Lebanon Utilities 2012 Electric Rate Increase

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The Lebanon City Council "rubber stamped" on March 12 a Lebanon Utilities petition to the Indiana Utility Regulatory Commission (IURC) seeking to increase its municipal electric utility’s base rates and charges (IURC Cause No. 44142). There would be an overall electric rate increase of 17.3%, with residential customers suffering an 18.6% increase. The typical residential customer who uses 1,000 kilowatt hours a month would see their monthly electric bill increase from about $98 to $116 (including sales tax and an increase in the flat monthly customer service charge from $5.00 to $8.00). Part of the electric bill increase would pay for a $13 million bond issue that Lebanon Utilities wants the Indiana Utility Regulatory Commission to approve. 

All publicly filed documents explaining the Lebanon Utilities electric rate increase are available on the IURC website: (a) visit http://www.in.gov/iurc/, (b) click the “Electronic Document System” link in the upper right portion of the page, (c) click the “Search Cases” link near the upper left corner of the following page, (d) enter docket number 44142 in the first field on the search page. Case updates for the Lebanon Electric Rate Case are also available on the Indiana Office of Utility Consumer Counselor (OUCC) website at http://www.in.gov/oucc/2692.htm.

The Indiana Office of Utility Consumer Counselor (OUCC) is a state agency paid for by our state tax dollars that is separate from the Indiana Utility Regulatory Commission (IURC). The OUCC represents the interests of all Indiana utility consumers – including residential, commercial, and industrial customer interests – in cases before the IURC and federal utility regulatory commissions. Among the 54 employees in the OUCC are attorneys, accountants, engineers, economists, consumer service specialists, and support personnel.

Anyone who had reason to believe that the Lebanon Utilities request for an 18.6% increase in residential electric bills is uncalled for – particularly during this time of slow recovery from the Great Recession – was encouraged to submit their comments to the OUCC no later than July 5. Information on how to submit comments to the OUCC can be found at http://www.in.gov/oucc/2361.htm.

The OUCC was asked to insist that the IURC seriously consider the three requests listed next.

(a) Reduce the requested bond issue to exclude those capital projects intended to serve future customers within Lebanon’s recent annexation along I-65 (see the detailed discussion item #1 below).

(b) Reduce any portion of the request to increase electric base rates and charges that is related to serving future customers within Lebanon’s I-65 annexation area (see the detailed discussion item #1 below).

(c) Reduce the request to increase electric base rates and charges by an amount equal to any actual increases that have been imposed without approval of the Indiana Utility Regulatory Commission (see the detailed discussion item #2 below).

The OUCC and Lebanon Utilities have reached a settlement agreement which is now pending before the IURC. The agreement and supporting testimony can be accessed online through http://www.in.gov/oucc/2692.htm.

Two much-appreciated components of the settlement agreement are summarized next.

(1) Lebanon Utilities will be allowed to increase its annual operating revenues from rates and charges for service by $2,385,273 or 13.40%. This increase is 22% less than what was initially requested by Lebanon Utilities. It is likely that the final average electric rate increase for residential customers will be more than 13.40% (probably about 14.44%) while the final average electric rate increase for non-residential customers will be less than 13.40%.

(2) Lebanon Utilities agrees that it will not loan any additional monies to iLines or assume any obligation or liability of iLines as a guarantor, endorser, surety, or otherwise. It is a relief to concerned Lebanon Utilities customers that Lebanon Utilities can no longer use customer utility payments to subsidize its struggling Telecom Division.

However, it is VERY disappointing that the settlement agreement authorizes Lebanon Utilities to issue electric utility revenue bonds in an aggregate principal amount not to exceed $13 million.

The costs of the $13 million bond issue account for 48% of the annual operating revenues increase resulting from the electric rate increase: $948,909 for the principal and interest payments debt service and $190,357 for the debt service reserve requirement. At least 40%, and maybe as much as 55%, of the $10,207,000 total estimated construction costs included in the bond issue is for speculative build-it-and-they-will-come electric infrastructure capital projects within Lebanon’s I-65 corridor annexation.

Detailed documentation can be found in the discussion item #1 that follows below regarding how it is not right for ANY portion of the Lebanon Utilities’ requested bond issue to be approved for unneeded electric infrastructure intended to serve FUTURE customers within Lebanon’s FAILED I-65 corridor annexation.

Infrastructure capital projects should not be approved within illogical and forced municipal annexations where there is no expectation for significant economic development within the reasonably near future. The cost of infrastructure improvements within these annexation areas should not be imposed on utility customers, but should be be paid for by developers at the time that economic development actually occurs.

