State agency recommends denial of AES Indiana’s rate increase

INDIANAPOLIS – A state agency is recommending that AES Indiana’s request for a rate increase be denied.

Instead, the Indiana Office of Utility Consumer Counselor (OUCC) is calling for a reduction in AES rates “based on the case’s evidence and applicable law.”

The agency represents taxpayer interests in cases presented before state and federal utility regulatory commissions, including the Indiana Utility Regulatory Commission (IURC).

According to previous reports, Indiana Gov. Mike Braun named Abby Gray as AUCC’s new leader earlier this month. Gray’s appointment came after Braun directed the Indiana OUCC to evaluate the profits of utility companies and “find cost-saving measures.”

Eleven OUCC witnesses filed their testimony this week with the IURC after spending three months looking into AES’s request and reviewing the rate hike.

AES is seeking an increase that would be phased in, with the first 7.5% increase in the second quarter of 2026 and a later 6% increase in January 2027. Average residential customers would see their monthly bills increase by about $21.

AES Indiana received approval for a base rate increase in April 2024.

“AES Indiana has not demonstrated sufficient evidence for an increase in this rate case, which it filed less than 14 months after receiving Commission approval in its last rate case,” Gray said. “My team is recommending additional reductions that would reduce the utility’s current rates and help lessen the burden on ratepayers.”

According to Gray, the OUCC received feedback from customers who face challenges with high bills. Others pointed out billing issues with AES that coincided with an upgrade of the utility’s billing system.

“We received thousands of consumer comments in this case, highlighting serious hardships many customers are facing, and I want to thank the individuals who took time to submit comments either in writing or at the IURC’s public hearings,” Gray said.

Here are the OUCC’s recommendations:

• Reducing AES Indiana’s monthly customer service charge for most residential customers from $17.00 to $11.25. The utility proposes raising the charge to $20.00 in this case. OUCC recommendations would also reduce small commercial customer service charges.
• Reducing the utility’s authorized return on equity to 8.5%. AES Indiana is seeking Commission approval to raise its currently authorized 9.9% amount to 10.7%. The OUCC’s recommended reduction cites factors including affordability concerns and problems customers have encountered with the utility’s billing system.
• Decreasing the utility’s proposed depreciation expense and reducing numerous line items from AES Indiana’s proposed amounts for operating and maintenance expenses.
• Keeping vegetation management costs at their current levels based on the utility’s performance.
• Elimination of more than 100 “phantom hires” in the company’s budget. The utility’s request seeks rate recovery for 105 vacant positions.

The OUCC’s recommendations come after residents submitted more than 6,700 consumer comments. The IURC held four public field hearings in August in which 89 AES customers voiced their opposition to the increase.

Citizens Action Coalition, the state’s largest consumer and environmental advocacy organization, asked the IURC to reject the request in its entirety.

“The Commission should take strong action to protect residential ratepayers experiencing inexcusably poor service at increasingly unaffordable rates. AES Indiana’s residential customers have grown beyond exasperated with AES Indiana’s persistent billing and autopay issues, the woefully inadequate customer service, and overall response to AES Indiana’s mismanaged billing and autopay systems,” said Ben Inskeep, CAC program director.

“Adding to the strain and frustration, AES Indiana has implemented multiple large rate increases in recent years, amplifying a growing affordability crisis,” Inskeep said. “And now, AES Indiana is proposing a massive $30 per month residential rate increase without any meaningful affordability protection, while AES Indiana shareholders would walk away with one of the highest authorized ROEs in the country. Enough is enough.”

Inskeep advocated for an investigation into AES’ billing problems, changes in the utility’s security deposit and disconnection policies and offered a host of other recommendations. He also criticized AES for its “refusal to furnish relevant information” about the impact data centers could have on the area.

AES responded with a statement:

AES Indiana takes seriously its responsibility to provide safe, reliable, and cost-effective electric service to more than 530,000 customers in Central Indiana. We deeply value customer feedback, and as part of the regulatory process, we are reviewing the OUCC and other intervenors’ testimony filed yesterday regarding the proposed rate review. The existing rate review framework with the Indiana Utility Regulatory Commission ensures transparency around the Company’s investments. AES Indiana will file its rebuttal testimony on October 9, in which we intend to address the concerns raised in the OUCC and intervenor testimony. When we filed our case earlier this year, we included evidence that demonstrated the need for continued prudent investments. These investments allow us to build a reliable and resilient electric system that delivers long-term value to more than 530,000 customers while preserving our position as one of the lowest rates of any investor-owned utility in Indiana.

An IURC evidentiary hearing is scheduled for Nov. 3, in which attorneys from the OUCC, utility, and intervening parties can cross-examine technical witnesses.

The IURC will make its final decision in spring 2026.