The Richmond Common Council has decided to place a “question” on the November 8, 2022 ballot asking voters to consider removing Richmond Power & Light (RP&L) from the jurisdiction of the IURC. Below is an explanation of why this is being considered.

Who/What is the IURC?

The IURC stands for the Indiana Utility Regulatory Commission. It is an administrative Indiana state government agency that regulates a utility’s rates, charges, ability to borrow money, and some rules/policies.

Why does RP&L want out of the IURC’s jurisdiction?

The bottom line is cost. It costs the RP&L ratepayers money to stay under the IURC’s regulation with little or no return on that money spent. For example, RP&L spent $835,000 in 2020-2021 to perform a rate study to get new rates approved by the IURC. These costs are paid by the RP&L ratepayers. These costs would have been dramatically lower if RP&L were not under the jurisdiction of the IURC.

Are other electric utilities in the IURC?

Less than 10% of municipal electric utilities, like RP&L, remain within the jurisdiction of the IURC. Investor owned (for profit) utilities, like Duke Energy, are highly regulated by the IURC. Municipally owned utilities, like RP&L, are not required to remain in the jurisdiction of the IURC because they are non-profit and have oversight by local elected officials.

If RP&L leaves the IURC’s jurisdiction, who will be our advocate?

The Richmond Common Council will continue to consider rate adjustments periodically, as they currently do now. The council members are elected officials and accountable to you, the voter. They are also customers of RP&L. They want to keep rates and charges low because they pay the same rates for electricity as you. They also want to have low-cost and reliable electricity for community and economic development purposes. Low-cost, reliable, environmentally friendly electricity is important for maintaining and attracting jobs in Richmond.

What prevents RP&L from increasing rates in excess of the utility’s needs?

These are just a few examples of the safeguards in place to keep RP&L accountable to you, the ratepayer:

1. Rate adjustments are approved by the Richmond Common Council. They are accountable to you, the voter.
2. The RP&L Board of Directors monitors the finances of the utility.
3. State law requires utility rates be nondiscriminatory, reasonable and just, and based upon the actual costs to provide electricity to customers. Funds cannot be used for other purposes per state law.
4. RP&L is audited by an independent third-party auditor annually in addition to audits by the State Board of accounts.
5. RP&L is a non-profit entity and must follow the internal control and other accounting standards established under state law.

Are there any safeguards for future city council members to follow?

Regardless of whether RP&L is regulated by the IURC, state law requires that the Council set rates that are nondiscriminatory, reasonable and just.

In addition, the Richmond City Council passed an ordinance creating guidelines for future rate studies. These guidelines are now part of city code.

The parameters for future rate studies are as follows:

1. Any future Cost of Service Studies will be completed by a third-party consulting firm with expertise in assessing the costs associated with and rate structures associated with providing electrical services by municipally owned electric utilities; and
2. Programs, such as the winter assistance program from the Interlocal Community Assistance Program (ICAP), will continued to be honored; and
3. Guidelines established by the IURC for service disconnection due to non-payment and reconnections will continue to be utilized as well as IURC parameters established for late fees; and
4. Any future proposed rate adjustments for RPL require adherence to Indiana State Law processes and procedures, including customer protection via the requirement for nondiscriminatory, reasonable and just charges pursuant to IC § 8-1.5-3-8, customer input at public hearings, and rate adjustments approved by elected public officials

If RP&L is withdrawn from the IURC, will my electric rates go up?

The charges for providing electric service will still need to be adjusted periodically due to the costs associated with buying electricity and maintaining the electric grid in our community. RP&L is currently in phase two of a three-phase rate adjustment approved by the IURC in 2021. During that rate adjustment approval process, the IURC “ordered” RP&L to submit a cost-of-service study for potential rate adjustments in 2025.

What scenario provides the lowest rates for me – staying in or withdrawing from the IURC?

Withdrawing from the IURC will lower the cost of the professional fees associated with adjusting rates, which could lessen the impact of rate adjustments to customers of RP&L.

How is RP&L different from large utilities like Duke or Citizen’s Energy?

RP&L is a municipally owned non-profit utility. RP&L rates are based upon the actual cost of doing business. RP&L does not have shareholders that demand a profit. This keeps RP&L’s rates lower.

Does the IURC regulate RP&L’s grid reliability?

The IURC does not regulate RP&L’s electricity grid reliability. RP&L will remain accountable to other organizations such as the North American Electric Reliability Corporation (NERC). NERC is a not-for-profit international regulatory authority whose mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid.

If I agree, what do I need to do?

You will need to vote “YES” on November 8, 2022 and answer the following question on the ballot:

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Shall the municipally owned utility be taken out of the jurisdiction of the utility regulatory commission for approval of rates and charges and of the issuance of stocks, bonds, notes, or other evidence of indebtedness?

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Feel free to call RP&L at 765-973-7200 or email us with your questions.