ENVIRONMENT

Utility commission extends moratorium on disconnections by six more weeks

London Gibson
Indianapolis Star

State utility regulators on Monday extended the moratorium on utility disconnections until Aug. 14, two weeks later than utility companies proposed, but months earlier than consumer advocacy groups called for.

The Indiana Utility Regulatory Commission also rejected utility companies’ controversial request for permission to recover lost revenue resulting from the COVID-19 pandemic.

If granted, the request would have opened the door for companies to shift the losses in revenue to customers down the line in ways that could have included rate increases.

The decision ends the first phase of an investigation into how Indiana's utility companies and customers have been impacted by the financial fallout of the coronavirus pandemic. The start date of the second phase, during which individual utility companies can submit specific proposals, is still uncertain.

Although some consumer advocates wanted the moratorium and other consumer protections to last longer, they say the commission's decision could be considered an overall win for ratepayers, and may leave an opportunity for an extension later in the year.

"I really think by and large, the commission deserves a lot of credit for this order," said Kerwin Olson, director of consumer advocacy group Citizens Action Coalition. "We were expecting something a little more vague and ambiguous, and in our view they were as certain as they could be with the information at hand."

Duke Energy's Gibson Generating Station, a coal-fired plant, is seen in photo taken Monday in Gibson County, Ind.

Danielle McGrath, president of the Indiana Energy Association, did not immediately respond to questions about the commission's decision to deny the utilities' request.

However, she did note that many of Indiana's utility companies suspended disconnections before the official executive order required them to, and have worked with customers on flexible bill arrangements in the meantime.

Moratorium on disconnections extended

The moratorium has been in place since March, when Gov. Eric Holcomb issued an executive order in response to the coronavirus pandemic. Several utilities had voluntarily suspended disconnections before the order.

Since then, hundreds of thousands of Hoosiers, impacted by high unemployment rates and a widespread economic recession, have fallen more than two months behind on their bills and leaned on the moratorium's protections.

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The moratorium was set to expire at the end of June, but utilities proposed extending it until at least July 31. Consumer advocates, however, said this wasn't long enough and called for it to run until the end of the year.

The commission noted the reopening of the economy in choosing not to extend it longer than advocacy groups requested.

"While we understand that the COVID-19 pandemic has caused significant financial difficulties for some customers, the economy is beginning to open and we are therefore hesitant at this time to extend beyond August 14, 2020," the IURC said in the order.

Anthony Swinger, a spokesperson for the Office of Utility Consumer Counselor, the state’s consumer advocacy agency, noted the decision left the door open for the moratorium to be extended again if the need arises. It also included all consumers, including residential customers and businesses, whereas the utilities initially proposed the extension only apply to residential customers.

“It’s an important first step in granting protection to consumers,” Swinger said. “I would describe it as a thoughtful analysis of where things are.”

Duke Energy's new $3.5 billion coal-gasification plant in Edwardsport, shown on June 12, 2013.

The commission’s order also required utilities to offer extended payment plans to consumers lasting at least six months after the moratorium ends.

Consumer advocacy groups had previously asked for plans to last between 18 and 24 months. Oslon said he was disappointed with this aspect of the IURC’s decision.

“We’re not sure that six months is long enough for many customers,” Olson said, “especially low-income customers.”

McGrath's statement noted the utilities' efforts to help impacted customers. "Throughout this pandemic, Indiana's utilities have provided continuous service and flexible bill arrangements for customers," she said, "including an early decision to voluntarily suspend service disconnections to ensure that families and businesses would not have to worry about having electric or gas service because they could not pay during this crisis."

A controversial request denied

The IURC's investigation was spurred in part by a petition from state utility companies in May, which asked for permission to recover costs and losses in revenue caused by the coronavirus pandemic. 

The utility companies, which include Duke Energy, Indianapolis Power & Light, Vectren and Northern Indiana Public Service Company, said they have faced financial impacts as a result of the pandemic, including "a significantly reduced load and revenue." 

As such, the companies requested permission to recover the losses experienced during the pandemic from customers, possibly through rate increases or other means. Some states have approved similar measures, although not all of them allow utilities to recover lost revenue.

Commissioners said they failed to see how allowing utility companies to recover lost revenues would be in the public interest.

"Asking customers to go beyond their obligation and pay for service they did not receive is beyond reasonable utility relief based on the facts before us," the agency said in the order. "A utility's customers are not the guarantors of a utility earning its authorized return." 

Duke Energy's coal-gasification plant in Edwardsport, seen June 12, 2013.

The request sparked frustration from consumer advocates, who said it would unfairly shift a financial burden onto customers who are already struggling from an economic recession. That the Commission chose to shut down this request, Olson said, was a good move — albeit a little surprising.

"It's rare that we see the commission just unequivocally say no with respect to a utility company, and that's what they did," Olson said. "Good for them, they did the right thing."

Swinger echoed Olson’s sentiment. 

“We greatly appreciate the commission’s denial of that request,” Swinger said. “We think that is very positive for consumers.”

The IURC did allow utilities to recover costs caused by waiving certain utility fees. They also authorized companies to recover costs associated with the prohibition on disconnections, bad debt expenses and the use of payment arrangements.

What's next

For the next few months, utilities will be required to file regular updates to the commission describing their efforts to contact delinquent customers as well as provide related data. The first updates will be submitted on July 15, followed by a July 27 update and consecutive updates once a month.

In the meantime, McGrath and Swinger both urged customers who may need to make payment arrangements to get started on doing so.

"Any one who is having difficulty paying their bills is also encouraged to contact 211, which is a resource that connects Hoosiers with the services they need," McGrath said. 

The second phase of the investigation will allow individual utility companies to propose specific plans related to payments, rate recovery and more. A spokesperson for the IURC said details and the start date for that second phase is yet to be determined. 

Contact IndyStar reporter London Gibson at 317-419-1912 or lbgibson@gannett.com. Follow her on Twitter @londongibson

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