Despite its easy approval by the Senate, legislation establishing a new energy efficiency program for the state faces heavy criticism from environmental and consumer advocacy groups. Much of the outcry comes because of what’s known as “lost revenue recovery.”
If the energy efficiency legislation works as planned Hoosiers will use less energy, which means utility companies will get less money. That’s why lost revenue recovery is built into the bill – essentially, utilities can raise customers’ rates to recover revenue lost because of energy efficiency. A change made in the Senate requires an independent third party to verify just how much revenue is lost. But Hoosier Environmental Council Executive Director Jesse Kharbanda says the bill should cap the amount of lost revenue utilities can recover from their customers. And he says that’s not just because it will help lower energy bills.
“But also because politically it will make these programs vulnerable to being clamped down by the legislature in the future if those prices become unaffordable,” says Kharbanda.
Indianapolis Republican Senator Jim Merritt, the bill’s author, says he’s open to the concept of capping lost revenue. The legislation is now in the House.
