Indiana has seen one of the biggest jumps in electricity bills in the country in recent years, according to a new study from a Houston-based consumer advocacy and electricity shopping site.
The study by Texas Electricity Ratings reports the states where residential consumers have faced the lowest and highest increases in energy costs over the years.
Indiana electric bills have jumped by an average of 29.1% from 2015 to 2023, according to the study, which used U.S. Energy Information Administration data. That increase ranked 13th nationally. Indiana saw a bigger increase than neighboring Illinois, where electric prices jumped by 25.7%.
The average cost per kWh of electricity for Hoosier households was 11.57 cents in 2015, according to the U.S. Energy Information Agency figures. The cost in Indiana shot up to 14.94 cents per kWh of electricity in 2023.
Electric rates have trended higher nationally, Indiana Energy Association President Danielle McGrath said. Texas Electricity Ratings estimates residential electricity costs have risen by more than 20% in 27 states, with increases of more than 40% in seven states.
"Indiana has been growing, and Indiana’s utilities have an obligation to keep pace with that demand and power a modern economy. In recent years, our energy companies have made substantial investments in additional power generation and modernization of the state’s century-old electric grid that delivers that power," McGrath said. "We’ve added advanced technology to the electric grid that reduces power outages and hardens the grid against severe weather. There also have been substantial investments to meet evolving environmental regulations. We are committed to keeping customer affordability top of mind, while also balancing the need to make the investments necessary to provide safe, reliable electricity."
Citizens Action Coalition Executive Director Kerwin Olson said people point to different root causes for the utility price hikes but that his consumer group largely blames the political influence of the utility industry.
"The underlying root cause of rapidly escalating electric bills in Indiana is the result of extreme legislative and regulatory capture by the investor-owned electric and gas monopolies in our state, due to their significant campaign contributions and influence peddling at all levels of our government from the local and county level and all the way to the legislature and administration," he said. "What we are seeing is the culmination of rate increase after increase which have been authorized and enabled by favorable legislation passed by the General Assembly and signed by the governor year after year after year."
Rising utility bills have especially been hitting low-income households that have been spending more than 6% of their household income on energy. That's more than three times the percentage higher-income groups pay, according to Texas Electricity Ratings.
In Indiana, NIPSCO now charges a residential consumer using 1000 kWh of electricity nearly $234 a month, CenterPoint Energy $221 a month, I&M $167 a month, AES $158 a month and Duke Energy $156 a month, according to Indiana Utility Regulatory Commission data. NIPSCO's electric bills have skyrocketed by around $100 a month since 2019 and by $50 a month over the past year.
State regulators are supposed to serve as a surrogate to the economic pressures that competition would normally place on utilities, which are almost always monopolies, Olson said. But instead they have been rubber-stamping rate hikes, he said.
"These policies have led to diminishing and reducing the authority and discretion of the IURC to do their job, and allowed the utilities to file gold-plated plans before the IURC that are all but rubber-stamped because the policies effectively compel the regulators to approve through statutory language such as, 'the IURC shall approve'," he said.
While the IURC retains a substantial amount of authority, Olson said "we have effectively turned the IURC into a body that enacts the policies of the (Indiana General Assembly) and governor — ignoring their role as that surrogate to competition who is supposed to keep monopolies in check and equally balance the interests of the utilities with those of the ratepayer. I would add that Indiana is one of a very few states where the regulators are not either directly elected by voters, or confirmed by one or both bodies of the legislature. They serve at the will and pleasure of the governor. Another underlying cause."
The legislature eliminated consumer-friendly programs and policies, such as the net-metering and Energizing Indiana programs that reduced monthly consumption, demand and bills, cutting into monopoly revenues and profits, Olson said.
Other contributing factors into the energy transition from fossil fuels to renewable energy, the replacement of old plants that are closing and updates to grids.
"Indiana also allowed the utilities to pour billions into coal plants in the 2010s," he said. "Plants that should have been retired and replaced with clean energy. And we allowed the utilities to file overly expensive and gold-plated 'grid modernization plans.'"
Indiana's residential electric rates rank among the lowest among surrounding states, McGrath said.
Utilities need to cover higher expenses, increase capacity and replace or modernize aging infrastructure.
"Customers see benefits from the investment the Indiana utilities are making. For example, many utilities are investing in smart metering technology, which allows customers more real-time insight into usage, allowing them to better control usage and costs," she said. "It also allows utilities better insight into system conditions, such as identifying customer outages more quickly during storms. Another example of benefits to customers are smart grid investments, which allow the utilities to isolate damaged portions of systems during storms, reducing the number of impacted customers and improving restoration times."
Indiana utilities have not improved reliability, prevented outages or shortened outages commensurate with their spending, Olson said. He said a consumer advocate should serve on the state's energy task force, that the state should advance policies that put consumers first and stop using utility bills as a way to finance economic development, shifting the burden from investors to ratepayers.
"Stop subjecting Hoosier consumers to monopoly pricing only and give them choices and more control over their bills," he said. "Things are bad. That's why affordability was the word of the day during the last election cycle, and will be again during the next election cycle. Folks can't afford day-to-day life. Housing costs, health care costs, energy and utilities, daycare, food — everything is going up with no end in sight."
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