Indiana Governor Eric Holcomb announced last week that he selected State Representative Dave Ober (R-Albion), chair of the House Committee on Utilities, Energy and Telecommunications and frequent recipient of utility contributions and gifts, to fill a vacancy on the body that oversees those same companies.
During his time in the House, Ober had received thousands of dollars in campaign contributions and gifts from the electric and water utilities that he will now be responsible for regulating.
An Energy and Policy Institute review of Indiana lobbying records and campaign contributions shows that since 2012, Ober has taken $24,000 from utilities and electric cooperatives. American Electric Power alone has contributed $8,900. AEP’s subsidiary, Indiana Michigan Power (IMP), serves over 450,000 customers in the state.
Furthermore, since 2015, Ober has accepted nearly $3,000 in gifts from utilities – the bulk of which came from Duke Energy, which serves 820,000 customers in Indiana, and the utilities’ lobbying group the Indiana Energy Association (IEA).
Most of the gifts are classified as “legislative entertainment” and don’t provide details. For instance, Duke Energy gave Ober a $405 “entertainment” gift on July 7, 2017, just a few months after Gov. Holcomb signed the anti-solar legislation. But a few records are more specific; Ober received an IEA gift of $616.04 expense for a golf outing, meal, refreshments, and concert tickets.
By joining the IURC, an administrative agency, Ober will no longer be able to accept gifts from persons who have a business relationship with the IURC. However, that ban does not extend to trade associations such as the Edison Electric Institute, American Gas Association, and presumably the IEA, as noted in a 2013 Indiana State Ethics Commission opinion. As the Energy and Policy Institute has revealed on several occasions, utility regulators regularly receive gifts from trade associations in the form of travel, entertainment, and meals. These events present opportunities for industry lobbyists to further wine and dine regulators.
History of supporting utility-friendly legislation
Last year, Ober made headlines when he co-sponsored SB309, the controversial legislation that phased-out the state’s net metering policy; the policy had allowed solar generators to be compensated for any extra electricity they sell back to the grid at the same rates at which they buy electricity from utilities.
The legislation was backed by Indiana utility companies along with the IEA, which argued without basis that the legislation “shifted costs” from solar customers to non-solar customers. Mark Maassel, president of IEA, admitted to the IndyStar that no study had been done to justify the change to the net metering rates and the need for the legislation.
The cost-shift argument used in Indiana echoed industry talking points from monopoly utilities, many of which have been debunked. The most recent data from the Department of Energy’s Lawrence Berkeley National Laboratory (LBNL) finds that a cost-shift does not occur until distributed solar penetration reaches 10% of electricity sales, and even then that the impact is minimal compared to other drivers of rate increases, like new gas plants or transmission lines. Solar net metering had been growing in Indiana, but it made up one-tenth of one percent of demand last year, providing a prime example of a place where any kind of cost shift argument is unfounded, but where cutting net metering would surely stunt distributed solar’s nascent growth. Indeed, Maassel again admitted that the impact of his claimed cost shift is negligible in Indiana because there are so few solar customers.
“The economic implications of this bill were just not thought through … I don’t think lawmakers really appreciated the potential of the solar industry to Indiana,” Jesse Kharbanda, director of the Hoosier Environmental Council told the IndyStar.
Ober, to his credit, lessened the blow the solar industry could have been dealt if he had not minimally improved the legislation from the original version authored by Sen. Brandt Hershman. Ober added an amendment that bars utilities from seeking even lower reimbursement rates in the future from the IURC. However, as reporter Katie Stancombe noted, “the amendment would not change the fact that those who benefit from net metering after 2022 will still be credited at a lesser wholesale rate than the current higher retail rate.”
The anti-rooftop solar bill SB309 was not the only utility-friendly legislation Ober supported during his six years in the General Assembly. The newly appointed commissioner has voted for utility-friendly bills that have cemented into law a flawed certificate of need process for utilities (2014 HB 1162) that according to Citizens Action Coalition, “creates the false appearance that Indiana now has a ‘competitive’ process in place” – likely allowing utilities to have an easier time getting approval to build unnecessary power plants. Ober also voted for legislation that dismantled the state’s energy efficiency program (2014 SB 340), and replaced the efficiency program with an unenforceable program (2015 SB 412).
Upcoming Regulatory Decisions will be Telltale
The IURC faces several critical decision in the coming months. For instance, Indianapolis Power & Light proposed in its December 2017 rate case filing to increase the monthly fixed charge on most customers to $27 per month – a 59% increase – and to increase base rates by 25%.
IMP had proposed a base rate increase of 25% and a fixed charge increase of 147%, but recently settled to raise the fixed charge from $7.30 to $10.50. The IURC has to approve the settlement.
IMP also has indicated that they do not want to renew their lease of Unit 2 at the Rockport coal plant when it expires in December 2022, but that it wants ratepayers to pay for pollution control upgrades that will cost millions of dollars in the meantime. Consumer advocates have contended to the IURC that IMP has failed to satisfy the burden of demonstrating that installing the equipment is just, reasonable, and the least-cost option.
Vectren filed a petition to the IURC last month to build a $900 million 800-900 megawatt natural gas plant. Sierra Club’s Beyond Coal Campaign in Indiana released a statement after the filing that criticized the petition: “Vectren’s proposed fracked gas plant is larger than the coal-burning power plants it would replace. We are concerned that a plant this size will crowd out the need for any meaningful investments in renewable energy for 40 to 50 years.”
Ober announced in January that he would not seek reelection for the part-time legislature because his fiancee lives in Indianapolis and he represents a district in the northeastern part of the state that is about two hours away from the capitol building, which contributed to his application to the IURC. “It seemed like the right opportunity,” Ober told The Journal Gazette. “We’ll see where that goes. We had to make a decision over the weekend so there is plenty of time for others to file [for the primary].”
Last month, a coalition made up of the Citizens Action Coalition, Indiana Chapter of the NAACP, Sierra Club, Hoosier Environmental Council, and Hoosier Interfaith Power & Light urged Gov. Holcomb to break with the selection process and appoint a leader that will look out for the people most impacted by utilities:
“According to the NAACP, most public utility commissioners in the United States are white, male, and mid- to high-wealth individuals. Two white men and two white women now sit on the Indiana Commission, with one vacancy. The candidates you are choosing from will add no racial inclusion; six of the seven are white males and one is a white female. The nominating committee, appointed by you and state legislative leaders, contains only white men.
Who will speak for Indiana’s most impacted populations when evidence comes before the Commission? Who will understand the difficulty many Hoosiers face due to declining incomes and rising costs? Who will have the courage to reject frequent, costly utility requests to keep operating aging power plants that are no longer needed, or that are too expensive to operate and maintain?”
While Gov. Holcomb continued on with the process and selected Ober, the former representative does bring youth to the commission. The 30-year-old commissioner was a co-founder of a bipartisan caucus comprised of legislators under the age of 40 to be “a voice for millennial Hoosiers, who make up more than a quarter of state’s total population.”
The upcoming decisions Ober faces will indicate if he will bring a fresh perspective to the regulatory body to help transition the state away from fossil fuels, or whether his track record of working hand-in-glove with the state’s utilities follows him to the Commission.