility companies get less money.

Indiana's proposed energy efficiency program includes what's called "lost revenue recovery," meaning utilities can get back some of the money they lose by increasing rates.

But Citizens Action Coalition counsel Jennifer Washburn says the problem is the proposed program doesn't really limit how much companies can get back.

"So if you have insulation that will last 20 years, the utility, if they install it in 2015, will be recovering that all the way out until 2035," Washburn explains.

Washburn says average ratepayers will lose whatever cost savings they might get by reducing energy usage if utilities can keep recovering costs.

But the Pence administration and utility companies say any cap disincentivizes utilities to participate in energy efficiency programs.

Pence administration official Dan Schmidt, who helped develop the proposed program, also notes, because of increased future demand, Hoosiers' energy bills are going to go up no matter what.

"The hope is, the goal here is, that they're not as high as they otherwise would have been," Schmidt says.

A proposed amendment in committee would have capped lost revenue recovery at three years.

It was defeated along a party line vote.

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