To the editor:
Recently there has been interest in the competitiveness of Indiana’s industrial electric rates. The Indiana Energy Association, which represents all five of Indiana’s investor-owned utilities, would like to share information from the Energy Information Agency (EIA) and shed more light on Indiana’s standing.
The most recent EIA information, which was released in late May, shows that from March 2014 to March 2015 Indiana’s average industrial rates remained fairly constant. During that same one-year period, 16 states saw their industrial rates rise. Indiana’s industrial rates remain slightly lower than the national average, putting us in the middle of the pack, ranking about 25th.
It’s worth noting that currently Indiana has the lowest industrial rates for the region (East North Central), beating out Ohio, Illinois, Michigan and Wisconsin. If you look at the difference between the 10th-lowest state (Alabama) and Indiana, the rate difference is about one cent per kilowatt-hour.
Many large industrial interests say that passing a law to permit customers to choose their electric supplier will lower rates. But of the 24 states with customer-choice statutes, seven have actually suspended their laws because of concern about rate impacts. March 2015 rate data shows that 14 of the 17 states that have maintained their deregulated status have industrial rates that are higher than Indiana’s.
When it comes to residential rates, Indiana’s average electric rates are well below the national average (10.79 cents per kilowatt-hour compared to 12.35 cents per kilowatt-hour). In addition to being 13 percent below the national average, Indiana’s residential rates are lower than all but one of the 17 states that still allow for retail choice.
For decades Indiana enjoyed low electric rates, but beginning around 2002 rates began a steady increase due largely to tough new environmental requirements aimed at generating plants utilizing coal. Also, Indiana utilities, like utilities throughout the country, must make investments in their aging electric grid and in maintaining their coal, nuclear and gas plants.
Rising electric rates are not unique to Indiana. But it’s important to remember that in Indiana rates are regulated. Utilities cannot add rates or charges to customer bills without seeking approval by the Indiana Utility Regulatory Commission (IURC). The IURC conducts detailed hearings on utility rate requests and impacted parties, including industrial and residential customers, have the opportunity to raise objections and concerns before the IURC acts.
It is an open and transparent process and one that serves Indiana electric customers well.
Mark T. Maassel
Indiana Energy Association