A report reveals that electricity and energy costs for Hoosiers are on the rise

Indianapolis, Indiana – Over the course of a year, the largest utility companies in the state cut off service to 174,015 households in Indiana, leaving residents without electricity and heating as energy prices continue to rise at a pace that outstrips local wages.

A recent report published by the Community Action Poverty Institute and Citizens Action Coalition earlier this month highlights electricity needs, an aspect of overall energy consumption, and the role of investor-owned utilities.

The authors of the report expressed strong disapproval of the compensation packages for CEOs and the “lucrative profit margins” observed at the five largest utility providers in the state, which are Indiana Michigan Power Company, AES Indiana, Northern Indiana Public Service Company, Duke Energy Indiana, and CenterPoint Energy Indiana.

The U.S. Energy Information Administration has disclosed that the total profits of these investor-owned companies reached $3.8 billion from residential electricity in 2022, with the average CEO compensation package amounting to $18 million, as stated in the report.

Simultaneously, households with low income allocate an average of 7% or more of their earnings to electric expenses, and they face a sixfold increase in the likelihood of having their utilities shut off. Overall, slightly more than 13% of households in Indiana experienced disconnection at least once each year, and nearly half, specifically 48%, of households with annual incomes below $20,000 prioritize electricity payments over other essential household needs.

Furthermore, households led by women or minorities tend to experience a higher electricity burden, indicating they are more prone to allocate a larger share of their income towards utility expenses.

“Every family deserves a home that maintains a comfortable temperature throughout the summer and winter, providing a space where we can prepare and store food as part of our everyday lives.” “The rising costs of electricity jeopardize vital needs, compelling consumers to make difficult choices between food, healthcare, and energy, all while grappling with a cost of living crisis and the impacts of climate change,” stated Zia Saylor, a researcher at the Indiana Community Action Poverty Institute. “This report emphasizes the impact of soaring electricity prices on energy burdens and underscores potential policy measures such as statewide affordability assistance and restrictions on disconnections.”

Proposed solutions involve increasing funding for energy assistance programs and establishing a state-mandated limit on energy bills, capping them at 6% of a household’s net annual income.
In the past week, legislators identified the reduction of energy expenses as a primary focus as they prepare for the upcoming 2025 session, scheduled to commence in January.

Senate Majority Leader Rodric Bray, R-Martinsville, acknowledged the efforts of his colleagues in past sessions while expressing continued frustrations concerning energy policy.

“The cost of that power has been steadily increasing — something we must monitor closely — as it’s essential to ensure that Hoosiers can afford their gas and electric bills,” Bray informed reporters.

Bray emphasized the importance for legislators to consider future power demands as well.

In May, the U.S. Energy Information Administration placed Indiana at 29th in the country regarding utility expenses, trailing behind neighboring states such as Ohio and Illinois. In the Hoosier State, energy costs have surged by 33% from 2012 to 2022, significantly outpacing the national average increase of 19% during the same period.

CenterPoint, Duke, and NIPSCO, three investor-owned companies highlighted in the report, have filed petitions with the Indiana Utility Regulatory Commission seeking rate increases for the years 2023 and 2024.

Utility companies are not allowed to disconnect homes when temperatures fall below freezing; however, this safeguard does not extend to extreme heat events, which can pose serious risks to health and safety. As climate conditions shift, instances of extreme weather are increasingly prevalent.

According to the report, heating and cooling make up nearly one-third of electricity consumption, totaling 31%.

The federal government has a program designed to help with energy costs, yet only about 16% of eligible homes, which translates to approximately 109,750 households, are benefiting from the Low Income Home Energy Assistance Program, primarily because of funding limitations. Certain utilities might provide their own crisis funding options for consumers, though the qualifying criteria can differ.

The financial strain of these expenses differs from one county to another, presenting an added challenge for lawmakers aiming to tackle these costs, as noted by the executive director of the Citizens Action Coalition.

Ensuring that every Hoosier has continuous access to utility services, irrespective of their income or zip code, is a fundamental responsibility for our State. Kerwin Olson stated in a release, “We must work towards implementing policies that empower individuals and provide everyone with the chance to lead a dignified life and engage meaningfully in society.” According to this report, Indiana still has significant progress to make. There is optimism that decision-makers will utilize this report as a guide to develop public policy aimed at safeguarding the most vulnerable members of our society from the loss of these vital services.

The report suggests increasing the federal energy assistance fund and revising the financial eligibility criteria to include a greater number of energy-burdened Hoosiers. The government may step in by implementing a payment limit set at 6% of a household’s net yearly income.
Experts indicated that combining this state initiative with current poverty reduction programs, like food assistance, could lower administrative expenses and highlighted examples from other states that have successfully adopted similar strategies.

Another measure taken by various states involves broadening disconnection moratoriums to cover additional severe weather conditions. The report wrapped up by recognizing the necessity for additional investigation into the relationship between energy expenses and poverty, as well as their effects on health.