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Duke Energy Agreement Caps Infrastructure Improvement Costs

By Barbara Brosher

Posted March 7, 2016

The Indiana Office of Utility Consumer Counselor (OUCC) reached a settlement with Duke Energy that will reduce proposed infrastructure improvement costs by nearly $400 million.

The proposal would cap rate increases at about $1.4 billion. Duke originally proposed a $1.83 billion plan.

The agreement does not include Duke's proposal to spend $192 million on installing advanced metering throughout the state. The OUCC says that project was beyond the scope of a 2013 law, which allows utilities to file a 7-year infrastructure plan between rate hike cases.

If the plan is approved, the law allows the utility to recoup 80 percent of its investment through a customer bill tracker. But Duke could still seek to recoup the costs of installing advanced metering during a future rate hike case.

"The parties were able to attain a reasonable balance between Duke Energy's need to modernize its infrastructure and the rate impact such a proposed plan would have on its customers," Indiana Utility Consumer Counselor David Stippler said in a statement. "This agreement enables Duke Energy to continue to provide safe, reliable service to its customers while doing so in the most cost-effective way possible."

Duke says the improvements will help increase reliability for customers.

"This plan is about creating an energy network that makes it easier for us to prevent and respond to power outages while strengthening an electric grid that has served the state for more than a century," Duke Energy Indiana President Melody Birmingham-Byrd said in a statement. "Besides replacing aging equipment, the plan modernizes the electric grid for the type of information and services that consumers have come to expect."

The Indiana Utility Regulatory Commission still has to hold public hearings on the proposals before deciding whether to approve the plan. They're expected to make a decision later this year.

If the proposal moves forward, customers will see a gradual rate increase averaging 0.75 percent per year between 2017 and 2022.

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