Citizens Action Coalition of Indiana, Inc., Indiana Association for Community and Economic Development, Indiana Coalition for Human Services v. Indianapolis Power & Light Company

FILED
Apr 05 2017, 6:36 am

CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court

ATTORNEY FOR APPELLANTS ATTORNEYS FOR APPELLEE –
Jennifer A. Washburn INDIANAPOLIS POWER & LIGHT
Indianapolis, Indiana COMPANY
Peter J. Rusthoven
Teresa Morton Nyhart
Jeffrey M. Peabody
Barnes & Thornburg LLP
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE –
INDIANAPOLIS POWER & LIGHT
INDUSTRIAL GROUP
Bette J. Dodd
Joseph P. Rompala
Lewis & Kappes, P.C.
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE –
INDIANA UTILITY REGULATORY
COMMISSION
Curtis T. Hill, Jr.
Attorney General of Indiana
David Lee Steiner
Deputy Attorney General
Indianapolis, Indiana
Beth Krogel Roads
General Counsel
Indiana Utility Regulatory
Commission
Indianapolis, Indiana

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 1 of 23
 IN THE
COURT OF APPEALS OF INDIANA

Citizens Action Coalition of April 5, 2017
Indiana, Inc., Indiana Court of Appeals Case No.
Association for Community and 93A02-1604-EX-804
Economic Development, Indiana Appeal from the Indiana Utility
Coalition for Human Services, Regulatory Commission
Indiana Community Action Cause Nos. 44576
Association, Indiana State 44602
Conference of the National The Hon. Carol Stephan,
Association for the Chair
Advancement of Colored People,
The Hon. James Huston
Inc., and National Association of The Hon. Carolene Mays-Medley
Social Workers Indiana Chapter, The Hon. Angela Weber
Appellants (Intervenors Below), The Hon. David E. Ziegner
Commissioners
v. The Hon. Aaron Schmoll,
Administrative Law Judge
Indianapolis Power & Light
Company, et al.,
Appellee (Petitioner and Parties Below).

Bailey, Judge.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 2 of 23
 Case Summary
[1] Indianapolis Power & Light Company (“IPL”) petitioned the Indiana Utility

Regulatory Commission (“the Commission”) for approval of an increase to its

base rates for provision of electricity, which had been in effect since 1995. The

Commission granted requests for intervention by Citizens Action Coalition,

Indiana Community Action Association, Indiana Coalition for Human

Services, Indiana Association for Community Economic Development,

National Association of Social Workers Indiana Chapter, and Indiana State

Conference of the National Association for the Advancement of Colored

People (collectively, “Joint Intervenors”), and by IPL Industrial Group (“IPL

Group”), The Kroger Company, and the City of Indianapolis.1 The proposed

rate increase was approved by the Commission. After the denial of various

petitions for reconsideration, Joint Intervenors appealed. We affirm. 2

1
The Indiana Office of the Utility Consumer Counselor (“the OUCC”) is a statutory party to rate
proceedings, as a consumer representative.
2
By a separate order, we grant Joint Intervenors’ motion to dismiss the Commission as a party to this appeal.
Because the Commission acted as a fact-finding administrative tribunal and no statute or administrative
provision expressly makes the Commission a party on appeal, it is not a proper party on appeal from its own
decision. See e.g., Citizens Action Coalition of Indiana, Inc. v. So. Indiana Gas & Electricity Co., 2017 WL 587261,
slip op. at 1, n.1 (Ind. Ct. App. Feb. 14, 2017). See also City of Terre Haute v. Terre Haute Water Works Corp.,
180 N.E.2d 110, 111 (Ind. Ct. App. 1962) (“When there are two opposing parties before [the Public Service
Commission of Indiana], as here, its action in making findings and issuing an order deemed detrimental by
one of the parties is similar to that of a court which makes a decision determining a controversy between
adverse parties. A court is never a party to an appeal from its decision.”)

