The Online Reflector

By Kim Puckett
Staff Writer

The University of Indianapolis’ electricity bill for March from Indianapolis Power and Light Co. included a letter outlining a temporary increase in rates “to provide for a recovery of costs for new pollution control equipment.”

The letter reported that an average residential customer’s bill, for 1,000 kilowatt hours of electricity used, increased by about $10 to pay for environmental compliance costs. The increased rate will be in effect starting with the February bills and will last for six months.

In its March 5 issue, The Reflector reported that the university estimated the electricity rate would increase 15 percent. According to Dan Burns, controller for the University of Indianapolis, IPL informed the university about this 15 percent increase. However, the actual electricity bill increased 30 percent, from 2.8 cents per kwh to 3.5 cents per kwh.

The cause of the 30 percent increase has not yet been determined. According to Burns, a major factor in the unexpected increase was an adjustment in fuel costs, which is what IPL is paying for fuel for its power plants.

“We did meet with the IPL representative this week and it appears there was an error on our March bill,” Burns said. “We may have been overcharged some for that month. We found [that] the billing for electricity is a very complicated process, and there are a number of factors that play into it.”

Alice McColgin, community relations administrator for IPL, would not comment on the university’s unexpected rate increase.

“I cannot talk about customers’ bills,” McColgin said. “That has to be between the university’s administration and our business department.”

The 30 percent rate increase will cause the university to make compensations in its budget.

“We have a finite number of dollars that come in from tuition and gifts and income from our endowment,” Burns said. “And those dollars have to be stretched to cover our costs. Some costs are more concrete than others, like the electric bill.”

According to Burns, the university can go without buying supplies and updating technologies, but the electric bill is a constant item on the budget.

“We can use old pencils and computers, but we have to keep the lights and heat on,” Burns said.

The university attempts to conserve energy on campus such as by changing from energy-inefficient incandescent light bulbs to the more efficient fluorescent light bulbs and replacing existing computer monitors with lower-energy LCD monitors, Burns said.

Burns also said the university has just been notified of a possible increase in natural gas prices from the provider Citizen’s Gas. The company has not yet approved the new rate or informed the university of the actual rate.

“We did not know of the rise in gas prices when we developed the budget,” Burns said. “But we will not raise tuition any more than already [has been] decided for next year.”

McColgin said the typical residential customer’s rates have increased by about 10 percent since 2003 “to pay for the environmental improvements.” McColgin would not disclose specific customer information because of IPL’s confidentiality guidelines.

Megan Fornuto, sophomore and exercise science major, said her IPL electricity bill rose 14 percent in the month of the increase. Fornuto lives in a three-bedroom apartment in the College Crossing at National complex and uses an average of 1300 kilowatts of electricity per month, 300 more than the amount IPL used as an average in its letter to customers.

“I would have just liked to have been warned ahead of time that my bill would go up this much,” Fornuto said.
McColgin said the Indiana Utility Regulatory Commission did not approve the increase until February, making the March bills the first to reflect the changes. David Johnston, assistant director of electricity for the IURC, confirmed that the increase was approved on Feb. 27. Johnston said IPL was not required to notify its customers before increasing the electricity rate.

The rate increase is to pay for new equipment, a flue gas desulphurization system, more commonly referred to as a scrubber, placed at the company’s Harding Street Station power plant, reportedly cost IPL and its customers $200 million, according to the IPL Web site (iplpower.com).
The United States Environmental Protection Agency’s Web site (epa.gov) reports sulfur dioxide creates health and environmental risks when it reacts with other particles in the air. A list of possible effects includes respiratory illness, reduced visibility and acid rain.

According to the letter to customers, the IURC approved the increase for IPL to recover the costs of the equipment. Put into effect Sept. 15, 2007, the scrubber will reduce emissions of sulfur dioxide by at least 97 percent, according to IPL.

IPL used Indiana pollution control statutes such as the Clean Coal Technology Certificate Statute and the Environmental Compliance Plan Approval Act to petition the IURC for permission to charge customers, according to Johnston.

“These codes generally provide for the recovery of the capital cost of pollution control equipment and a return on them,” Johnston said.