During this time of slow recovery from the Great Recession, it is unfortunate that the OUCC has not sufficiently protected Lebanon Utilities customers from exploitation by uncaring and developer-compromised local elected and appointed officials. A fair, reasonable, and just resolution of all the issues in Cause No. 44142 has not been reached unless the IURC improves the settlement agreement to (a) approve a lowered bond issue that does NOT include unneeded capital projects within Lebanon’s I-65 corridor annexation and (b) reduce the revenue requirements for both the principal and interest payments debt service and the debt service reserve.

1. It is not right for ANY portion of the Lebanon Utilities’ requested rate increase and bond issue to be approved for unneeded build-it-and-they-will-come electric infrastructure within the FAILED I-65 Corridor Annexation.

Background information for the 2009 forced annexation that was initiated by the City of Lebanon along the I-65 corridor is provided by the “I-65 Corridor Annexation” web page at http://www.finplaneducation.net/I-65_corridor_annexation.htm, Indiana Code 36-4-3-13, and the May 12, 2008, Annexation Fiscal Plan for Lebanon’s I-65 Corridor Annexation. A copy of the Annexation Fiscal Plan was provided to the Indiana Utility Regulatory Commission at the June 11 public hearing, and an electronic copy can be sent by E-mail upon request.

The “I-65 Corridor Annexation” web page details how Lebanon’s I-65 corridor annexation resulted from political motivations WITHOUT a realistic expectation that the annexed territory is needed and can be used by the City of Lebanon for its development in the reasonably near future. Lebanon’s I-65 corridor annexation was a forced annexation that the City of Lebanon accomplished by ordinance adoption WITHOUT a petition signed by at least fifty-one percent of the owners of land in the annexed territory or the owners of seventy-five percent of the total assessed value of the annexed land for property tax purposes.

Indiana Code 36-4-3-13 provides that the court having jurisdiction must rule against a remonstrance and order a proposed annexation to take place if certain requirements are met. In essence, these requirements represent the standards that must be met to reasonably justify a municipal annexation.

A municipal annexation is reasonably justified by IC 36-4-3-13 if one of the following requirements is met: (a) the resident population density of the territory sought to be annexed is at least three persons per acre; (b) sixty percent of the territory is subdivided; (c) the territory is zoned for commercial, business, or industrial uses. As explained next, the Annexation Fiscal Plan shows that Lebanon’s I-65 corridor annexation does NOT meet any of these three requirements.

(a) The resident population density of the annexed territory is NOT at least three persons per acre. If there were three persons per acre, the 3,675 acres in the annexation would have 10,965 persons. The Annexation Fiscal Pan estimates the population of the annexation area to be 273 persons.

(b) Sixty percent of the annexed territory is NOT subdivided into lots and parcels one acre or less. The annexation map contained in the Annexation Fiscal Plan confirms that less than 60% of the annexation area is included in a subdivision as defined in the Lebanon Zoning Ordinance: the division of any lot, tract or parcel of land, separately described in a deed on record in the Office of the County Recorder, into two or more contiguous parcels, sites, or lots fronting on public street, for the purpose of immediate or future offer, sale, lease, or development.

(c) The annexed territory is NOT zoned for commercial, business, or industrial uses. According to the Annexation Fiscal Plan, the majority of the annexed territory consists of residential and agricultural land.

A municipal annexation is also reasonably justified by IC 36-4-3-13 if at least one-fourth (25%) of the aggregate external boundaries of the annexed territory coincides with the boundaries of the municipality AND the annexed territory is needed and can be used by the municipality for its development in the reasonably near future. Lebanon’s Annexation Fiscal Plan shows that only 16.1% of the I-65 corridor annexation boundary was contiguous with Lebanon’s boundary at the time of annexation. The grandiose growth assumptions in the Annexation Fiscal Plan (which were identified as unrealistic at the time that Lebanon’s I-65 corridor annexation was taking place) have not been realized the past three years, and significant development within the annexed territory is still not expected in the reasonably near future.

According to the Annexation Fiscal Plan, developers will build 3,486 homes (with an average sales price of $145,000) and 40 commercial developments (with an average $18 million net assessed value) within the I-65 corridor annexation area by 2019. As of June 1, 2012, there are supposed to be 1,157 new homes and 13 new commercial developments within the annexation area. However, NO new homes and NO new commercial developments have been built the past three years. Because the number of Lebanon single family new construction permits steadily declined from 64 to 32 to 26 from 2005 through 2007, no objective person believed prior to the annexation (and no objective person believes now) that the housing market will improve enough to support an 800% increase in Lebanon homebuilding to substantiate the Annexation Fiscal Plan assumption that 345 homes per year will be built in the annexation area every year through 2018.

