CAC’s Kerwin Olson: Dueling energy proposals bear monitoring at Indiana State House; How will they impact you? January 31, 2013Posted by Laura Arnold in 2013 Indiana General Assembly, Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
Tags: Citizens Action Coalition Executive Director Kerwin Olson, Indiana Gasification LLC, Indiana HB 1515 (2013), Indiana Rep. Suzanne Crouch (R-Evansville), Indiana SB 510 (2013), Indiana SB 560 (2013) utility transmission, Indiana Sen. Doug Eckerty (R-Yorktown)
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Dear IndianaDG Readers:
In any attempt to bring you a variety of viewpoints on energy and utility issues that will impact renewable energy and distributed generation, please find below a pieve written by Kerwin Olson who is the Executive Director of Citizens Action Coalition.
Just a friendly reminder, SB 560 will be heard this morning (1/31/2013) in the Senate Utilities Committee starting at 9 am. You can watch on-line. Please visit this previous post for details http://wp.me/pMRZi-12b.
As of last night there were three proposed amendments circulating which may or may not be offered to SB 560.
Laura Ann Arnold
Published: January 31, 2013 3:00 a.m.
Dueling energy proposals bear monitoring
The fate of monthly utility bills and the future of Indiana energy policy will be a hot topic of discussion in the Indiana General Assembly.
Once again, the proposed coal-to-gas plant to be built in Rockport by Indiana Gasification will be the subject of legislation. Two companion bills, SB 510 (authored by Sen. Doug Eckerty – R, Yorktown) and HB 1515 (authored by Rep. Suzanne Crouch – R, Evansville) promise to protect consumers from what are certain to be excessive charges for the substitute natural gas to be produced by the proposed facility. By making this the law of our state, captive Hoosier ratepayers will be protected from being gouged by an Enron-like scheme that promises hefty returns for a privately held, out-of-state hedge fund.
Conversely, SB 560 (authored by Sen. Brandt Hershman, R, Monticello) guarantees that captive gas and electricity ratepayers will face enormous bill increases; the legislation eliminates regulatory protections to which captive consumers are entitled. SB 560 will shift almost all of the costs and risk of operating a monopoly utility company to captive ratepayers and away from voluntary investors. Additionally, SB 560 would allow the monopoly utilities to raise rates virtually automatically and would further reduce regulatory oversight by placing unreasonable time restrictions on both the Indiana Utility Regulatory Commission and the Office of Utility Consumer Counselor to review requests by the monopoly utilities to raise your rates. Should SB 560 become law, monopoly utility profits will become excessive as the utilities will have little incentive to control costs while the more expensive, risky and obsolete technologies will continue to be chosen over cheaper, cleaner and less risky alternatives.
Every branch of government is being asked to do more with less. The public is struggling with stagnant and diminishing wages, while monthly electric bills have increased nearly 50 percent over the last decade, and the cost of living continues to soar, especially for essentials such as food and health care. Meanwhile, the monopoly electric and gas utility companies in Indiana are working hard to undermine regulatory oversight and are attempting to deregulate their monopoly revenue and profits. They are asking your elected officials for a raise, and they want it to come from your checkbook. While everyone else is being forced to tighten their belts and the working class and vulnerable populations struggle to survive, the monopoly utilities parade around the halls of government with unfettered access working to increase their monopoly revenue and profits at the expense of the public.
It should be interesting to observe the now Republican-dominated General Assembly and a newly elected governor with no Statehouse experience navigate the two paradigms. Will they allow the monopoly utilities with their deep pockets to control the agenda and the future of Indiana energy policy, or will they stand up for consumers, keep the utilities in check and protect the public interest? We’ll learn the answer during what promises to be a long and contentious 2013 General Assembly session. Stay tuned.
Kerwin Olson is executive director of Citizens Action Coalition in Indianapolis. He wrote this for Indiana newspapers.
In Indiana, debate over how ‘trackers’ shape future energy system | Midwest Energy News January 21, 2013Posted by Laura Arnold in 2013 Indiana General Assembly, Uncategorized.
Tags: Ed Simcox with the Indiana Energy Association, Hoosier Environmental Council (HEC) Executive Director Jesse Kharbanda, Indiana SB 560 (2013) utility transmission, Indiana utility cost trackers, Kerwin Olson Citizens Action Coalition
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This article from Midwestern Energy News discusses SB 560 on utility transmission introduced by Sen. Brandt Hershman. There is no official word yet about when this bill will be scheduled for a hearing before the Senate Utility Committee. Continue to watch this blog for details!
Transmission lines near Walnut, Indiana. (Photo by Patrick Finnegan via Creative Commons)
New legislation in the Indiana Senate would ensure a healthy, guaranteed profit in perpetuity on utility investments in wires, telephone poles, substations, and other parts of the transmission and distribution infrastructure, and ratepayer advocates and environmentalists are crying foul.
