Section 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(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.
Added by P.L. 55-2023,SEC. 2, eff. 7/1/2023.