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 3 of 23
 Issue
[2] Joint Intervenors articulate four issues claiming that the order lacks adequate

support, particularly challenging (1) the lack of findings specifically addressing

the impact of a particular rate component, a declining block rate (“DBR”),

upon energy conservation, (2) the lack of findings specifically addressing the

effect of DBR on elderly and African-American customers, (3) the rejection of a

proposal for 25% low-income customer subsidies, and (4) the rejection of

mandatory reporting by IPL of interruption-in-service data. We consolidate

and restate the issues to conform to our standard of review, that is, a

Commission order will stand unless no substantial evidence supports it or it is

contrary to law,3 and address the following issue: Whether the Commission’s

rate approval order is not conclusive and binding due to a lack of specific

findings on factual determinations material to its ultimate conclusions.

Facts and Procedural History
[3] On December 29, 2014, IPL, an investor-owned public utility providing

electrical service to approximately 470,000 ratepayers in and around

Indianapolis, filed a base-rate-increase petition with the Commission. IPL

proposed that the fixed customer charge, a flat fee for access to the electrical

grid, would rise from $6.70 per month to $11.25 per month for customers using

3
Northern Ind. Public Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1015 (Ind. 2009).

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 4 of 23
 0 to 325 kilowatt hours and from $11.00 to $17.00 for customers using over 325

kilowatt hours. The energy charge, a volumetric charge equal to the approved

rate multiplied by the number of kilowatt hours consumed, would rise from

$0.093346 to $0.093935 for the first 500 kilowatt hours and from $0.070346 to

$0.073000 thereafter.4 Because customers consuming greater than 500 kilowatt

hours incrementally pay less than the lower-usage customers for the energy

charge portion of the bill, the rate scheme incorporates a DBR.

[4] The Commission consolidated the base rate case with a facilities investigation

case and conducted nine days of evidentiary hearings. At the hearing, Joint

Intervenors opposed the increase to the monthly fixed customer charge and

presented testimony opposing the DBR on grounds that charging less at higher

usage rates penalizes low volume customers and does not promote energy

conservation. Also, Joint Intervenors urged adoption of a 25% subsidy for

certain customers, to be funded by an incremental usage increase on other

customers, and requested an order that IPL provide Joint Intervenors with data

on service interruption events pertaining to low-income customers.

[5] IPL presented testimony acknowledging that, in the absence of demand meters

and/or time-of-use meters, the most cost-justified rate design would be a

straight fixed-rate/variable rate. In this design, fixed rates are entirely

4
The inclusion of fuel and Demand Side Management (“DSM”) charges would cause a rise to $0.097416
from $0.096827 and to $0.076481 from $0.073827, for the first 500 kilowatt hours and over 500 kilowatt
hours, respectively. There was also a third block reduced rate for residential users of electric hot water
heaters and space heaters who consumed over 1,000 kilowatt hours per month.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 5 of 23
 recovered from the fixed charges and variable costs are entirely recovered from

variable charges. However, IPL proposed gradualism as opposed to a total

conversion to straight fixed-rate/variable rate methodology within one rate

proceeding. Additionally, there was testimony that economically efficient

pricing is achieved when a price is set equal to the marginal cost of production,

and that flat energy charges (eliminating DBR) do not mirror costs in that it

does not cost twice as much to produce twice as much electricity.

[6] Economist Glenn Watkins (“Watkins”), who testified for the OUCC after

conducting an evaluation of IPL’s proposal, opined that “the current level of

customer charges is appropriate.” (Tr. at 8208.) According to Watkins, the

proposed increases to the fixed monthly customer charge “violate the regulatory

principle of gradualism, violate the economic theory of efficient competitive

pricing, and are contrary to effective conservation efforts.” (Tr. at 8200.) With

regard to DBR, Watkins recommended: “[DBR rates] be eliminated gradually

to a flat rate structure. However, this restructuring of residential and small

commercial rates should be done in a gradual and systematic manner to avoid

rate shock to large volume heating customers.” (Tr. at 8212.) He

recommended a phase out in three rate cases, with equal increments.

