I'm State Representative Matt Pierce M-A-T-T P-I-E-R-C-E. I represent District 61, which is most of the city of Bloomington. And first I would like to thank the commission and utility consumer counselor for scheduling this meeting. And Bloomington as you can see, there's a great deal of interest in this proceeding. And I appreciate you bringing things closer to home for my constituents. The two proposed rate increases in 2025 in 2026, will significantly burden my constituents. The Citizens Action Coalition estimates the increase will be $42 over April 2024 rates. They expect the request, if approved, to cost the average homeowner or ratepayer, average home, an additional $500 per year. This is quite a significant increase that's being requested. Beyond the overall negative impact on ratepayers, the individual elements of the rate request are also problematic. And I'd like to walk through some of those. The first is the requested increase in the fixed charge. We have a lot of debates about fixed charges in the legislature. And the biggest problem with fixed charge, and this would be a 29.9% increase, is it undermines a ratepayer's incentive to either become more energy efficient, because no matter how much energy they use, they're paying that flat rate. It also undermines the incentive to add distributed energy to their homes, whether it be solar or some other kind of form of energy. So the fixed charges are difficult, because you can't avoid them, no matter how you consume electricity. And these fixed rates, because you can't avoid them, have a particular hard impact on people with low and fixed incomes. So that flat rate is there and there's nothing they can do to avoid it, no matter how much they might decide they just have to turn off the air conditioning on a really hot day like today. It's not going to eliminate or reduce that fixed charge. Another problematic request is for the higher return on equity from 9.7 to 10.5%. I'm sure that the experts on the record are arguing that rises in interest rates or other places where money could be invested, justifies increasing basically the profit margin, the profits of the utility. But I would argue that the higher return on equity is not justified, because there's no coincident risk. So as a member of the House utilities committee from time to time, I have attended conferences and things where there are investors, people from Wall Street, who are experts in utilities, and they talk about rate making constructs and things along those lines. And one of the things they tell me, is that—and they they believe this as a virtue—but they say that Indiana is so—I'm trying to think of the right term—basically, it's so favorable to utilities, in its regulatory environment that investors love to invest here in Indiana utilities. And so what they're really saying there is, our money we're investing has little risk. So normally, if you think about it, you know, your personal advisor, they tell you that if you're investing in riskier things like the stock market, you probably have a greater opportunity for return, than if you invest in something that's less risky, like a bond. So I don't think it's justified to increase this profit margin for Duke, because they're still going to be able to get the equity they need, because it's a very low risk investment. The other thing is, I know that some will say, well, a rate case is not the place to argue about degeneration, which they talk about in the resource plan. But I think you can't deny that a large part of this rate increase relates to the fact that Duke Energy is sticking with coal—they're almost kind of doubling down on coal—at a time when we've seen other utilities moving away from coal as quickly as possible. So what are they asking their ratepayers to do? They're asking ratepayers to pay for some of the most expensive energy, because we know the air emission requirements, environmental regulations, they continue to increase. And so in this rate, they're projecting out maintaining their coal generation longer than most other utilities. And so what they're essentially doing is they're telling the ratepayers, we want you to continue to pay for a form of energy that's gonna get more and more expensive. And we already see that in the coal ash issue, right? So that's another big expense that ratepayers brings because using coal creates coal ash. For decades, now it's been stored. Now the regulations are coming up, we're finally dealing with it hundreds of millions of dollars of costs. Every year that Duke continues to use coal is another year of coal ash piling up, of pollution of environmental problems getting worse. And so by approving this rate increase, essentially you are approving the continued use of coal generation, and that continued most expensive power that's available. Related to that is the request to pay for the study of carbon capture and—we used to call it sequestration, but I guess they call storage now. But CCS is another thing where they want millions of dollars to study that. Which is a little bit ironic, because you might remember that when the Edwardsport plant was approved, one of the arguments that was made is that this gasification plant can eventually have a snap-on carbon sequestration element. But once the plant began to be constructed, we heard, Oh, gee, I guess the