There are two well-established Tax Increment Financing districts directly adjacent to the northern and southern boundaries of Lebanon’s I-65 corridor annexation – Lebanon Business Park (Lebanon Redevelopment Commission) and AllPoints at Anson (Boone County Redevelopment Commission). The Lebanon Business Park has available for development seven lots totaling 219.4 acres that can accommodate buildings ranging in size from 121,500 square feet to 1,054,000 square feet. The Boone County Economic Development Corporation reports that shell buildings will soon be constructed within both the Lebanon Business Park and AllPoints at Anson, and that NO economic development prospects currently have a legitimate interest in Lebanon’s I-65 corridor annexation.

Some may contend that it is acceptable to provide electric infrastructure improvements within Lebanon’s I-65 corridor annexation to support unlikely growth prospects simply because the annexation was approved by Lebanon’s elected officials. This contention ignores the significant community controversy that exists in Lebanon between a compromised pro-developer faction that controls the city government and residents who favor orderly growth that pays for itself: see http://www.finplaneducation.net/huck_lewis_contributions.htm. Lebanon Utilities customers need the Indiana Office of Utility Consumer Counselor to help protect us against bonded debt and electric rate increases for electric infrastructure intended to enrich unscrupulous developers and their supporters.

The following comments were included in the Annexation Fiscal Plan regarding capital improvement requirements for electric service: “The Lebanon Municipal Electric Utility is not currently responsible for serving the Annexation Area. The City anticipates the need to spend approximately $346,000 to extend electric service to the Annexation Area. This estimated cost is based on two miles of three-phase construction and four miles of single-phase construction based on average estimated line extension costs of $75,000 per mile for three-phase construction and $45,000 per mile of single-phase construction. The initial cost of service will be paid by the Electric Utility contributing 2.5 times the estimated annual revenue with any remaining cost being borne by the developing agency.” The Annexation Fiscal Plan cost estimates for electric capital improvements within the annexation area were either incompetent or purposefully misleading. The Lebanon Utilities General Manger told me on February 24, 2012, that (a)electric infrastructure within the annexation area was purchased by Lebanon Utilities from Boone REMC for $1,357,402 on October 19, 2010, and (b) additional electric utility expenditures by Lebanon Utilities within the annexation area have totaled about one million dollars.

The following assertion appears in Lines 8-10 on Page No. 13 of the Verified Direct Testimony for Cause No. 44142 that was filed with the Indiana Utility Regulatory Commission on March 1, 2012: “Given the growth the Utility is experiencing in the 1-65 south area, it also would be ideal to use the Central substation as backup for that area.” The facts in the preceding paragraphs clearly prove that this assertion by Lebanon Utilities General Manager Michael Martin is a blatant falsehood – there has been NO growth the past three years in Lebanon’s I-65 corridor annexation (south of the prior city boundary) and significant development within the annexed territory is NOT expected in the reasonably near future. Therefore, the Indiana Office of Utility Consumer Counselor is obligated to convince the Indiana Utility Regulatory Commission to (1) reduce the requested bond issue to exclude those capital projects intended to serve future customers within Lebanon’s I-65 corridor annexation and (2) reduce any portion of the request to increase electric base rates and charges that is related to serving future customers within Lebanon’s I-65 corridor annexation.

The Bond Ordinance that the Common Council of the City of Lebanon adopted on March 12, 2012, would finance capital improvement projects for the Lebanon Utilities Electric Department by the issuance of long-term utility revenue bonds on the open market in the amount of $13,000,000. The proposed capital improvement projects are estimated to cost a total of $11,680,000 – $10,267,000 construction costs plus $1,026,700 contingency costs plus $386,300 bond issuance costs and underwriter’s discount. The construction costs would be divided between the following projects: Reconstruction of Central Substation for $1,450,000; West Substation for $1,450,000; 1-65 Area Substation for $1,910,000; 1-65 Area Transmission and Distribution for $2,155,000; South State Road 39 Area Substation for $1,910,000; Operations Facility for $1,322,000; Lau Substation for $70,000.

All or a portion of the proposed capital improvement projects listed next are intended to serve future customers within Lebanon’s I-65 corridor annexation, and their cost should NOT be included in the requested bond issue.

(a) Reconstruction of Central Substation for $1,450,000. A portion of this proposed capital improvement project would provide unneeded redundant backup to the Lau substation, which already adequately and reliably serves existing customers within Lebanon’s I-65 corridor annexation.