[7] On March 16, 2016, the Commission issued its final order approving IPL’s

proposed rate increase and rejecting the proposals for a low-income customer

subsidy and service interruption reporting requirements. We do not re-produce

the eighty-three-page opinion here, but recite portions relevant to Joint

Intervenor’s positions:

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 Comprehensive Low Income Bill Payment Assistance Program

Evidence. Joint Intervenors witness Howat recommended
implementation of a low income rate that would be paid for by
all classes of customers through a volumetric charge and that the
low income rate be available to all residential customers at or
below 150% of the poverty level. His recommendation was a
25% discounted rate. He also recommended a plan to implement
a low-income arrearage write-down program by retiring pre-
program arrearages through 12 timely payments of discounted
bills. He conducted and submitted analysis for the Commission’s
consideration of the account activity among Low Income Home
Energy Assistance program (“LIHEAP”) customers – number of
overdue accounts, disconnect notices, and disconnection for
nonpayment. Joint Intervenor witness Fraser presented
demographic data concerning income levels and poverty rates in
Indiana and Marion County.

Industrial Group witness Phillips contended that recovery of
social program costs is divorced from any cost causation
principles and distorts electric price signals. He testified that the
proposed program is best addressed by the Indiana state
legislature.

In rebuttal, IPL witness Gaske testified that the Joint Intervenors’
proposal raises significant policy issues for the Commission to
address and that perhaps the manner and amount of low income
assistance would be more appropriately addressed in a generic
proceeding involving all regulated electric utilities or by the
legislature.

Discussion and Findings. We recognize the importance of the
issues raised by Joint Intervenors, but find that there are
numerous implementation and policy related concerns. The
timing of the introduction of the proposal in this proceeding has

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 not provided an opportunity for sufficient consideration of the
complexities involved. As pointed out by Mr. Phillips, the
application of costs that could be considered beyond the cost of
electric service distorts electric service price signals. A well-
designed proposal would include a thorough understanding of
how it would create or alleviate any costs of providing electric
service. Further, access to key demographic and billing
information the affected utility or utilities collect and hold is
integral to evaluating any specific program design. Absent this
information, we decline to adopt Mr. Howat’s recommendations
in this proceeding.

Joint Intervenors also have proposed that IPL be ordered to
collect and report trend data on arrearages, disconnections, and
related data points. While a properly designed program of the
type suggested by Joint Intervenors would benefit from this
information, and we encourage IPL to consider working with the
Joint Intervenors and other interested stakeholders in further
identifying beneficial information, we decline to order such
collection and reporting solely on the basis of the evidence before
us. We believe that any such effort is best pursued by the utility
and interested stakeholders outside the regulatory constraints of a
specific Commission directive.

Rate Design.

Evidence. Dr. Gaske explained that the rate design objective was
guided by two goals: (1) the residential increase would remain
less than 10%; and (2) no rate schedule would receive a rate
decrease. The rate design proposed for residential and
commercial rate classes by Dr. Gaske included moving
additional fixed costs into the customer charge component of the
bill. The result is a customer charge that increases by a greater
percentage than the overall rate increase. He explained that the
proposed level does not include all the fixed costs. In conducting
the revenue proof, Dr. Gaske gave effect to the movement of
Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 8 of 23
 customers who are eligible to migrate to a different rate schedule
that would be more financially advantageous to them. He
testified that after this case is concluded, IPL will notify those
customers who would achieve lower bills by moving to a
different rate schedule. The effect of this migration will result in
the new rate schedule producing $1.187 million less in revenue,
which was added to the overall rate increase requested.

OUCC witness Watkins objected to the increase to the residential
customer charge. He testified that it violates gradualism, violates
efficient competitive pricing, and discourages conservation. Mr.
Watkins also opposed Dr. Gaske’s proposed migration
adjustment.5 The migration adjustment was based upon an
analysis of customers and a determination that a number of the
customers would be financially benefitted if they migrated to an
alternative rate schedule. Mr. Watkins claimed that one cannot
assume that a customer will choose to move to a more
economical rate. He noted that savings for most would be less
than 10%.

...

