State utility regulators have approved Duke Energy’s request to raise rates through the summer due to rising fuel costs.
The four-member Indiana Utility Regulatory Commission unanimously approved Plainfield-based Duke Energy Indiana’s application for the approval of rate changes for its electric and steam services due to fuel costs. The new rates would take effect in July and remain in effect through September, with the new rate beginning to appearing on bills in July.
Duke Energy’s current electric rates for residential customers will increase by 16%, or an increase of 24.6% from what customers paid from July to September 2021. For commercial customers, the rates will increase by less than 20.3% and for industrial customers, the rate will increase by less than 25.7%, according to filings.
A residential customer with a bill of $141.20 right now would see it go up by $22.59, and a customer who had a bill of $131.40 last August would see it increase by $32.39, filings show.
Representatives of Duke Energy, which is Indiana’s largest electric utility provider, said in testimony with the application that the increase was needed due to volatility in fuel markets. The utility has experienced a “significant and prolonged” rise in coal, natural gas and wholesale power prices between when the projections were made and when the rates go into effect, filings say.
“We are seeing the highest sustained prices for fuel that we have witnessed in a decade,” Duke Energy spokesperson Angeline Protogere said last month.
Utility representatives also said in filings that constraints from high gas prices, coal supply and fossil fuel transportation have significantly affected how Duke Energy operates its fossil fuel thermal plants and how the utility purchases energy and fuel in the marketplace.
“Duke Energy Indiana has made every reasonable effort to acquire fuel and generate or purchase power or both so as to provide electricity to its retail customers at the lowest fuel cost reasonably possible,” the filing says.
Since mid-2021, the electric utility has seen costs for coal and gas increase significantly. Fuel purchases account for a significant portion of Duke Energy’s electric costs, averaging as high as 30% of a total bill, Protogere said in an email Wednesday.
The markets are being affected by a variety of factors. Along with global demand and tight fuel supplies, the markets have been affected by labor shortages at coal mines and railroads. These issues are affecting the cost of the power the company both produces and purchases in energy markets, she said.
There also is the matter of supply chain challenges, which Duke has been working to overcome, Protogere said.
“To lessen the impact on customer bills, we are spreading recovery of some of these fuel costs over a longer period to reduce the rate impact,” Duke Energy officials said.
These costs are expected to be spread out over six months, instead of the usual three-month period, according to Duke Energy’s application. The IURC approved this measure, saying it was “reasonable” and that a six-month recovery could provide meaningful rate relief for customers rather than have Duke attempt to collect the entire amount during the normal period, the final order said.
“While it may not provide as much rate relief as spreading the recovery over 12 months, (the) Applicant’s proposal makes the most sense when balanced against the risk of pancaking that could occur over time if we continue spreading the recovery out over a longer period of time,” IURC commissioners concluded.
Duke Energy expects the effect on bills to increase as summer approaches and throughout the rest of the year. However, the increases are not expected to be permanent, Protogere said.
“Fuel costs rise and fall, and we pass those costs to our customers with no markup, so customers pay what we pay,” Protogere said.
The utility does have plans to try to ease the costs for customers, officials say.
The utility is encouraging customers who are struggling to pay their bills to call them at 800-421-2232. Customer service representatives can discuss payment plans and provide other resources for help. More information can also be found online at duke-energy.com.
Customers are also encouraged to look at tools such as billing and high bill alerts to help manage bills. The High Bill Alerts feature is designed to let customers know if their bill is going to be higher than usual so they can adjust their electric consumption, Protogere said.
Financial assistance is also available through Duke Energy’s Share the Light program, where eligible customers can receive up to $300 in energy bill assistance. There also is federal and state assistance available, Protogere said.