(b) I-65 Area Substation for $1,910,000. This unneeded capital improvement project for a new substation east of I-65 in the Lebanon I-65 corridor annexation to serve future customers would include the purchase of at least two acres of land, site preparation (grading, stone, fence, ground grid. spill containment, cable trench), construction of steel structures and a bus, a 20 MVA 69kv/12kv transformer, two 69kv circuit breakers, and a metal-clad switchgear and control house.

(c) 1-65 Area Transmission and Distribution for $2,155,000. This transmission and distribution capital improvement project is intended to serve future Lebanon I-65 corridor annexation customers in conjunction with a new I-65 substation and a new State Road 39 substation. This unneeded project would include the purchase of transmission and distribution material and the construction of about 250 transmission structures over nine miles at 200-foot span.

(d) South State Road 39 Area Substation for $1,910,000. A significant portion of this proposed capital improvement project is intended to serve future customers within Lebanon’s I-65 corridor annexation. A new substation would be located just southeast of the Lebanon Business Park, west of I-65, and adjacent to State Road 39. Lebanon Utilities asserts that most future customers to be served by this new substation would result from a Lebanon Business Park expansion extends to the east of State Road 39 and further southward through Lebanon’s I-65 corridor annexation. This new South State Road 39 Area substation would also serve as a backup for the unneeded new I-65 Area substation. At a minimum two acres of land would be purchased. Site preparation would include grading, stone, fence, ground grid, spill containment, and cable trench. Steel structures and bus would be established, a 20 MVA 69kv/12kv station power transformer added, two 69kv circuit breakers installed, and metal-clad switchgear and control house added.

It should be noted that existing customers within Lebanon’s I-65 corridor annexation are already adequately, efficiently, and reliably served by the Lau substation. In the past, the Lau substation had two 12kv circuits feeding the Middle School, Flying J Truck Stop, and other customers. Lebanon Utilities recently transferred 4 MVA load off of the Middle School circuit so that more circuit and transformer capacity is available for the Lau substation to pick up the remaining 1-65 annexation customers and leave 3 MVA of capacity on the bank at the Lau substation. In addition, the proposed $70,000 Lau substation capital improvement project would install a third recloser as a backup and a 69kv circuit switcher and transrupter on the 69kv side of the substation’s transformer.

Furthermore, it is not right that the proposed capital improvement projects are estimated to cost a total of $11,680,000 while the requested bond issue totals $13,000,000. The $1,320,000 difference between the requested bond issue and the proposed capital improvements projects cost should NOT be approved by the Indiana Utility Regulatory Commission.

Lines 18-20 on Page No. 9 of the Verified Direct Testimony of Mark Beauchamp for Cause No. 44142 that was filed with the Indiana Utility Regulatory Commission reveals that the rate design process which resulted in the Rate Ordinance adopted by the Common Council of the City of Lebanon on March 12, 2012, included consideration of factors related to future customers within Lebanon’s I-65 corridor annexation. Any portion of the Lebanon Utilities request to increase electric base rates and charges that the Indiana Office of Utility Consumer Counselor determines is related to serving future customers within Lebanon’s I-65 corridor annexation should NOT be approved by the Indiana Utility Regulatory Commission.

If it should somehow be deemed acceptable to subsidize specious build-it-and-they-will-come electric infrastructure within Lebanon’s I-65 corridor annexation, the City of Lebanon has considerable economic development money available now and in the foreseeable future to get the job done WITHOUT ELECTRIC RATE AND CHARGE INCREASES . According to Lebanon’s 2011 Annual Financial Report, receipts from Fund #290 (Enterprise Boulevard Construction), Fund # 291 (Enterprise Boulevard TIF Allocation), and Fund # 292 (Enterprise Boulevard Reserve) totaled $3,951,455.89. The receipts from these three funds were generated by the 17 Lebanon Business Park employers within Lebanon’s Tax Increment Financing (TIF) district. The only legally obligated payments that must be made from these TIF funds are bond payments for a new public safety building that total from $305,000 to $311,000 each year for the next 14 years. As long as the Lebanon Business Park does not go into sudden decline (and the TIF district is not terminated), Lebanon’s TIF district will continue to generate as much $3.6 million every year for the foreseeable future.