Joint Intervenor witness Howat also objected to the increase to
the customer charge and continuation of declining block rates.
He testified that rate structures such as these have a
disproportionate impact on low income, elderly, and African
American customers, and that on average, low income customers
use less electricity than the average or than their higher income
counterparts.

Industrial Group witness Phillips objected to the proposed
increase in the demand charge for the HL class. . . . Kroger

5
Migration refers to movement between an SS (energy only) rate and SL (demand plus energy) rate.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 9 of 23
 witness Higgins testified that he supports IPL’s proposed rate
design, including the increases to the demand charge for the HL
and SL classes. City witness Sommer disagreed with IPL’s rate
migration objective that no class receive a rate decrease. . . .

In rebuttal, Dr. Gaske responded to Mr. Watkins’ testimony
concerning economic efficiency and testified that economic
theory supports the concept that economic efficiency is promoted
by recovering fixed costs through a fixed charge and only
variable costs in a variable charge. He noted that IPL is not
proposing a straight fixed variable (“SFV”) rate design in this
case. He testified that while a SFV rate design would provide
better price signals, IPL’s proposed rates would continue to
recover 75% of residential fixed costs through the energy charge
and 81% of small commercial fixed costs. He agreed that
declining block rates are not as cost-justified as a SFV rate design,
but are more cost-justified than a flat energy charge in that the
declining block rate structure represents a reasonable
compromise approach in which successively larger rate blocks
move closer to the marginal cost of energy. He further responded
to Mr. Watkins’ contention that the increase in the customer
charge violates a principle of gradualism by noting that
gradualism looks at the total bill, which is the sum of both the
customer and energy charges. The proposed increase in
customer charge would significantly reduce the percentage
increase in energy charge that would otherwise be required and
thereby offset the increase in the customer charge which is the
focus of Mr. Watkins’ argument.

With respect to the Joint Intervenors’ position, Dr. Gaske cited
details concerning the percentage of residential customers who
are enrolled in the LIHEAP program and those who are not,
showing that, in general, the energy usage characteristics among
the residential class for LIHEAP customers are very similar to
the no-assistance customers. As a result, proposals for lower
customer charges and/or flat energy charges are likely to increase

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 the monthly bills of the significant portion of low income energy
assistance customers who have above-average energy use, and
reduce the bills of the significant portion of customers who are
not low income but have below-average energy use.

...

Discussion and Findings.

Increase in Residential Customer Charge and Continuation of Declining
Block Rates. There were only two arguments presented in
opposition to IPL’s customer charge proposal: Mr. Watkins’
contention that all costs are variable in the long run and therefore
SFV rates represent inefficient pricing, and Mr. Howat’s
testimony that Petitioner’s rate design produces a
disproportionate impact on low income customers.

As to the first argument, we note that IPL has not proposed SFV
rates. While the proposed increases in the customer charge from
$6.70 to $11.25 (for less than 325 kWh/month) and $11.00 to
$17.00 (for greater than 325 kWh/month) move toward a more
fixed and variable rate design consistent with traditional cost
causation principals, it is demonstrably short of SFV rates. There
is no evidence that the customer charge as designed even reaches
the level of full distribution system fixed cost recovery. Cost
recovery design alignment with cost causation principles sends
efficient price signals to customers, allowing customers to make
informed decisions regarding their consumption of the service
being provided. The Commission investigated the rate design
issue with regard to natural gas service in Cause No. 43180, and
the general premise appears to be reasonably applicable to
electric utilities in the context of distribution-related costs.
Notwithstanding, gradualism in any movement is a reasonable
consideration, and we find that the increase in customer charge is
consistent with the Commission’s preference for gradual changes

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 in rate structures. We note that IPL’s proposed customer charge
represents the first increase in the customer charge since base
rates were last changed in 1995.

With respect to the second argument, Dr. Gaske’s analysis
demonstrated that approximately 8-10% of the customers within
each residential class receive energy assistance, yet the median
usage and the 90th percentile usage for energy assistance
customers compared to no-assistance customers is similar. While
switching to an inclining block rate structure may benefit low
income/low energy users, it would harm a substantial number of
low income/high energy users. Many low-income customers use
more than the residential average amount.

