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Court shoots down challenge to IPL rate hike

The Indiana Court of Appeals has affirmed a decision by Indiana regulators to approve a $29.6 million rate increase for Indianapolis Power & Light Co. in March 2016, despite concerns from the state's top consumer advocates and other intervenors.

The Indiana Utility Regulatory Commission on March 16, 2016, authorized the 2.4% rate increase premised upon a 9.85% return on equity and a 6.51% return on a year-end rate base valued at $1.887 billion for a test year ended June 30, 2014. (IURC docket 44576)

The court on April 5 rejected intervenors' arguments challenging the order, specifically as it relates to approval of a declining block rate tied to energy conservation; the effect of this rate on elderly and African-American customers; the rejection of a proposal that would provide a 25% subsidy for low-income households; and the rejection of a proposal calling for mandatory reporting by IPL of interruption-in-service data.

Under the declining block rate, customers consuming greater than 500 kWh incrementally pay less than lower-usage customers for the energy charge portion of their bills, according to the court filing. In addition to opposing this rate mechanism, the intervernors also challenged IPL's plan to increase the fixed customer charge to $11.25 from $6.70 per month for customers using up to 325 kWh, while increasing this flat rate to $17 from $11 for customers using more than 325 kWh of electricity.

"Joint intervenors have not shown that the Commission failed to conform to statutory standards or failed to make requisite findings," the court wrote.

The AES Corp. subsidiary requested a rate increase of about $67.8 million in December 2014, which would have raised rates for the average residential customer by approximately $8 per month. The Indiana Office of Utility Consumer Counselor asked state regulators in July 2015 to dramatically cut IPL's requested rate increase to $5.9 million.