Your electric bill is going to change. New law aims to stabilize utilities

Indiana residents will see new billing options and summer shut-off protections under a new state law aimed at managing electric costs. It will also transition public utility companies to a new rate approval process.

Gov. Mike Braun signed the law Thursday. 

“At its core, House Bill 1002 is about balance,” said the bill’s author Rep. Alaina Shonkwiler (R-Noblesville) in a committee hearing earlier this month. “It recognizes that Indiana needs strong financial, stable utilities that can invest in the infrastructure, modernize the grid and meet growing demand at the same time. It recognizes that families and businesses are facing real pressure from rising costs, seasonal spikes and economic uncertainty.”

“This bill works on bringing those priorities together,” she added. 

It passed through both legislative chambers with bipartisan and near-unanimous support, although lawmakers disagreed over the extent of provisions for residents.

For residents, the law expands access to levelized billing — these are billing plans that even out costs throughout the year to avoid seasonal spikes — by transitioning all customers. Residents will be able to opt out of that plan.

Under levelized billing, they would have to reconcile their bills, or pay the difference on what is owed if the usage exceeds the levelized amount, up to twice a year. The law also requires utilities to offer and promote a low-income assistance program.

And, it creates a disconnection moratorium for the hottest summer days, when the National Weather Service forecasts a heat index of 95 degrees Fahrenheit or higher within 48 hours.

For utility companies, the law adds new state reporting requirements. Utilities must send regular data on customer affordability and service restoration. They will transition to multi-year rate plans under state oversight and must seek approval from the Indiana Utilities Regulatory Commission for any rate changes. When a utility seeks a change, the state will consult the data when it makes decisions on rate changes — this is known as performance-based ratemaking.

The measure is one of lawmakers’ efforts to address pocketbook issues this year as demand for energy and electric bills rise. Recently, the IURC announced an investigative inquiry after lawmakers urged the commission to take action after receiving complaints from constituents. They also passed a nuclear energy law.

Interest groups respond

In committee hearings, the bill saw broad support from environmental and industry groups, though some had caveats.

Danielle McGrath is president of the Indiana Energy Association, which represents the 14 investor-owned electric and natural gas utilities in Indiana. She said utilities share the affordability goal but worry about the tight timeline for rolling out the new rules and the way performance metrics include major event days like storms in calculations.

Ryan Hadley with Indiana Electric Cooperatives, opposed a longer summer shut-off ban, warning that unpaid debt from those months could eventually force rates higher for members of cooperatives.

AARP Indiana, which represents older residents, preferred a months-long summer moratorium but called the bill a step in the right direction. Spokesperson Jason Tomsci noted that rate increases disproportionately impact older residents on fixed incomes.

“This is a pocketbook issue for older Hoosiers, because so many of them are on that limited income. Any increase to a bill, no matter how small it might be viewed, can make a huge difference,” Tomsci said. 

The Hoosier Environmental Council praised the heat protections and the shift toward linking rates to service quality rather than just utility spending.

Rebecca TeKolste, the group’s climate and energy advisor, told WFYI the legislation could be the start of “moving away from basing our rates on what utilities spend and moving towards a system where we’re basing our rates for electricity more on the kinds and the quality of service that the utilities are providing.”

Bipartisan support

The legislation received broad support from the legislature, but Republicans rejected about two dozen amendments from Democrats in both chambers.

These included a longer, time-based summer disconnection moratorium, a prohibition against utilities passing along lobbying costs to residents, and eliminating sales tax on utility bills.

There are various timelines from this April through 2029 for the state and utilities to implement the law.

Contact WFYI data journalist Zak Cassel at zcassel@wfyi.org