Here is the testimony delivered by State Rep. Gail Riecken (D-Evansville) to the Indiana Utility Regulatory Commission regarding the rate increase requested by Vectren:
I first want to thank the IURC for coming to Evansville to hear comments about the rate increases that are proposed by Vectren. Our electric rates are already high and to meet the requirements of this new proposal, our gas rates will increase.
As a state legislator I receive complaints, concerns from constituents. And, the concerns I have received about Vectren’s proposal are from homeowners and small businesses.
They are twofold: one, about the increase in rates, and two, about the legislation since 2011, that legislators voted on, to allow utility companies to make the requests such as we have before the IURC today.
I’ll leave the issue of the state legislature passing this legislation. But, in full disclosure, I did not vote for the two bills, SEA 251 and SEA 560.
The bills are now law and the best thing we can do is make sure the position of consumers is protected in the IURC formal approval process.
My comments about Vectren’s rate increase proposal are particular to the $217 million plan for Vectren’s South territory, our area.
Vectren’s project includes gas main replacements and upgrades to transmission and distribution pipelines. The plan recovers the project costs over a seven year period, starting this year.
I would like to digress a minute here to make an important note.
The Vectren North plan includes extensions into rural areas that currently do not have natural gas service.
As a legislator and electric ratepayer, because a proposal could be for electric infrastructure improvements, I am concerned. We consumers in the South territory may someday see a proposal in the South territory for extensions to new areas that benefit other entities and that we pay for.
This idea of expanding to new areas and the existing ratepayers paying for it or a good part of it has too many opportunities for utilities where the responsibility for growth should be the corporations and shareholders, not the ratepayers.
I guess if Walmart were a monopoly, they could just raise their prices whenever they wanted to expand, and their customers would pay for it.
And, if not the corporations and shareholders, then, taxpayers should be considered for economic development rather than ratepayers.
A friend of mine explains it this way: “If I truly believed we were expanding service to benefit Grandma and other populations who did not have access to natural gas, I would mostly be ok with it. But that’s not why that section was put in the bill. We are making ratepayers pay for economic development. From … perspective, that’s the role of a taxpayer. Ratepayers pay for utility service, nothing more nothing less. “
I can’t imagine the legislators that voted for this new law believe that it is the intent of the law to be used for ratepayers to pay for economic development outside their service area. The law should be clarified.
There is another justification for SEA 560, I think given in committee that advocates cited to support the legislation.
That was that the use of the tracker model of charging ratepayers for improvements would benefit consumers; one, because there wouldn’t be great jumps in our bills since increases would happen every six months; and, two, that the tracker model would eliminate financing costs, and therefore, a benefit or savings to consumers.
SEA251 and SEA 560 are law and they reflect policy changes that are dramatic in Indiana and deserved more discussion before the legislature voted on them.
However, this is now and we need to talk about what we can do to make sure consumers are protected and the benefits realized are fair to both the utility companies and the consumers.
I have these concerns and questions that I would like the IURC to consider in your review.
1.) How can the consumer be assured of the savings in Vectren’s proposal.
Stated another way, what proof has Vectren established in their plan that their plan will save money to the benefit of the consumer.
2.) The utility has the ability to come back every six months and request a revision.
What assurance does the consumer have that there won’t be some costs revised in the plan that should not be included in in the rate increase proposal but should be the burden of the company and shareholders.
For example, specific safety issues that may have resulted from mismanagement where the remedies are by federal mandates. Those mandates should not be the burden of the ratepayer but the burden of management and shareholders. They may be interpreted as permissible costs in SEA 251. If so, the legislature needs to change the law.
There should be clear determination what is company responsibility and should be company paid and what is consumer driven and should be consumer paid and I look to the IURC to make those determinations.
3.) Are we going to know how long we are going to have to pay for the improvements in the proposal. Stated another way, is the plan clear when the tracker should drop off.
4.) The new tracker law (IC 8-1-39-14) from SEA 251 limits annual rate increases to 2% of the utility’s total retail revenues each year. As has been reported NIPSCO has interpreted the new tracker law, IC 8-1-37-13(a), to mean those increases can be compounded each year during the seven year recovery period.
This issue is surely going to court. How will the IURC address this issue with Vectren in this proposal.
I agree with the OUCC in their testimony recommending that the IURC impose specific conditions, if the IURC approves the plans, including no double-recovery for infrastructure.
5.) Another concern with revenues is that there is no clearly defined term “total retail revenues†in the law referring to the utility issues or at least not in Title 8. I would request the IURC’s opinion if the term “total retail revenues†is clearly defined in law and, if not, should the term be clarified.
Just a couple of comments more…
6.) I endorse the ongoing reporting requirements OUCC has recommended, including Vectren meeting with the OUCC and other interested stakeholders at least eight weeks prior to each fall tracker filing. It is at that time Vectren should supply additional project cost and scope details for all to analyze the upcoming year.
And finally,
7.) The term “reasonable or reasonableness†is a consideration in all IURC reviews. I have often wondered where the consumer fits into that concept. As I have advocated before, would it not be fair to include the consideration of “affordabilityâ€, that is “affordability†to the consumer.
Maybe that would pare down a project or maybe the corporation and shareholders might choose to invest some of their high earnings and finance some of the costs.
Please accept the following questions I received the day of the hearing that I did not see prior to the meeting—some that I may have covered in my testimony:
· Since Vectren has asked for a detailed amount of money, there must be a detailed maintenance plan that should be made public to show support for the increase
· Why is there current funding falling short?
· Why is Vectren hesitating to reinvest some of their profit into infrastructure improvements?
· Will all Work be put out for public bid- if not why?
· Will any of the increase be shown to shareholders as a profit in anyway?
· Will all money ask for be used exclusively for improvements only.
· Will any of the improvements be used to expand Vectren Gas Network to new Customers?,
If so why are Vectren profits not going towards the capital expansion
· After improvements are completed will the increases be dissolved?
· Why does Vectren advertise when they are a monopoly here in Evansville?
· As a customer of Vectren part of my bill was to go towards maintenance and improvements why now is this amount falling short?
Thank you for your time and consideration.