The Lebanon Redevelopment Commission is allowed to spend Lebanon’s TIF dollars throughout the city (including Lebanon’s I-65 corridor annexation) however it wishes by Indiana Code 36-7-25-3(a): “Projects, improvements, or purposes that may be financed by a commission in redevelopment project areas or economic development areas may be financed if the projects, improvements, or purposes are not located in those areas or the redevelopment district as long as the projects, improvements, or purposes directly serve or benefit those areas.” Indeed, some of the build-it-and-they-will-come projects recently funded by the Lebanon Redevelopment Committee are described at http://www.finplaneducation.net/lebanon_failed_vision.htm. If Lebanon chooses to not require developers within Lebanon’s I-65 corridor annexation to fund their own electric infrastructure improvements, then why shouldn’t Lebanon use its ample TIF dollars to build speculative electric infrastructure within Lebanon’s I-65 corridor annexation WITHOUT electric rate and charge increases? Doesn’t it make sense to use economic development dollars from Lebanon’s TIF district to fund economic development schemes within Lebanon’s I-65 corridor annexation, including the construction of additional electric infrastructure to serve future customers?

In summary, Lebanon Utilities customers need to have the Indiana Office of Utility Consumer Counselor protect our interests in reasonably-priced electric services by convincing the Indiana Utility Regulatory Commission to (1) reduce the requested bond issue to exclude those capital projects intended to serve future customers within Lebanon’s I-65 corridor annexation and (2) reduce any portion of the request to increase electric base rates and charges that is related to serving future customers within Lebanon’s I-65 corridor annexation.

OUTCOME: The Indiana Utility Regulatory Commission (IURC) was derelict in its duties when it accepted on September 12 the settlement agreement between Lebanon Utilities and the Indiana Office of Utility Consumer Counselor (OUCC).

Lebanon Utilities sought a 17.27% increase in its annual operating revenues from rates and charges for electric service. The OUCC and Lebanon Utilities reached a settlement where the rates and charges for electric service will be increased to generate a 13.40% increase in annual operating revenues. The IURC was supposed to “consider whether the public interest will be served by accepting the settlement” after determining whether the evidence supports the conclusions that the settlement is “reasonable, just, and consistent.”

The IURC was derelict in accepting the settlement because it included the issuance of $13 million in electric utility revenue bonds “to finance the cost of certain capital projects necessary in order for Lebanon to continue to provide adequate and efficient electric utility service.” The costs of the $13 million bond issue account for 48% of the annual operating revenues increase resulting from the electric rate increase. At least 40%, and maybe as much as 55%, of the $10,207,000 total estimated construction costs included in the bond issue is for speculative build-it-and-they-will-come electric infrastructure capital projects within Lebanon’s failed I-65 corridor annexation.

About one-fourth of the Lebanon Utilities electric rate increase included in the settlement requires existing ratepayers to pay for electric utility infrastructure capital projects intended to serve future customers. However, extensive documentation was provided to the IURC to show that there is no expectation within the reasonably near future for future customers from significant economic development within Lebanon’s failed I-65 corridor annexation.

The IURC was not supposed to accept a settlement between the OUCC and Lebanon Utilities merely because they are satisfied. The IURC was derelict when it concluded that Lebanon Utilities’ proposed capital improvement projects are “reasonably necessary for the provision of electric service in its service area” WITHOUT requiring Lebanon Utilities to prove that there is an expectation within the reasonably near future for future customers from significant economic development within Lebanon’s failed I-65 corridor annexation.

The IURC needs to establish a precedent where municipal utility rate increases anywhere in Indiana are not allowed to pay for utility infrastructure capital projects intended to serve future customers where there is no expectation for significant economic development within the reasonably near future. The cost of municipal utility infrastructure improvements within speculative economic development areas should not be imposed on existing utility customers, but should be be paid for by developers at the time that economic development actually occurs.

2. It is confusing when Lebanon Utilities contends that electric base rates and charges have not been increased since 1995 - this contention seems to imply that residential cost per kilowatt hour should be about the same from one year to the next.

Listed next is a summary of Aaron Smith's monthly residential electric bills from Lebanon Utilities the past nine years. The ELECTRIC ERS-RESIDENTIAL and ELECTRIC line items on Aaron's monthly Lebanon Utilities bills are listed in the summary; these line items do NOT include the ELECTRIC SALES TAX line item. Also listed in the summary is Aaron's KWH (kilowatt hours) CONSUMPTION (USAGE) HISTORY line item from his monthly Lebanon Utilities bills. 

