Court: Vectren can bill customers for $55 million lost revenue from energy efficiency plan
Mark WilsonEVANSVILLE, Ind. — The Indiana Court of Appeals has upheld the energy efficiency plan of Vectren, a CenterPoint Company, clearing the way for it to recover nearly $55 million in projected lost revenues as a result.
This is the second time the appeals court has sided with Vectren on the issue of recovering lost revenues associated with its energy efficiency plan.
Tuesday's unanimous appeals ruling also marks a reversal in regulatory policy on the issue.
"We are incredibly frustrated by this change in course by the Indiana Utility Regulatory Commission," said Jennifer Washburn, legal counsel for the Citizens Action Coalition of Indiana, the consumer advocacy group which filed the appeal.
Read More:In 'beyond the pale' move, Vectren promotes energy efficiency while making others pay
In the 3-0 decision, the panel of appeals judges ruled Vectren's plan was in accord with state law. The Indiana General Assembly passed the law in 2015, requiring energy suppliers file three-year energy efficiency plans for approval with the Indiana Utility Regulatory Commission (IURC).
As part of the energy efficiency plan law, the General Assembly allowed utilities to recover some related costs, including revenues lost from decreased electricity sales resulting from the energy efficiency measures.
The court ruled the requirement is in addition to and separate from the requirements for setting regular utility rates. The ruling also said the commission did not have to consider the overall financial condition of a company when determining whether a lost revenue recovery proposal was reasonable.
In April 2017, Vectren filed its proposed 2018-2020 energy efficiency plan with an estimated $28.6 million cost. It also asked to recover lost revenues over the life of those measures. The utility commission approved the plan along with permission to recover $54.8 million in lost revenue.
The Citizens Action Coalition (CAC), which had challenged the plan before the commission, then appealed it to the Indiana Court of Appeals. It argued Vectren's plan was contrary to the state law and the commission did not follow its own precedent in approving it. CAC had wanted the commission to put a cap on the time for which Vectren could recover its losses.
"To the average customer, it means the ability to continue offering energy efficiency programs to residential and commercial customers," said Natalie Hedde, spokeswoman for Vectren, a CenterPoint Company. "Vectren is committed to energy efficiency and offering customers the ability to lower their bill through the practice of conservation."
However, she said the costs associated with those energy efficiency programs is recovered through customers' bills.
The IURC in March 2016 put a four-year cap on Vectren's recovery for 2016-17 that Vectren challenged in court, and in March 2017 the Court of Appeals ruled unanimously in the company's favor.
The CAC had sought a similar cap on Vectren's revenue recovery request in the 2018-2020 plan. Instead, the court's ruling Tuesday allows the company to recover its losses for however long the energy efficiency measure lasts.
"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.
She said the Court of Appeals decision in the first appeal directed the IURC to provide more legal analysis.
"Instead, the commission went in the entire other direction and gave the utility everything they wanted," Washburn said.
