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Bill would let Indiana utilities charge ratepayers for additional costs

By Rebecca Thiele

Posted February 10, 2023

An old photo of the former R. Gallagher Generating Station seen from Shawnee Park in Louisville, Kentucky, in 1988. More stringent requirements in the 2015 federal coal ash rule will likely increase Duke Energy's costs for coal ash cleanup at plants like Gallagher. (William Alden / Flickr)

A state House bill, HB 1417, aims to undo the effect of an Indiana Supreme Court decision over Duke Energy’s coal ash waste — which is what’s leftover when you burn coal.

It would allow utilities to recover the cost of “unexpected events” that ended up being more expensive than what they budgeted for.

Duke had already built the cost of coal ash cleanup into its rates, but asked for another rate increase in 2019 when cleanup ended up being more pricey than it thought. The Indiana Utility Regulatory Commission approved the increase, but the state Supreme Court ruled it "retroactive ratemaking" — which is illegal.

The author of the bill, Rep. Ed Soliday (R-Valparaiso), disagrees with the majority opinion. He said the court should have deferred to the agency — which he said is how it's always been.

The bill would allow utilities to recover a number of unexpected, additional costs. Soliday used the example of a tornado causing more damage than what a utility has budgeted for extreme weather events.

“They don’t just get a free lunch. They don’t get to come in and say, ‘Here’s how much it costs, just give me the money.’ The IURC decides whether it’s fair, whether it’s reasonable, whether it’s prudent," Soliday said.

Join the conversation and sign up for the Indiana Two-Way. Text "Indiana" to 73224. Your comments and questions in response to our weekly text help us find the answers you need on statewide issues throughout the legislative session. And follow along with our bill tracker.

But utilities could also ask to charge ratepayers for things like capital costs — which could be anything from new power plants to electric poles and lines.

Several groups worry allowing utilities to do this will mean higher electric bills for Indiana residents and businesses. Consumer advocacy groups Citizens Action Coalition and Indiana Industrial Energy Consumers (INDIEC) both oppose the bill. So do climate advocates with Earth Charter Indiana. The Indiana Energy Association — which represents utilities — is in support.

Rep. Matt Pierce (D-Bloomington) said lawmakers often say that the IURC will protect consumers from unnecessary rate hikes, but he said the agency rarely does so. Pierce said that's likely because the IURC doesn't want to be seen as going against the legislature's wishes.

“The message we’re sending the utility commission with a bullhorn is, 'We want you to approve all this stuff,'" he said.

The bill passed committee and now moves on to the full House for consideration.

Rebecca is our energy and environment reporter. Contact her at rthiele@iu.edu or follow her on Twitter at @beckythiele.