Ultimately, we find that Petitioner’s proposed rate design to
increase the customer charge and maintain declining block rates
should be approved. We further find that this structure does not
violate principles of gradualism, because gradualism is best
considered in the context of the entire customer bill and not
discrete charges within the bill.

(App. at 91-96.)

[8] The Commission subsequently issued a Nunc Pro Tunc Order unrelated to this

appeal. On April 5, 2015, Joint Intervenors, IPL Group, and The Kroger

Company filed petitions seeking reconsideration of various aspects of the Order.

On June 1, 2016, the Commission denied those petitions. Joint Intervenors and

the OUCC filed notices of appeal. Subsequently, the OUCC filed a motion to

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 12 of 23
 dismiss its notice of appeal.6 The appeal initiated by Joint Intervenors

proceeded.

Standard of Review
[9] The Commission was created by the Indiana General Assembly to act

“primarily as a fact-finding body with the technical expertise to administer the

regulatory scheme designed by the legislature.” Northern Ind. Public Serv. v. U.S.

Steel, 907 N.E.2d 1012, 1015 (Ind. 2009). The Commission was assigned the

responsibility “to insure that public utilities provide constant, reliable, and

efficient service to the citizens of Indiana.” Id. The Commission can exercise

only that power which has been conferred upon it by statute. Id.

[10] This statutory scheme reflects a basic legislative policy that questions of rate-

making methodology are best consigned to the Commission’s expertise. L.S.

Ayres & Co. et al. v. IPALCO et al., 169 Ind. App. 652, 675-76, 351 N.E.2d 814,

830 (1976). In each rate proceeding, the Commission’s primary objective is to

establish a level of rates and charges that will permit the utility to meet its

operating expenses plus a return on investment which will compensate its

investors. City of Evansville v. Southern Ind. Gas & Elec. Co., 167 Ind. App. 472,

479, 339 N.E.2d 562, 568 (1976).

6
The OUCC petitioned to be retained as a statutory party on appeal. This Court granted that motion on
August 4, 2016.

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[11] Indiana Code Section 8-1-3-1 provides for judicial review of the Commission’s

decisions in language almost identical to provisions for judicial review of other

administrative agency actions:

Any person, firm, association, corporation, limited liability
company, city, town or public utility adversely affected by any
final decision, ruling, or order of the commission may, within
thirty (30) days from the date of entry of such decision, ruling, or
order, appeal to the court of appeals of Indiana for errors of law
under the same terms and conditions as govern appeals in
ordinary civil actions, except as otherwise provided in this
chapter and with the right in the losing party or parties in the
court of appeals to apply to the supreme court for a petition to
transfer the cause to said supreme court as in other cases. An
assignment of errors that the decision, ruling, or order of the
commission is contrary to law shall be sufficient to present both
the sufficiency of the facts found to sustain the decision, ruling,
or order, and the sufficiency of the evidence to sustain the finding
of facts upon which it was rendered.

[12] Our review is two-tiered:

On the first level, it requires a review of whether there is
substantial evidence in light of the whole record to support the
Commission’s findings of basic fact. Citizens Action Coalition of
Ind., Inc. v. N. Ind. Pub. Serv. Co., 485 N.E.2d 610, 612 (Ind.
1985). Such determinations of basic fact are reviewed under a
substantial evidence standard, meaning the order will stand
unless no substantial evidence supports it. McClain [v. Review Bd.
Of Ind. Dept. of Workforce Dev., 693 N.E.2d 1314, 1317-18 (Ind.
1998)]. In substantial evidence review, “the appellate court
neither reweighs the evidence nor assesses the credibility of
witnesses and considers only the evidence most favorable to the
Board’s findings.” Id. The Commission’s order is conclusive and
binding unless (1) the evidence on which the Commission based
Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 14 of 23
 its findings was devoid of probative value; (2) the quantum of
legitimate evidence was so proportionately meager as to lead to
the conviction that the finding does not rest upon a rational basis;
(3) the result of the hearing before the Commission was
substantially influenced by improper considerations; (4) there
was not substantial evidence supporting the findings of the
Commission; (5) the order of the Commission is fraudulent,
unreasonable, or arbitrary. Id. at 1317 n.2. This list of
exceptions is not exclusive. Id.