AARON SMITH MONTHLY ELECTRIC BILLS SUMMARY

2003 ERS-RESIDENTIAL and KWH line items on Lebanon Utilities Bills (listed by due date)
02/05/03 $34.71 for 580 KWH (5.98 cents per KWH)
03/05/03 $43.17 for 690 KWH (6.26 cents per KWH)
04/05/03 $41.07 for 1,340 KWH (not included in the 2003 TOTALS below)
05/05/03 $37.90 for 590 KWH (6.42 cents per KWH)
06/05/03 $34.69 for 550 KWH (5.88 cents per KWH)
07/05/03 $33.67 for 530 KWH (6.35 cents per KWH)
08/05/03 $48.39 for 820 KWH (5.90 cents per KWH)
09/05/03 $47.95 for 750 KWH (6.39 cents per KWH)
10/05/03 $61.67 for 1,000 KWH (6.17 cents per KWH)
11/05/03 $43.00 for 660 KWH (6.52 cents per KWH)
12/05/03 $37.97 for 580 KWH (6.55 cents per KWH)
01/05/04 $41.19 for 640 KWH (6.44 cents per KWH)
2003 TOTALS $464.31 for 7,390 KWH = 6.28 cents per KWH

2004 ERS-RESIDENTIAL and KWH line items on Lebanon Utilities Bills (listed by due date)
02/05/04 $43.88 for 690 KWH (6.36 cents per KWH)
03/05/04 $46.32 for 700 KWH (6.62 cents per KWH)
04/05/04 $42.94 for 640 KWH (6.71 cents per KWH)
05/05/04 $36.15 for 520 KWH (6.95 cents per KWH)
06/05/04 $44.47 for 670 KWH (6.64 cents per KWH)
07/05/04 $42.22 for 630 KWH (6.70 cents per KWH)
08/05/04 $52.90 for 820 KWH (6.45 cents per KWH)
09/05/04 $52.33 for 810 KWH (6.46 cents per KWH)
10/05/04 $50.65 for 780 KWH (6.49 cents per KWH)
11/05/04 $41.08 for 610 KWH (6.73 cents per KWH)
12/05/04 $46.40 for 710 KWH (6.54 cents per KWH)
01/05/05 $40.82 for 610 KWH (6.69 cents per KWH)
2004 TOTALS $540.16 for 8,190 KWH = 6.60 cents per KWH
2004 average cost per KWH is 5.10% MORE than 2003 average cost per KWH

2005 ERS-RESIDENTIAL and KWH line items on Lebanon Utilities Bills (listed by due date)
02/05/05 $48.63 for 750 KWH (6.48 cents per KWH)
03/05/05 $37.16 for 520 KWH (7.15 cents per KWH)
04/05/05 $42.43 for 610 KWH (6.96 cents per KWH)
05/05/05 $43.60 for 630 KWH (6.92 cents per KWH)
06/05/05 $30.33 for 400 KWH (7.58 cents per KWH)
07/05/05 $39.75 for 560 KWH (7.10 cents per KWH)
08/05/05 $57.42 for 860 KWH (6.68 cents per KWH)
09/05/05 $71.48 for 1,030 KWH (6.94 cents per KWH)
10/05/05 $67.93 for 970 KWH (7.00 cents per KWH)
11/05/05 $57.21 for 800 KWH (7.15 cents per KWH)
12/05/05 $47.43 for 650 KWH (7.30 cents per KWH)
01/05/06 $43.05 for 580 KWH (7.42 cents per KWH)
2005 TOTALS $586.42 for 8,360 KWH = 7.01 cents per KWH
2005 average cost per KWH is 6.21% MORE than 2004 average cost per KWH

2006 ERS-RESIDENTIAL, ELECTRIC, and KWH line items on Lebanon Utilities Bills (listed by due date)
02/05/06 $49.31 for 680 KWH (7.25 cents per KWH)
03/05/06 $48.22 for 650 KWH (7.42 cents per KWH)
04/05/06 $38.65 for 500 KWH (7.73 cents per KWH)
05/05/06 $38.65 for 500 KWH (7.73 cents per KWH)
05/27/06 $38.99 for 490 KWH (7.96 cents per KWH)
06/27/06 $49.52 for 650 KWH (7.62 cents per KWH)
07/27/06 $65.30 for 890 KWH (7.34 cents per KWH)
08/27/06 $77.43 for 1,080 KWH (7.17 cents per KWH)
09/27/06 $73.92 for 1,020 KWH (7.25 cents per KWH)
10/27/06 $51.64 for 680 KWH (7.59 cents per KWH)
11/27/06 $50.70 for 660 KWH (7.68 cents per KWH)
12/27/06 $46.71 for 600 KWH (7.79 cents per KWH)
2006 TOTALS $629.04 for 8,400 KWH = 7.49 cents per KWH
2006 average cost per KWH is 6.85% MORE than 2005 average cost per KWH