If such a measure becomes law, they say, it will burden low-income ratepayers with unnecessarily high bills and further entrench centralized, coal- and gas-based electricity generation, placing distributed, renewable generation at a disadvantage.
At issue in the new legislation is an important but esoteric provision of utility law called a cost tracker. When states allow trackers, they bypass rate cases, a key step in which state utility regulators scrutinize the books of monopoly electric utilities on behalf of the customers who are forced to buy their electricity.
The state then allows a line item to be added to utility bills for a specified purpose—in this case, for costs incurred when utilities replace or maintain power poles, wires and the like. In Indiana, trackers typically guarantee utilities a profit of between 8.5 and 12 percent on costs of a particular type, and ratepayers supply the company with that guaranteed profit.
The electricity bills that Indiana residents pay are a sum of the utility’s rate and the various line items.
Over the years, the state’s five investor-owned utilities—Duke Energy, Indiana Power and Light, Vectren, Nipsco, and Indiana Michigan Power, have persuaded state legislators to let them recoup most of their costs through trackers, including the cost of coal, natural gas, uranium and other fuel, the cost of scrubbers and other pollution controls, the cost of energy-efficiency efforts, and now the cost of wires, poles, transformers and other parts of the transmission and distribution network.
Because the state’s utilities are allowed a variety of trackers, their rates are not an accurate reflection of what customers actually pay. So when an Indiana utility says that its rates are rising only 2-3 percent per year, that’s technically correct, said Kerwin Olson, executive director of Citizens Action Coalition, an Indianapolis-based ratepayer advocacy group. But it’s also misleading, Olson said, because “customers don’t pay rates, customers pay bills.”
What’s more, Olson said, “utilities don’t like rate cases” and try to avoid them because they’re expensive to litigate, and because they allow the public utility commission, and the interested public, to examine their books and question whether costs they’re trying to get reimbursed for are costs they actually incurred.
That’s nonsense, said Ed Simcox, president of Indiana Energy Association, a trade group that represents the state’s investor-owned utilities.
Trackers are routine in Indiana and other states, he said, and they’re legitimate ways to recoup costs. The tracker for transmission and distribution infrastructure, in particular, is a legitimate way for companies to recoup costs to repair and replace aging infrastructure, he added.
A benefit for whom?
The tracker for transmission and distribution is important for reliability, Simcox said.
There are some very basic needs that the system has, he said. “They include pipe in the ground for gas companies, half-century-old wooden poles to string power lines and aging transformers that need to be replaced,” Simcox said. A lot of this will be done in the foreseeable future—over the next 10 years.
Moreover, Simcox said, the expenses recouped by trackers “have to be approved by the commission. That’s something these advocates wouldn’t tell you. The commission has the ability to open the books of the company at any time.”
Having trackers even benefits ratepayers, Simcox maintained. By guaranteeing revenue, it “enhances the position of the company in the financial community.” That means that utilities can pay lower interest rates when they borrow money for capital improvements, which in turn saves money for ratepayers, who reimburse the companies for their costs, he said.
Olson maintains that utilities are simply feathering their nest at the expense of ratepayers.
“Utility rate increases are the most regressive taxes you can have on the general population. They hit the poor the hardest,” Olson added.
Moreover, trackers are simply a different way for utilities to get guaranteed revenue to maintain a reliable electrical system. Whether the companies open their books in rate cases or use trackers to pay for it, utilities still need to do their job and provide reliable electricity.
“They’re going to do that stuff anyway because they have to,” Olson said.
Charging ratepayers for coal’s costs
Guaranteeing cost recovery for transmission lines could perpetuate an electrical system that produces far more climate-warming greenhouse gases than it might, said Jesse Kharbanda, executive director of the Hoosier Environmental Council.
“If you replace the transmission and distribution infrastructure on a 1:1 basis or build in anticipation of new central power plants, you’re reinforcing the current system,” he said.
That current system in Indiana is one of the most coal-reliant in the nation. In 2010, the most recent year for which data was available, the state generated 90 percent of its electricity by burning coal, far more than the U.S. average of 48 percent, according to data from the Energy Information Administration.
And according to a report [PDF] from the Environmental Integrity Project, Indiana was the fourth-largest greenhouse gas emitter overall in the United States in 2010, emitting more than three times the carbon dioxide of New York and California, which are far more populous.
Trackers are one of several ways Indiana’s utilities perpetuate the current system, Olson said. Utilities have had such dominion over the Indiana legislature, he maintained, that if the current bill passes they will have guaranteed that ratepayers pay fully for the costs of coal to burn; pollution controls that keep coal plants in compliance with federal environmental rules, and the costs of wires and infrastructure to move electricity from central plants to the populace.
“Essentially they have a tracker from coalmine to light switch,” Olson said.