At the second level, the order must contain specific findings on
all the factual determinations material to its ultimate conclusions.
Citizens Action Coalition, 485 N.E.2d at 612. McClain described
the judicial task on this score as reviewing conclusions of
ultimate facts for reasonableness, the deference of which is based
on the amount of expertise exercised by the agency. McClain,
693 N.E.2d at 1317-18. Insofar as the order involves a subject
within the Commission’s special competence, courts should give
it greater deference. Id. at 1318. If the subject is outside the
Commission’s expertise, courts give it less deference. Id. In
either case courts may examine the logic of inferences drawn and
any rule of law that may drive the result. Id. Additionally, an
agency action is always subject to review as contrary to law, but
this constitutionally preserved review is limited to whether the
Commission stayed within its jurisdiction and conformed to the
statutory standard and legal principles involved in producing its
decision, ruling, or order. Citizens Action Coalition, 485 N.E.2d at
612-13.

Northern Indiana Public Serv., 907 N.E.2d at 1016.

Declining Block Rates – Disparate Impact
[13] At the hearing, Joint Intervenors opposed a rate scheme inclusive of DBR, that

is, the volumetric charge decrease from $0.093935 to $0.070346 after the first

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 500 kilowatt hours of usage. Joint Intervenors argued that this is a disincentive

for conservation and disproportionately harms elderly, African-American, and

low income customers.

[14] In response to an inquiry about the “general public policy” applicable to DBR,

Watkins testified:

In 1978, Congress passed the Public Utility Regulatory Policies
Act (“PURPA”). Among other things, PURPA established
various conservation initiatives and mandates for electric utilities.
Included in this Act is a clear policy to eliminate declining-block
energy rates unless supported by costs. Specifically, PURPA
states:

‘Declining Block Rates. The energy component of a rate, or the
amount attributable to the energy component in a rate, charged
by any electric utility for providing electric service during any
period to any class of electric consumers may not decrease as
kilowatt-hour consumption by such class increases during such
period except to the extent that such utility demonstrates that the
costs to such utility or providing electric service to such class,
which costs are attributable to such energy component, decrease
as such consumption increases during such period.’

Since this time, most states and commissions have abandoned
the once prevalent declining-block rate structures in favor of flat,
or inverted, block rates. The general policy supporting the
elimination of such declining-block rates is that this type of rate
structure is clearly at odds with energy conservation due to the
fact that the incremental price of electricity decreases as
consumption increases, thereby creating somewhat of an
incentive to use more and more electricity. Indeed, declining-
block electricity rates became popular in the 1960s and early
1970s and were used as a promotional tool to encourage the

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 increased usage of relatively cheap electricity during a time in
which there were significant natural gas shortages through the
Country.

(Tr. at 8210.)

[15] On appeal, Joint Intervenors claim that the Commission’s order “is deficient

because the Commission failed to make basic findings of fact or a conclusion of

law as to whether DBR has a deleterious effect on energy conservation and

energy efficiency programs sponsored by the utility.” Appellant’s Br. at 25.

According to Joint Intervenors, the Commission “ignored the substantial

evidence presented by both CAC and the OUCC, demonstrating that ‘this type

of structure is clearly at odds with energy conservation due to the fact that the

incremental price of electricity decreases as consumption increases, thereby

creating somewhat of an incentive to use more and more electricity.”’

Appellant’s Br. at 27 (quoting App. at 190-91). They ask that we remand the

order “for the Commission to determine whether the DBR rate structure is

deleterious to energy conservation and utility-sponsored energy efficiency

programs.” Appellant’s Br. at 30.

