Customers of Central Indiana electric utility AES Indiana can expect a temporary increase in their bills this summer. The change will result in a net increase of $9.52 for customers using 1,000 kilowatt-hours per month from June through August.
The increase is for a Fuel Adjustment Clause proceeding, or FAC, which is a billing component that accounts for changing fuel costs versus what the company projected. There are several billing components beyond a utility's base rate.
Utilities predict how much they expect fuel to cost, and these predictions are factored into electric bills. That fuel can cost more or less than expected, so the utility can attempt to recover those losses from customers through a quarterly case with the state.
"Generally, you know, if you're projecting that the winter weather is not going to be so cold, and then you have a cold snap, or a polar vortex, or a winter storm, and prices are higher than what you estimated, eventually that's going to appear in higher rates," said David Ober, a former commissioner with the Indiana Utility Regulatory Commission who no longer works in utilities.
The commission is currently conducting an investigation into energy affordability and billing transparency with Indiana's five investor-owned utility companies.
This spring, the commission held a public hearing, where the companies shared evidence with the commission, followed by listening sessions to hear from customers. Those sessions were held in ten locations across the state, including Noblesville and Indianapolis. The commission said a report on the investigation's findings will be issued in the coming months.
In its FAC case with the IURC, AES Indiana said that its charges for fuel costs this past winter exceeded what was predicted, including due to Winter Storm Fern of January 2026. The state Office of Utility Consumer Counselor, which advocates for ratepayers, did not oppose the increase. All five members of the commission voted to approve the utility's temporary increase.
"Based on the evidence presented, the Commission finds AES Indiana has made every reasonable effort to acquire fuel and generate or purchase power to provide electricity at the lowest fuel cost reasonably possible," said the May 27 order from the commission.
The severe winter storm brought significant snowfall to Indiana from January 23-27 and resulted in an emergency declaration from the state and federal governments. Subsequently, the U.S. Energy Information Administration said that the storm resulted in higher fuel costs around the country.
A spokesperson for AES Indiana shared a statement with WFYI.
"The FAC rate is made up of both forward-looking estimates and true-ups and can result in a credit (lower bills) or a charge (higher bills)," it read.
"Beginning with June bills, customers will see an increase driven by the FAC, which is updated quarterly after it is approved by the Indiana Utility Regulatory Commission," the statement continued. "A new charge of $3.98 per month for a customer using 1,000 kWh will be in effect June 2026 through August 2026. This increase is due to increased fuel costs."
The billing components like the FAC beyond the base rate are called "trackers," which also include things like Transmission & Distribution (or TDSIC), Environmental Compliance Cost and Demand Side Management.
"The utilities have tons of these tracking mechanisms that allow rates to be adjusted outside of a rate case. Consumer advocates hate those things. That's why we try to remind everybody that, 'Hey, don't forget about trackers, you know, because here's a 7% bill increase, even though the commission hasn't made any order on the rate case,'" said Kerwin Olson, executive director of the Citizens Action Coalition, a consumer and environmental advocacy organization.
AES Indiana has another case pending before the IURC concerning base rates, including rates for residential customers. The company said it is unrelated to the increase due to the FAC case. The commission has not yet issued a decision.
Contact WFYI data journalist Zak Cassel at zcassel@wfyi.org
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