Indiana regulators investigate utility ROEs, ‘trackers’ in affordability review

Indiana's utility regulator has opened investigations into how much profit power companies are allowed to earn on their investments (called return on equity, or ROE) and their use of "trackers," which let utilities raise bills between formal rate cases to cover certain costs right away. The move follows a broader affordability review the commission released this week, which also recommends doubling ratepayer assistance programs and expanding energy efficiency efforts. Utilities that could be affected include AES, American Electric Power, CenterPoint Energy, Duke Energy and NiSource.

This comes after Indiana Gov. Mike Braun pushed for lower utility rates, replaced the commission's chairman, and called for a rehearing of a recent AES rate increase. The affordability report suggests that under a new law shifting utilities to multi-year rate plans, companies face less financial risk and so may not need such high guaranteed profits or the same tracker mechanisms. One utility's Indiana subsidiary, for example, is earning a return well above its officially authorized rate. The commission also wants the state legislature to consider dropping the 7% sales tax on utility bills and giving regulators more power over utility mergers.

For homeowners, none of this changes anything immediately, but it is part of a push that could shape how much utilities are allowed to charge and how quickly they can pass along costs. If regulators and lawmakers act on these recommendations, it could eventually affect electric rates and available bill assistance programs in the state.