[16] We do not find this particular relief warranted. Joint Intervenors did not bring

a declaratory judgment action; rather, they intervened in a rate case. Rate-

making is a legislative as opposed to a judicial function, and our Indiana

Legislature has seen fit to establish a commission for the express purpose of

hearing evidence and balancing and weighing the many complicated factors

which must be taken into consideration in setting utility rates. State ex rel.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 17 of 23
 Indianapolis Water Co. v. Boone Circuit Court, 261 Ind. 583, 586-87, 307 N.E.2d

870, 872 (1974). The enabling act does not authorize the Commission to issue

declaratory rulings. See U.S. Steel Corp. v. No. Ind. Public Serv. Co., Inc., 482

N.E.2d 501, 506 (Ind. Ct. App. 1985), trans. denied.

[17] In their insistence upon particular language, Joint Intervenors attempt to shift

the focus from the reasonableness of the order approving the rate change as a

whole to one component. As the Commission acknowledged, an ideal rate

scheme would closely align recovery of fixed costs with fixed rates and variable

costs with variable rates based upon usage. However, there was ample

testimony to support the Commission’s conclusions that, in light of the fact that

IPL’s base rates had not been increased since 1995, an abrupt rate structure

overhaul ignoring the principles of gradualism would be undesirable.

Ultimately, the Commission incorporated the principle of “gradualism,” (App.

at 96), and approved a rate structure that was not a straight fixed rate/variable

rate structure.

[18] Joint Intervenors make a cursory claim that “approval of DBR despite its

deleterious effect on energy conservation is contrary to federal law, state rule,

and existing precedent.” Appellant’s Br. at 27. They note that the National

Energy Policy Act of 1992 encourages state regulators of utilities to consider

setting rates to promote energy efficient investments. They also note that, in a

separate utility case, the Commission found the utility’s proposal to gradually

eliminate DBR rates to be reasonable. See In re Verified Petition of So. Ind. Gas &

Electric Co., Cause No. 43839, 2011 Ind. PUC LEXIS 115, 215 (I.U.R.C. Apr.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 18 of 23
 27, 2011). The parties do not dispute the proposition that public policy, federal

and State, favors and encourages conservation.

[19] Nonetheless, encouragement is not a mandate. Joint Intervenors direct us to no

statutory requirement that each individual component of a rate scheme reflect

the most environmentally conservative approach or that abandonment of older

methodology be immediate and total. At bottom, Joint Intervenors suggest a

reweighing of evidence, with conservation – based upon their interpretation of

customer usage signals – being paramount. They do not demonstrate the

unreasonableness of the rate increase as a whole.

[20] In a similar vein, Joint Intervenors argue that the Commission “did not make

any specific findings of fact or make an ultimate finding of reasonableness as to

the material issue raised regarding whether the continuance of the DBR

structure disproportionately harms elderly consumers and African American

consumers.” Appellant’s Br. at 31. Joint Intervenors observe that the

Commission has a duty to see that the rates are fair and reasonable, both to the

consumers and to the utility; claim that “no party rebutted the [Joint

Intervenor] evidence on this issue”; and ask for remand “to determine whether

the DBR rate structure disproportionately harms elderly and African American

ratepayers.” Appellant’s Br. at 31-32.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 19 of 23
[21] Joint Intervenors presented testimony to the effect that lower income customers

use less electricity on average.7 IPL presented testimony that their customers

participating in energy assistance programs show similar characteristics of

usage compared to customers not receiving assistance, looking at median usage

and 90th percentile usage. Even assuming that DBR has a disproportionate

negative impact upon certain groups of customers, the Commission is required

by statute to approve rates that are fair and reasonable inclusive of the entire

customer base. There is no statutory requirement that the impact upon

particular sub-groups be separately addressed. Joint Intervenors have not

demonstrated that the Commission failed to conform to statutory standards.

[22] “On matters within its jurisdiction, the Commission enjoys wide discretion.

The Commission’s findings and decision will not be lightly overridden just

because we might reach a contrary opinion on the same evidence.” NIPSCO

Indus. Grp. v. No. Ind. Public Serv. Co., 31 N.E.3d 1, 5-6 (Ind. Ct. App. 2015)

(internal citation omitted.) As explained by Watkins, “it is generally accepted

that to the extent possible, joint costs should be allocated to customer classes

based on the concept of cost causation,” but “although there are certain

principles used by all cost of service analysts, there are often significant

disagreements on the specific factors that drive individual costs.” (Tr. at 8147-

48.)

