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WSJ: Duke Takes Big Charge for Edwardsport IGCC Plant in Indiana; CAC Urges IURC to Reject Settlement May 1, 2012

Posted by Laura Arnold in Edwardsport IGCC Plant, Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
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Dear IndianaDG Readers:

I don’t know about you but this announcement of a proposed Settlement Agreement on the Duke Energy Indiana Edwardsport IGCC plant totally took me by surprise.

There is an in-depth article on the front page of the Indianapolis Star this morning describing this latest action by parties to the proceeding. Deal is reached over Duke. I encourage you to read it.

Here is a link to the other side of the story from the Citizens Action Coalition (CAC) website issued today (05/01/2012). http://citact.org/pdfs/Press_Release/5.1.12_DukeIGCC_OUCC_Settlement.pdf

Let me know what you think.

Laura Ann Arnold

BUSINESS–April 30, 2012, 9:49 p.m. ET.

By REBECCA SMITH

Duke Energy Corp. DUK +0.79%said it would take a $420 million charge for cost overruns at its Edwardsport coal gasification plant in Indiana, one of the costliest fossil-fuel generating stations ever built.

The company also announced a settlement agreement that would allow it to pass on to its customers $2.6 billion of the plant’s expected $3.3 billion cost, if state utility regulators approve the deal. Duke, which previously took $265 million in charges for the plant, said rates would rise 9.6% on top of an earlier 5% increase attributable to the plant.

The plant is 99% complete and is expected to be put into service this fall.

The settlement agreement has the support of the state agency that represents ratepayers, a group representing industrial customers and Nucor Steel-Indiana, a large customer. Previously, they had recommended that Duke’s cost recovery be held to about $2 billion, which would have forced the utility to absorb the remainder of the cost.

But Citizens Action Coalition, a consumer group, said the settlement agreement should be rejected by the Indiana Utility Regulatory Commission because it saddles consumers with too much expense for a plant that, in the group’s opinion, shouldn’t have been built.

“Absolutely, we will oppose this settlement,” said Kerwin Olson, executive director of Citizens Action in Indianapolis. He said it was “unconscionable” to allow Duke to collect $2.6 billion when it “grossly mismanaged” the project and exercised undue influence over the regulatory process.

Indiana’s governor removed the head of the utility commission in late 2010, amid an email scandal that suggested an unusually chummy relationship between regulators and Duke executives.

In December 2011, the former commission chairman, David Lott Hardy, was indicted on three counts of felony misconduct by an Indianapolis grand jury. He has said he is innocent. Three Duke officials, including its second-in-command executive, behind chief executive Jim Rogers, stepped down.

When proposed in 2007, the Edwardsport plant was expected to cost less than $2 billion. Cost overruns and the utility’s management of the project were the subjects of lengthy hearings that started in October and concluded in January. Critics accused the utility of fraud and gross mismanagement.

At those hearings, Mr. Rogers, Duke’s chief executive, described Edwardsport as the cornerstone of his utility’s efforts to modernize its fleet of plants that serve the Carolinas, Kentucky, Indiana and Ohio.

But Duke’s effort to scale up a small demonstration plant in Florida were fraught with problems. For example, Duke underestimated the amount of steel, concrete and other materials needed.

“The estimates were just flat wrong,” Mr. Rogers testified on Jan. 9 at a hearing at the regulatory commission hearings. The utility’s principal problem was “we were a little ahead of our time,” he said, and tried to be a pioneer. He urged regulators to agree with him that expenditures were “reasonable and necessary.”

The commission could accept the settlement agreement or reject it and continue the current process, in which it is reassessing the appropriate amount of recovery.

If it accepts the agreement, as written, allegations of fraud and mismanagement “go away,” said a Duke spokeswoman, Angeline Protogere.

Write to Rebecca Smith at rebecca.smith@wsj.com

A version of this article appeared May 1, 2012, on page B5 in some U.S. editions of The Wall Street Journal, with the headline: Duke Takes Big Charge For Plant.

Indiana state energy adviser Brandon Seitz takes job with utility, raising concerns among watchdog groups February 25, 2012

Posted by Laura Arnold in Indiana Office of Energy Development (OED), Indiana Utility Regulatory Commission (IURC), Northern Indiana Public Service Company (NIPSCO), Office of Utility Consumer Counselor (OUCC).
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Dear Readers: So what do you think? Laura Ann Arnold

Original story: http://www.indystar.com/article/20120225/BUSINESS/302250002/State-energy-adviser-Brandon-Seitz-takes-job-utility-raising-concerns-among-watchdog-groups?odyssey=nav|head

Written by John Russell, 12:10 AM, Feb. 25, 2012

Lt. Gov. Becky Skillman’s top energy policy adviser has taken a job with a major Indiana utility, raising more questions about the closeness of the Daniels administration and the energy companies it regulates.

Brandon Seitz, who had been director of Indiana’s Office of Energy Development, started his new job Monday as manager of regulatory affairs for the Northern Indiana Public Service Co., or NIPSCO.

In his new role, Seitz will work on NIPSCO rate issues in front of the Indiana Utility Regulatory Commission and the Office of Utility Consumer Counselor. The utility provides electricity and natural gas to hundreds of thousands in Northern Indiana.

Some government watchdog groups said the move raised alarms, coming on the heels of an ethics scandal involving another major utility, Duke Energy, and state utility regulators.

That scandal, which began when Duke hired the state’s top regulatory attorney while he was handling Duke cases, cost four people their jobs and led to felony indictments against the former chairman of the Indiana Utility Regulatory Commission.

Under Indiana law, state employees who want to move to private industry must wait through a 365-day “cooling-off” period if they were involved personally and substantially with issues affecting the company.

