COA affirms for Duke Energy to raise customers’ rates

Duke Energy successfully defended itself Thursday from a lawsuit brought by a group of its customers after the Indiana Utility Regulatory Commission partially granted the electric giant’s petition to raise its base rates.

In July 2019, Duke Energy filed with the IURC a petition for authorization to increase its retail rates and charges for electric utility service. In the petition, Duke requested the IURC to investigate all aspects of its operations and to approve its suggested rate increases.

The Indiana Office of Utility Consumer Counselor, along with a group of Duke’s industrial electricity customers and other entities, opposed the petition, arguing that revenue requirements should be reduced rather than increased, resulting in lower electricity rates for Duke’s retail customers. After extensive proceedings, however, the IURC issued an order granting in part and denying in part Duke’s petition.

As a result, the OUCC and customer group claimed on appeal that the IURC erred in allowing Duke to recover from ratepayers money that it spent to dispose of coal ash.

The customers group raised two additional issues on appeal:

  • Whether the IURC erred in accepting Duke’s jurisdictional separation study allocating costs between Duke’s retail and wholesale electricity customers; and
  • Whether the IURC erred in granting in full Duke’s request to recover operating and maintenance costs at its Edwardsport, Indiana, power plant.

Finding the IURC did not err in either regard, the Indiana Court of Appeals affirmed in Indiana Office of Utility Consumer Counselor, et al. v. Duke Energy Indiana, LLC, et al., 20A-EX-01404.

Deciding a mixed question of law and fact, the appellate court initially concluded that the IURC did not err in approving Duke’s coal ash remediation costs. Neither, it found, was there an error in the IURC’s approval of Duke’s jurisdictional separation study.

“The Group claims that the IURC should not have accepted the study as the basis for allocating revenue and costs between wholesale and retail customers, arguing that the study inappropriately burdens Duke’s retail customers with unneeded production capacity that Duke had previously dedicated to its wholesale customers,” Senior Judge John Baker wrote.

“The IURC, as the finder of fact, weighed the parties’ evidence and credited Duke’s analysis of its production capacity over that of the Group. We will not second-guess the finder of fact,” it concluded. “The IURC did not err on this issue.”

Lastly, the appellate court concluded that the IURC did not err in granting Duke’s request to recover in full its requested amount of O&M costs for the Edwardsport plant. It found that for the purposes of the question of Duke’s O&M expenses at Edwardsport, Ayres and City of Evansville were factually distinguishable.

“The IURC’s final order in this case considered the parties’ arguments in detail and directly addressed the question of whether Duke should be allowed to recover O&M [operations and maintenance] costs, including gasification-related costs,” the appellate court wrote.

“By contrast, the Commission’s decisions in (L.S. Ayres & Co. v. Indianapolis Power & Light Co., 169 Ind. App. 652, 662, 351 N.E.2d 814, 822 (1976)) and (City of Evansville v. S. Ind. Gas & Elec. Co., 167 Ind. App. 472, 516, 339 N.E.2d 562, 589 (1975)) did not address the claims at issue in depth, if at all. We conclude the IURC did not err in granting Duke’s request to recover in full its requested amount of O&M costs for the Edwardsport plant.”

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