7
The data base was not limited to IPL or Indiana customers.

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 20 of 23
[23] Challengers have the burden of showing there is insufficient evidence in the

record to support the findings of the Commission; they cannot merely cite to

other evidence of record which would support a determination more favorable

to their position. Bethlehem Steel Corp. v. N. Ind. Pub. Serv. Co., 397 N.E.2d 623,

628 (Ind. Ct. App. 1979). Here, the findings contain enough detail such that we

can determine whether the order is reasonable, within the wide discretion of the

Commission.

Subsidy Program and Reporting Requirements
[24] Joint Intervenors complain that the Commission did not make sufficient

findings to support its rejection of Joint Intervenors’ requests for a 25% subsidy

to low-income customers and for mandatory reporting of service interruption

events so as to assist the Intervenors in supporting future arguments with such

data. As a threshold matter, we observe that Joint Intervenors argue that the

Commission must make findings with respect to disparate socioeconomic

impact of rate increases, but have not shown that the Commission had a

statutory duty to make any findings at all in this regard. Joint Intervenors were

permitted to intervene in a rate-making case, but this did not change the nature

of the proceeding from rate-making to a broad socio-economic inquiry akin to

that which might be undertaken by the General Assembly.

[25] The Commission is to approve rates that are just and reasonable. Within the

statutory language, there is no requirement that the unique position of

particular groups of consumers be separately considered. Joint Intervenors are

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 21 of 23
 not entitled to specific findings on propositions they have injected unless it is a

matter material to the rate decision. Citizens Action Coalition, 485 N.E.2d at 612.

In other words, the Commission does not have to justify to Joint Intervenors

why it rejected a subsidy outside general rate-making principles and a reporting

obligation. Joint Intervenors had to justify to the Commission why a direct

subsidy and reporting requirement should be adopted within a rate case. They

failed to do so.

[26] That said, the Commission has shown some inclination to hear socio-economic

evidence in a rate case. It did not simply ignore the Joint Intervenors’

argument. Rather, after hearing limited evidence, the Commission

acknowledged the need for broader-based evidence and observed that the

legislature is better suited to determinations of if and when one citizen is

burdened to benefit another. Undeniably, lower income persons at times

struggle to obtain basic necessities. But the struggle for necessities of life is

broader; what of those who have above-poverty incomes but increased

expenses, a larger family size, or significant medical needs? The drawing of

lines in the face of myriad considerations and competing concerns is

traditionally a function performed by our General Assembly. See Citizens Action

Coalition v. Public Serv. Co., 450 N.E.2d 98, 103 (Ind. Ct. App. 1983) (affirming

the Commission decision declining to require Indiana electric utilities to offer a

“life-line” rate structure providing a below-cost rate for essential residential

customer needs and observing, “any decision to implement an assistance

Court of Appeals of Indiana | Opinion 93A02-1604-EX-804 | April 5, 2017 Page 22 of 23
 program not based on sound regulatory principles must be made by the

legislature.”)8

[27] Again, Joint Intervenors have not shown that the Commission failed to

conform to statutory standards or failed to make requisite findings.

Conclusion
[28] Joint Intervenors have not shown that the Commission decision approving a

rate design that includes DBR is unsupported by requisite findings. Joint

Intervenors have not shown that the rate approval order is non-binding due to a

lack of more extensive factual findings on matters introduced by Joint

Intervenors which were not directly material to components of the approved

rate design.

[29] Affirmed.

Najam, J., and May, J., concur.

8
In the order affirmed on appeal, the Commission found that a rate “targeted” to specific income or
demographic groups of residential customers was prohibited by law and a general lifeline rate structure was
not an effective and equitable means of providing assistance to low-income residential customers. Citizens
Action Coalition, 450 N.E.2d at 100.

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