2007 ELECTRIC and KWH line items on Lebanon Utilities Bills (listed by due date)
01/27/07 $57.36 for 760 KWH (7.55 cents per KWH)
02/27/07 $47.29 for 640 KWH (7.39 cents per KWH)
03/27/07 $49.19 for 670 KWH (7.34 cents per KWH)
04/27/07 $40.96 for 540 KWH (7.59 cents per KWH)
05/27/07 $53.22 for 710 KWH (7.50 cents per KWH)
06/27/07 $64.35 for 880 KWH (7.31 cents per KWH)
07/27/07 $76.24 for 1,070 KWH (7.13 cents per KWH)
08/27/07 $100.23 for 1,430 KWH (7.01 cents per KWH)
09/27/07 $88.22 for 1,230 KWH (7.17 cents per KWH)
10/27/07 $74.41 for 1,000 KWH (7.44 cents per KWH)
11/27/07 $56.36 for 730 KWH (7.72 cents per KWH)
12/27/07 $53.64 for 690 KWH (7.77 cents per KWH)
2007 TOTALS $761.47 for 10,350 KWH = 7.36 cents per KWH
2007 average cost per KWH is 1.74% LESS than 2006 average cost per KWH

2008 ELECTRIC and KWH line items on Lebanon Utilities Bills (listed by due date)
01/27/08 $56.36 for 730 KWH (7.72 cents per KWH)
02/27/08 $47.85 for 590 KWH (8.11 cents per KWH)
03/27/08 $49.85 for 590 KWH (8.45 cents per KWH)
04/27/08 $40.20 for 480 KWH (8.38 cents per KWH)
05/27/08 $55.04 for 680 KWH (8.09 cents per KWH)
06/26/08 $55.74 for 690 KWH (8.08 cents per KWH)
07/27/08 $78.38 for 1,010 KWH (7.76 cents per KWH)
08/27/08 $84.59 for 1,080 KWH (7.83 cents per KWH)
09/27/08 $73.58 for 920 KWH (8.00 cents per KWH)
10/27/08 $41.63 for 480 KWH (8.67 cents per KWH)
11/27/08 $38.45 for 424 KWH (9.07 cents per KWH)
12/27/08 $48.69 for 561 KWH (8.68 cents per KWH)
2008 TOTALS $670.36 for 8,235 KWH = 8.14 cents per KWH
2008 average cost per KWH is 10.60% MORE than 2007 average cost per KWH

2009 ELECTRIC and KWH line items on Lebanon Utilities Bills (listed by due date)
01/27/09 $56.70 for 628 KWH (9.03 cents per KWH)
02/27/09 $49.83 for 533 KWH (9.35 cents per KWH)
03/27/09 $44.99 for 473 KWH (9.51 cents per KWH)
04/27/09 $41.92 for 435 KWH (9.64 cents per KWH)
05/27/09 $45.11 for 461 KWH (9.79 cents per KWH)
06/27/09 $48.11 for 497 KWH (9.68 cents per KWH)
07/27/09 $69.40 for 753 KWH (9.22 cents per KWH)
08/27/09 $55.40 for 616 KWH (8.99 cents per KWH)
09/27/09 $59.27 for 665 KWH (8.91 cents per KWH)
10/27/09 $56.59 for 631 KWH (8.97 cents per KWH)
11/27/09 $44.03 for 450 KWH (9.78 cents per KWH)
12/27/09 $46.10 for 475 KWH (9.71 cents per KWH)
2009 TOTALS $617.45 for 6,617 KWH = 9.33 cents per KWH
2009 average cost per KWH is 14.62% MORE than 2008 average cost per KWH

2010 ELECTRIC and KWH line items on Lebanon Utilities Bills (listed by due date)
01/27/10 $57.60 for 614 KWH (9.38 cents per KWH)
02/27/10 $51.32 for 619 KWH (8.29 cents per KWH)
03/27/10 $39.01 for 448 KWH (8.71 cents per KWH)
04/27/10 $35.27 for 396 KWH (8.91 cents per KWH)
05/27/10 $43.62 for 474 KWH (9.20 cents per KWH)
06/27/10 $61.11 for 699 KWH (8.74 cents per KWH)
07/27/10 $77.59 for 911 KWH (8.52 cents per KWH)
08/27/10 $72.02 for 893 KWH (8.06 cents per KWH)
09/27/10 $79.97 for 1,002 KWH (7.98 cents per KWH)
10/27/10 $58.65 for 710 KWH (8.26 cents per KWH)
11/27/10 $39.43 for 413 KWH (9.55 cents per KWH)
12/27/10 $49.00 for 534 KWH (9.18 cents per KWH)
2010 TOTALS $664.59 for 7,713 KWH = 8.62 cents per KWH
2010 average cost per KWH is 7.61% LESS than 2009 average cost per KWH

