Will customers carry the brunt of Vectren’s $55 million efficiency plan?

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The Indiana court of appeals has cleared the way for Vectren, a utility holding company, to recover nearly $55 million in lost projected revenues.

The energy company merged with Houston-based CenterPoint in 2018, to serve a combined 7 million customers across 40 states.

This is the second time the court has sided with the company on the recovery of revenues lost due to its energy efficiency plan.

Indiana consumers are already paying increased water charges, following a September 2018 ruling allowing Indiana Water to recover $542 million dollars invested in modernisation of water infrastructure and services.

The unanimous siding with the company is significant as it represents a switch in regulatory policy on the issue.

“We are incredibly frustrated by this change in course by the Indiana Utility Regulatory Commission,” Jennifer Washburn was reported as saying. Washburn is the legal representative for consumer advocacy group Citizens Action Coalition of Indiana, which filed the appeal.

Vectren’s plan was found to be compliant with state law. This follows legislation passed by Indiana General Assembly in 2015, which requires that energy companies submit three-year energy efficiency plans with the Indiana Utility Regulatory Commission (IURC).

The energy efficiency plan-related legislation facilitates the recovery of some lost revenues arising from decreased electricity sales which result from efficiency plans.

The required filing was ruled to be in addition to, and separate from, current requirements for setting regular utility rates, and further ruled that the overall financial condition of a company doesn’t bear consideration in the approval of a revenue recovery proposal.

Vectren’s proposed 2018-2020 plan was filed in April 2017, with an estimated cost of $28.6 million. The company was also granted its request to recover revenues lost over the life of the plan by the commission, which amount to $54.8 million in lost revenues.

The Citizens Action Coalition (CAC) initially challenged the plan before the commission, and the appealed it to the state’s court of appeals, arguing that the commission hadn’t followed the precedent it itself has set, and that Vectren’s plan contradicted state law. The coalition further petitioned for a cap to be placed on the period during which the company could recover losses.

“To the average customer, it means the ability to continue offering energy efficiency programs to residential and commercial customers,” said Natalie Hedde on behalf of Vectren.

 “Vectren is committed to energy efficiency and offering customers the ability to lower their bill through the practice of conservation.” She later added that despite this, costs associated with those energy efficiency programs are recovered through customer billing.

The commission had previously ruled in favour of a four year cap on revenue recovery for the 2016-2017 year. The limitation was overturned on appeal in March 2017, when the Court of Appeals unanimous vote went the company’s way.

The CAC sought a similar cap on the utility company’s 2018-2020 plan, but this latest decision gives Vectren authority to freely recover losses.

“In the commission’s decisions before Vectren brought its first appeal, the commission looked at the numbers and the facts, thoughtfully crafted a legal analysis, and appropriately capped Vectren’s total profit recovery. Unfortunately, this change in the Commission’s direction leaves us without proper recourse,” Washburn said. “We believe the commission incorrectly responded to the last Indiana Court of Appeals decision on this subject.

According to Washburn, the decision in the first appeal directed the commission to provide further legal analysis.

“Instead, the commission went in the entire other direction and gave the utility everything they wanted,” Washburn said.