topography, the geology of the area is not as good as we thought. And they kind of walked away from CCS. But now they're back again saying they want to do a study. And again, even if the study were to show that CCS would work, it's gonna be one of the more expensive approaches to energy, to try to maintain the coal gasification of that plant, which you know, has a lot of it takes a lot of energy to run the plant. And so if you go down that path, you're not only going to need to continue one of the more expensive plants ever built. But now you're going to add the additional expensie of CCS to it. And that's something that ratepayers shouldn't have to bear. Right. Another element is Duke, while they say they don't want ratepayers to pay for their lobbying expenses, they would like to recover the costs of belonging to trade associations. And I would argue that the trade associations are lobbyists, right? So clearly, utilities hire their own lobbyists or government relations people. And as a legislator, I've been on a committee that oversees their industry, I deal with them a lot. But they're also, whether it's the Indiana Energy Association, Chamber of Commerce, they're they're in the room just like lobbyists, and they're giving their opinions about bills. And for the Chamber of Commerce, Duke Energy is probably one of the larger dues-paying members, these things are on a sliding fee scale, you can go look at Chamber of Commerce, scorecards for the votes of legislators, where they list bills that are important to them. And you will see many energy issues on there. And obviously, the Indiana Energy Association is a collective of the utilities from around the state. And so it's the same thing. They're in the room testifying to. So I think that if you feel it's not appropriate for ratepayers to pay for direct lobbying of utility corporations, then it's also not appropriate to have ratepayers pay for their dues to belong to trade associations, business organizations that are also going to be lobbying on their behalf. OK, just a few points, I appreciate you letting me be a little long-winded here. As you probably know, the legislature just last few years, added to the code 8-1-2.6, which we call the five pillars. And in this section of the code, the General Assembly directed the utility commission to consider five different factors, when it is considering rate constructs, and basically everything you're doing. These are supposed to be the overarching principles are things to consider. So we've got reliability, resiliency, instability, that's making sure the electricity is actually, then we have two that are particularly important for this proceeding. The second one on the list is affordability.
Right, so the legislature said that in the code that you must consider these. And so I think that this being a new section of the code, this is an opportunity where the commission should add some concrete metrics to these policies that the legislature put out. So if there's ever a case, that called for us to decide and define what is affordability, is a $42 rate increase that will bring your average home up to maybe $150 a month for electricity, is that affordable?There's a way to bring some kind of concrete analysis to that that the commission could use, because that's something you're supposed to consider. The other one, the fifth one on the list, the fifth pillar is environmental sustainability. So you're supposed to be thinking about how do you maintain an environmentally sustainable energy mix. And so again, in this proceeding, these rates are going to enable continued use of the most expensive and most polluting form of energy—coal, And the coal ash ponds and all that comes along with it, and the air emissions as well. So I think this is the proceeding where the commission needs to carry out the mandate of the General Assembly, and wrestle with those pillars. And I'll admit that balancing that against reliability, sustainability may not always be simple. But I think it's something that has to be done. I think this in particular, this proposal, affordability and environmental sustainability really cry out for some more direct consideration. OK, the last point I would like to make is, throughout my service and the General Assembly on the utilities committee, whenever we've had debates and I've raised the issue of like, Hey, this policy you're adopting may result in significant burdens on ratepayers. It may not be the best for ratepayers, the response I always get is: You don't have to worry about that, because the Indiana Utility Regulatory Commission, under the law must ensure that all rates are just and reasonable. So even if we come up with something, even if we signal that we we're interested in a particular energy mix or particular approach to something, I'm told that we can rely upon the commission to ensure they're just and reasonable. And so you are the last line of defense for the ratepayer. And quite honestly, the legislature hides behind that., right? So we say we can count on you to make it all work out in the end. So I'm asking you, as a legislator, to bring some truth to that statement, to make that happen for ratepayers. And please do all you can, in this proceeding to ensure that electricity rates remain affordable, and that our environmental mix of energy is sustainable. Thank you very
