ILNews

Duke can charge ratepayers for time construction delayed on Edwardsport plant

Back to TopCommentsE-mailPrintBookmark and Share

The Indiana Court of Appeals has affirmed grant of Duke Energy Indiana’s request to include the amount spent during an 80-day delay in construction of the coal gasification plant in Edwardsport in a rate adjustment rider. Several parties intervened, claiming construction delays attributable to Duke should not be chargeable to ratepayers.

Citizens Action Coalition of Indiana, Save the Valley Inc., Sierra Club Inc. and Valley Watch Inc. appealed the Indiana Utility Regulatory Commission’s order approving Duke’s request to include power plant construction costs incurred April 1, 2012 – Sept. 30, 2012. The costs are included in a rate adjustment rider through implementation of a settlement agreement between Duke, the Office of the Utility Consumer Counselor and other entities over the total cost of the Edwardsport plant.

It was first estimated to cost $1.985 billion – in which construction and operating costs are recoverable from ratepayers – but the costs soared to $2.35 billion. The settlement agreement put a hard cap of $2.595 billion for construction costs to be included in rates over a 30-year period.

The plant, which began commercial operations in 2013, ultimately had an approved cost of $2.88 billion.

The interveners argued in Citizens Action Coalition of Indiana, Inc., Save the Valley, Inc., Sierra Club, and Valley Watch, Inc. v. Duke Energy Indiana, Inc., Indiana Office of Utility Consumer Counselor, et al., 93A02-1310-EX-835, that the commission applied an incorrect statutory standard that placed an undue burden on them when it approved the total of requested construction-related financing costs, despite the 80-day delay in construction.

“Our examination of the plain language leads us to agree with Duke that 8-1-8.8-12 concerns the initial application for financial incentives. We are not persuaded that, once a utility has demonstrated its eligibility for clean energy financial incentives, the Commission is obliged to go beyond a reasonableness or prudence review to conduct a line item review to ascertain ‘substantial documentation,’” Judge L. Mark Bailey wrote.  

“Interveners insist that this Court need not afford the Commission a high level of deference as to this matter. In other words, Interveners ask that we reweigh the evidence, find credible the testimony that Duke simply should not have let the delay happen, and order a reduction in the amount of construction costs allowed. This we cannot do. The allowance of costs is inherent in the ratemaking process and we accord deference to the Commission. The Commission did not act contrary to law when it found the ‘technical problems associated with human errors, equipment failures, or a combination of the two ... within the control of the Company or its contractors” did not preclude Duke’s recovery of its costs,’” he wrote.

The interveners also claimed the commission disregarded relevant caselaw by approving capitalized financing costs that allowed a return on capital contributed from ratepayers attributable to deferred taxes. But the Court of Appeals again affirmed the commission’s decision, pointing out that this issue has already been litigated.

“Ultimately, the Commission is charged with the independent oversight of ratemaking decisions. The Commission is in the best position to determine a proper rate of return on capital from utility investors, and we defer to their expertise where appropriate. Interveners were given a full and fair opportunity, in the context of the settlement proceedings and appeal, to demonstrate that deference would not be warranted in these circumstances because an improper mathematical computation allowed a return on customer investment. Having fully litigated the propriety of the AFUDC calculation in the prior appeal, Interveners are not entitled to a second bite at the apple,” Bailey wrote.

 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. CCHP's real accomplishment is the 2015 law signed by Gov Pence that basically outlaws any annexation that is forced where a 65% majority of landowners in the affected area disagree. Regardless of whether HP wins or loses, the citizens of Indiana will not have another fiasco like this. The law Gov Pence signed is a direct result of this malgovernance.

  2. I gave tempparry guardship to a friend of my granddaughter in 2012. I went to prison. I had custody. My daughter went to prison to. We are out. My daughter gave me custody but can get her back. She was not order to give me custody . but now we want granddaughter back from friend. She's 14 now. What rights do we have

  3. This sure is not what most who value good governance consider the Rule of Law to entail: "In a letter dated March 2, which Brizzi forwarded to IBJ, the commission dismissed the grievance “on grounds that there is not reasonable cause to believe that you are guilty of misconduct.”" Yet two month later reasonable cause does exist? (Or is the commission forging ahead, the need for reasonable belief be damned? -- A seeming violation of the Rules of Profession Ethics on the part of the commission) Could the rule of law theory cause one to believe that an explanation is in order? Could it be that Hoosier attorneys live under Imperial Law (which is also a t-word that rhymes with infamy) in which the Platonic guardians can do no wrong and never owe the plebeian class any explanation for their powerful actions. (Might makes it right?) Could this be a case of politics directing the commission, as celebrated IU Mauer Professor (the late) Patrick Baude warned was happening 20 years ago in his controversial (whisteblowing) ethics lecture on a quite similar topic: http://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1498&context=ilj

  4. I have a case presently pending cert review before the SCOTUS that reveals just how Indiana regulates the bar. I have been denied licensure for life for holding the wrong views and questioning the grand inquisitors as to their duties as to state and federal constitutional due process. True story: https://www.scribd.com/doc/299040839/2016Petitionforcert-to-SCOTUS Shorter, Amici brief serving to frame issue as misuse of govt licensure: https://www.scribd.com/doc/312841269/Thomas-More-Society-Amicus-Brown-v-Ind-Bd-of-Law-Examiners

  5. Here's an idea...how about we MORE heavily regulate the law schools to reduce the surplus of graduates, driving starting salaries up for those new grads, so that we can all pay our insane amount of student loans off in a reasonable amount of time and then be able to afford to do pro bono & low-fee work? I've got friends in other industries, radiology for example, and their schools accept a very limited number of students so there will never be a glut of new grads and everyone's pay stays high. For example, my radiologist friend's school accepted just six new students per year.

ADVERTISEMENT