Indiana electric bills are up. Here’s why.

Indiana residents saw electric costs surge last year, with July bills going up by as much as 27% for some households.

Those high costs have driven backlash from ratepayers around the state. People in Evansville protested in the streets and a local bar shut off its own lights in response to CenterPoint Energy rate increases last year. An anti-NIPSCO Facebook group has attracted more than 36,000 members upset with the northern Indiana utility. And people regularly take to the Indianapolis Reddit page to ask: Why is my AES bill so high?

State leaders have taken notice. One of the legislature’s signature bills in 2026 will help some low-income ratepayers avoid shutoffs during periods of high heat, among other changes. Gov. Mike Braun — who says energy affordability is one of his top priorities — ousted the chairman of the Indiana Utility Regulatory Commission this week after it approved a rate increase for AES.

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That shakeup at the IURC came despite the commission’s attempt to highlight affordability this spring by holding listening sessions across the state and questioning executives from the five investor-owned electric utilities at a public inquiry.

So what’s behind rising bills in recent years? Hot and cold weather always drive up costs, but there are other factors behind recent increases, from investments in infrastructure to higher fuel costs. At the same time, new data centers built to power AI could drive rates up even higher.

Rate approval process

Most Indiana electric consumers are served by one of five investor-owned utilities that are overseen by the state regulatory commission. When energy companies want to charge more per kilowatt hour, they need to ask for approval.

Utilities have won increases in base rates in several recent cases, including CenterPoint, which serves Evansville and the surrounding area, and NIPSCO. Those two utilities, which already had the highest bills for homes using 1,000 kilowatt hours in the state, had the largest increases last year, according to data from the IURC.

Investments in infrastructure

When utilities spend on infrastructure and maintenance, it’s passed on to consumers. That includes building new plants, keeping existing ones running — like the aging coal plants the Trump administration ordered NIPSCO and CenterPoint to keep open — and maintaining the grid.

“We have an aging and aged electrical grid, particularly our distribution and transmission systems,” said Tremaine Phillips, an energy consultant and former member of the commission that regulates Michigan utilities.

That system — which includes power lines that go the last mile to homes and high-voltage lines on highways — has gotten less attention historically, Phillips said. “There is now a need to continue to retrofit, to repair and replace components of that system.”

Indiana’s utilities say they have made necessary investments that comply with regulations, increase safety and improve service for consumers by reducing outages. At the IURC affordability inquiry, a CenterPoint official said the average number of minutes power was out for customers declined by 57% since 2018.

The cost for improvements has been driven up by inflation, said Shane Bradford, a vice president for CenterPoint.

“With these cost increases, we’ve remained focused on only necessary investments that support safe, reliable, and cost-effective service for our customers,” Bradford said.

Profits can drive up costs

IURC-approved rates include built-in profits for investor-owned utilities. That means rates not only account for costs like maintenance and investments in infrastructure, they also include an approved rate of return.

Those margins aim to attract investment but critics say because utilities earn them on investments like building power plants and not regular maintenance like tree trimming, they can incentivize companies to spend big and pass the costs on to consumers.

A sample CenterPoint Energy bill. Credit: Jenna Watson/FPI News

The rates of return vary by utility, but they are close to 10% for Indiana investor-owned electric providers, according to Ben Inskeep, program director at the Citizens Action Coalition, an Indianapolis-based advocacy organization.

While those returns are similar to the national average, consumer advocates like Inskeep argue they are higher than they should be.

“Utilities repeatedly are getting very high guaranteed profit margins that are then built into our rates and that are artificially increasing our cost of electricity,” Inskeep said.

At the IURC affordability hearing, utility officials pushed back on the idea that they make investment decisions based on the potential to earn returns set by the state.

“The capital investments that we’re making in the system are really driven by need,” said Andrew Williamson, vice president of regulatory and finance for Indiana Michigan Power. The company must offer “fair” returns to attract investors, he added.

Rising fuel costs passed on to consumers

Base rates are not the only costs on an electric bill. Customers are also required to pay so-called “trackers,” which can change more often.

Fuel charges can fluctuate throughout the year based on the costs utilities must pay for the fuel they use to generate electricity. When fuel costs go up because of weather or global conflict, that cost is passed on to consumers.

Data centers could drive up prices

As new data centers are built across Indiana, they could continue to push up electric costs.

Wholesale power prices have increased in parts of the country near data centers, according to a Bloomberg News analysis. And if energy demand exceeds current capacity, Indiana utilities may have to build new power plants, and those costs could be passed on to residential ratepayers.

Inskeep argues the data center boom is already increasing consumer bills, and as new centers are built, costs will go up even further.

“We’re talking about sites that use more power than an entire city — just at one facility,” Inskeep said. “This is just unprecedented in every way.”

Or data centers could help pay for grid upgrades

Indiana utilities have taken some steps to make data centers foot the bill for investments in the electric grid. A recent agreement between Indiana Michigan Power, consumer advocates and three incoming data centers created new tariffs for large load customers such as data centers. NIPSCO has created an affiliate for data center power generation that the company says will protect residential ratepayers.

Phillips, who works with a national energy affordability advocacy group called PowerLines, said data centers could help finance essential improvements to the grid.

“But that doesn’t happen by accident,” Phillips said. It requires regulatory reform from state public utility commissions, governors’ offices and legislatures — and business model reform by utilities.

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FPI News reporter Dylan Peers McCoy covers pressing issues throughout the state and how local communities are tackling those challenges. Reach her at 508-259-4809 or dylan.mccoy@fpinews.org.