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The Indiana Court of Appeals overturned an Indiana Utility Regulatory Commission decision allowing Duke Energy to raise utility rates on Hoosiers, with the court ruling the utility couldn’t retroactively recover the money it lost due to a federally mandated cleanup of toxic coal ash.
With its opinion issued Tuesday, the appellate court also ruled that the Citizens Action Coalition had standing to appeal the commission’s decision.
In reversing the commission’s decision, the appellate court ruled that the regulatory commission impermissibly applied the amended Federal Mandate Statutes retroactively to Duke’s August 2023 rate hike application, which the utility sought to recover the costs it had incurred between 2015 and 2018 for bringing its treatment and disposal of coal ash into federal compliance
The court remanded the case with instructions for the commission to either reconsider Duke’s application in a way that is consistent with the court’s opinion or dismiss it entirely.
McKenzie Barbknect, lead communications manager for Duke Energy, told The Indiana Lawyer that the utility is reviewing the appellate court’s ruling.
Luke Wilson, IURC’s executive director of external affairs, told The Lawyer the commission cannot comment on the court’s decision because it’s still in its appeal window.
The coalition did not immediately respond to The Lawyer’s request for comment.
According to court records, in July 2019, Duke Energy filed an application with the commission to increase its utility rates in the state so the energy company could recover the money it lost between 2015 and 2018 in order to comply with 2015 rules by the U.S. Environmental Protection Agency for treating and disposing coal ash.
Duke also sought to increase its rates for compliance costs that began in 2018 and for expected costs through 2028.
While the regulatory commission granted Duke’s requests, the Indiana Supreme Court reversed the decision, noting that Indiana Code does not allow for “retroactive ratemaking.”
In the appeals process, the state appellate court reversed the commission’s decision to grant Duke’s request to cover past expenditures, but affirmed the commission’s decision to allow it to increase rates for projected costs.
In 2023, the Indiana General Assembly amended the Federal Mandate Statutes in Indiana Code to allow the regulatory commission to “approve[] . . . incurred . . . costs associated with [an] energy utility’s federal] compliance project . . . .”.
Shortly after the amendment went into effect, Duke filed a new application with the commission seeking to recover approximately $62 million in costs it had incurred between 2019 and 2022 while bringing its treatment and disposal of coal ash into compliance with the EPA’s 2015 rules.
Duke also sought approximately $26 million in costs throughout 2023 and an additional $238 million in projected costs between 2024 and 2030.
The Citizens Action Coalition intervened in Duke’s case, arguing Duke’s request improperly sought to apply the amended Federal Mandate Statutes retroactively.
Writing for the court, Judge Paul Mathias wrote that it is not enough to simply assert that the amended statutes are remedial, and that even remedial statutes typically aren’t applied retroactively unless there is a “strong and compelling” reason to.
The court added that Duke did not argue that such a strong and compelling reason exists.
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