2011 ELECTRIC and KWH line items on Lebanon Utilities Bills (listed by due date)
01/27/11 ? for 663 KWH (not included in the 2011 TOTALS below)
02/27/11 $52.64 for 600 KWH (8.77 cents per KWH)
03/27/11 $41.93 for 460 KWH (9.12 cents per KWH)
04/27/11 $42.78 for 471 KWH (9.08 cents per KWH)
05/27/11 $41.45 for 426 KWH (9.73 cents per KWH)
06/27/11 $51.88 for 554 KWH (9.36 cents per KWH)
07/27/11 $67.83 for 750 KWH (9.04 cents per KWH)
08/27/11 $93.90 for 1,092 KWH (8.60 cents per KWH)
09/27/11 $97.97 for 1,148 KWH (8.53 cents per KWH)
10/27/11 $47.31 for 504 KWH (9.39 cents per KWH)
11/27/11 $41.21 for 407 KWH (10.13 cents per KWH)
12/27/11 $49.25 for 502 KWH (9.81 cents per KWH)
2011 TOTALS $628.15 for 6,914 KWH = 9.09 cents per KWH
2011 average cost per KWH is 5.45% MORE than 2010 average cost per KWH

2012 ELECTRIC and KWH line items on Lebanon Utilities Bills (listed by due date)
01/27/12 $63.98 for 676 KWH (9.46 cents per KWH)
02/27/12 $46.10 for 483 KWH (9.54 cents per KWH)
03/27/12 $42.60 for 440 KWH (9.68 cents per KWH)
04/27/12 $36.57 for 366 KWH (9.99 cents per KWH)
05/27/12 $49.50 for 486 KWH (10.19 cents per KWH)
06/27/12 $63.93 for 650 KWH (10.17 cents per KWH)
2012 TOTALS $302.68 for 3,101 KWH = 9.76 cents per KWH
2012 average cost per KWH is 7.37% MORE than 2011 average cost per KWH
2012 average cost per KWH is 55.41% MORE than 2003 average cost per KWH

CONSUMER PRICE INDEX FOR ALL ITEMS FOR ALL URBAN CONSUMERS
April 2003 CPI: 183.8
April 2012 CPI: 230.085
Inflation has increased 25.18% the past nine years

LEBANON UTILITIES RESIDENTIAL ELECTRIC COST PER KILOWATT HOUR
April 2003: 6.42 cents per KWH
April 2012: 9.99 cents per KWH
Residential electric cost per kilowatt hour has increased 55.61% the past nine years
Residential electric cost per KWH has increased 2.21 times more than inflation the past nine years

An analysis of Aaron's Lebanon Utilities monthly electric bills reveals that his April 2012 electric cost per KWH is 55.61% more than his April 2003 electric cost per KWH. His electric cost per KWH is definitely NOT the same from one year to the next – it has increased 2.21 times more than inflation the past nine years.

It is understood that the “fuel adjustment clause” allows Lebanon Utilities to file “tracker rates” with the IURC as often as once every three months to reflect changes in the cost of electricity that Lebanon Utilities purchases from the Indiana Municipal Power Agency. Application of the flat monthly customer service charge of $5.00 may also alter Aaron's electric cost per KWH from one month to the next.

Taking into account the tracker rates, it would seem that there should be MANY time periods at least three months long where Aaron's electric cost per KWH changes very little. A review of Aaron's monthly electric bills summary for the past nine years reveals that there have been very FEW time periods at least three months long where his electric cost per KWH changed very little. Indeed, Aaron's electric cost per KWH has frequently changed significantly from one month to the next. These facts cause one to question whether or not Lebanon Utilities has properly and accurately applied their IURC rate approvals to the computation of monthly electric utility bills.

The OUCC has been asked to use their expertise to determine if Lebanon Utilities has properly and accurately applied their IURC rate approvals to the computation of customer electric utility bills.

If it is determined that customers have paid more than they should have because Lebanon Utilities has improperly or inaccurately applied their IURC rate approvals to the computation of customer electric bills, the OUCC has also been asked to insist that the IURC reduce the Lebanon Utilities’ request to increase electric base rates and monthly customer service charges by a commensurate amount.

OUTCOME: A Utility Analyst from the OUCC Electric Division made an on-site visit to the Lebanon Utilities offices where he reviewed the utility's books and records. The Utility Analyst concluded that customer electric bills fluctuate due to the IMPA Purchased Power Tracker, approved by the IURC in Cause No. 36835-S3 (December 1989). The Tracker allows Lebanon Utilities to pass through increases or decreases in the cost of power purchased from IMPA. Lebanon Utilities updates the Purchase Power Tracker quarterly for rate making purposes.

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This page was last updated on 07/03/13 .