§ 8-1-2.5-6.5 — Commission study of performance based ratemaking for electricity suppliers; topics for study; stakeholder comments; recommendations in 2025 annual report

Indiana § 8-1-2.5-6.5

• Jurisdiction: Indiana
• Art. 1: UTILITIES GENERALLY
• Ch. 2.5: Alternative Utility Regulation

Text

5. (a) As used in this section, "electricity
supplier" means a public utility (as defined in IC 8-1-2-1(a)) that
furnishes retail electric service to customers in Indiana. The term does
not include a utility that is:
(1) a municipally owned utility (as defined in IC 8-1-2-1(h));
(2) a corporation organized under IC 8-1-13; or
(3) a corporation organized under IC 23-17 that is an electric
cooperative and that has at least one (1) member that is a
corporation organized under IC 8-1-13.
(b) Before September 1, 2023, the commission shall commence a
comprehensive study to consider the appropriate:
(1) design and framework for; and
(2) requirements with respect to;
performance based ratemaking (as described in section 6(a)(2) of this
chapter) for electricity suppliers.
(c) In conducting the study required by this section, the commission
shall evaluate the following:
(1) Multi-year rate plans with incremental rate increases.
(2) Index-driven revenue formulas.
(3) Performance incentive mechanisms, including both rewards
and penalties, for meeting, or failing to meet, metrics related to
service or infrastructure investments.
(4) The use of performance incentive mechanisms in conjunction
with traditional cost-of-service ratemaking, to provide regulatory
oversight and ensure that rewards and penalties are equitably
balanced and do not:
(A) over-compensate electricity suppliers for benefits provided;
or
(B) under-compensate electricity suppliers for costs and risks
incurred;
as applicable.
(5) Best practices for allocating the costs, benefits, and risks
associated with performance incentive mechanisms between:
(A) customers and customer classes; and
(B) shareholders;
with affordability of service prioritized.
(6) Best practices for establishing quantifiable, verifiable, and
clearly defined performance metrics in connection with
performance incentive mechanisms.
(7) Best practices for the collection and protection of data from
electricity suppliers as needed to justify or evaluate proposed or
approved performance incentive mechanisms.
(8) Any other aspect of performance based ratemaking that the
commission determines to be appropriate to incentivize electricity
suppliers to provide value to ratepayers.
(d) In conducting the study required by this section, the commission
may invite comments from:
(1) electricity suppliers;
(2) the office of utility consumer counselor;
(3) associations or organizations representing utility ratepayers;
(4) regulatory commissions or agencies in other states that have
experience with performance based ratemaking;
(5) rate design experts; or
(6) other stakeholders.
The commission may incorporate any comments received under this
subsection in its report under subsection (e).
(e) The commission shall include in the annual report that the
commission is required to submit under IC 8-1-1-14 before October 1,
2025, a report that includes the commission's analysis and
recommendations on the topics outlined in subsection (c). The report
required by this subsection must contain recommendations, supported
by sufficient data and analysis from the commission's study under this
section, with respect to the appropriate:
(1) design and framework for; and
(2) requirements with respect to;
performance based ratemaking (as described in section 6(a)(2) of this
chapter) for electricity suppliers, so as to enable the general assembly
to fully evaluate the impact of performance based ratemaking on all
classes of ratepayers, while considering the attributes of electric utility
service set forth in IC 8-1-2-0.6, including reliability, affordability,
resiliency, stability, and environmental sustainability.

Legislative History

As added by P.L.55-2023, SEC.2.