The state ethics panel ruled that Seitz’s employment with NIPSCO did not violate state law. In a six-page ruling, the panel pointed out that Seitz’s office in state government did not regulate or license any utility. The panel also said that based on information from Seitz and his agency’s ethics officer, NIPSCO’s offer of employment did not result “from information of a confidential nature.”

In addition, the panel found that Seitz did not have a financial interest in the outcome of any matter between NIPSCO and the state, and the company did not have any contracts with Seitz’s office. Nor would Seitz be working as an executive branch lobbyist, seeking to influence state government on policy, it said.

“None of the facts provided suggest that NIPSCO’s offer of employment to Mr. Seitz was extended in an attempt to influence him in his capacity as Director,” the ethics report said.

But Kerwin Olson, executive director of watchdog group Citizen Action Coalition of Indiana, said Seitz was part of a team that formulated energy policy in Indiana, and therefore should do everything to avoid the possibility of a conflict of interest.

“It seems pretty murky,” he said.

Julia Vaughn, policy director for Common Cause/Indiana, said a conflict might still exist due to the energy issues involved, not just which agency Seitz worked in.

“The Ethics Commission must still be handing out waivers to the cooling-off period like Halloween candy,” she said.

As director of the Indiana Office of Energy Development, Seitz had offered advice on energy programs, services and initiatives to the administration of Gov. Mitch Daniels. The OED does not have any regulatory or licensing authority. Seitz had worked for the office since 2005.

He referred questions to NIPSCO’s public relations office. A NIPSCO spokesman, Nick Meyer, said Seitz had not worked as a state regulator, only a policy adviser.

“As a state employee, he had no role in approving our cases or filings in front of the commission,” Meyer said, adding that Seitz would be a “great addition to our team, given his unique perspective and background.”

Call Star reporter John Russell at (317) 444-6283. Follow him on Twitter: @johnrussell99.

Dear Readers: I received this message as an email yesterday. Laura Ann Arnold

Office Of Energy Development

Indiana Office of Energy Development

Energy Office Has New Director

Lt. Governor Becky Skillman has announced Brandon Seitz is leaving his   position as director of the Office of Energy Development (OED) to serve in   the private sector.

Tristan Vance has   been appointed to the position, effective February 20.

“Where we once lagged far behind, Indiana has become a leader in producing   homegrown energy. Brandon’s efforts helped us grow as fast as any state in   the areas of wind power, biofuels, clean coaland more,” Lt. Governor Skillman   said.  “I’m confident Tristan Vance will continue fostering success in   this high-potential sector of our economy.”

Seitz joined Lt. Governor Skillman’s executive staff in 2005 after a prior   stint on staff in the Indiana  House of Representatives. He has worked   in various capacities at OED and for Lt. Governor Skillman, including deputy   chief of staff. He was appointed director of OED in 2008.

Vance previously worked as special assistant to the Lt. Governor starting in   2005. After a stint at the Office of Community and Rural Affairs, he joined   the Government Efficiency and Financial Planning group in the Office of   Management and Budget in 2007. There, he monitored efficiency at several   state agencies, including OED. Vance is from Paoli, and is a graduate of   Hanover College.

 OED LOGO

Contact Us

Indiana Office of   Energy Development

One North Capitol

Suite 600

Indianapolis, IN   46074

(317) 232-8939

Follow us on   twitter: IndianaEnergy

      Februrary, 2012

Tristan Vance

OED Director Tristan Vance

“I am very pleased to be working with the Office of Energy Development on Indiana’s energy future,” says OED Director Tristan Vance.  “There are so many opportunities ahead of us to continue to develop Indiana as a leader in homegrown energy.”

Brandon Seitz

Seitz Moves to Private Sector

Following a long stint in the public sector,former OED Director Brandon Seitz will move to the other side of the energy business.  Seitz is now working in regulatory affairs for Nisource. You can contact Brandon via email at bseitz-at-nisource.com

 

 

IURC Hearing on Indiana Michigan Power Rate Case Starts Today –Feb. 20 at 9:30 am EST; Watch On-line February 20, 2012

Posted by Laura Arnold in American Electric Power (AEP), Indiana Michigan Power Company (I&M), Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC).
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FYI: The IURC streaming video is down right now but they are trying to fix it. Check back periodicially to see if the problem is fixed so that you can watch on-line. Laura Ann Arnold

Hearing Set For I&M Rate Case

InsideINdianaBusiness.com Report

The Indiana Office of Utility Consumer Counselor’s first evidentiary hearing in the Indiana Michigan Power rate case begins Monday. I&M’s requested increase would raise some customers’ monthly bills by approximately 25 percent. The utility serves more than 450,000 Indiana customers.

To watch on-line, go to http://www.in.gov/iurc/2624.htm Hearing is scheduled to start today at 9:30 am and continue for the next two weeks if needed.

February 17, 2012

News Release

The Indiana Office of Utility Consumer Counselor (OUCC) and other consumer parties will start cross examining Indiana Michigan Power Company’s (I&M’s) rate case witnesses on Monday, February 20.

Twenty-two I&M witnesses have filed testimony in the utility’s pending base rate case before the Indiana Utility Regulatory Commission (IURC). The IURC’s first evidentiary hearing in the rate case starts Monday in Indianapolis and is expected to last several days.

“The evidentiary hearing is a critical step in this case as the OUCC continues to question I&M on its request and develop recommendations,” said Indiana Utility Consumer Counselor David Stippler. “While this hearing will focus on attorney cross-examination and Commission questioning of I&M’s technical witnesses, I urge I&M customers to make the most of the opportunities they have to make their voices heard.”

I&M’s requested base rate increase, according to its testimony and exhibits, would raise the monthly bill for a residential customer using 1,000 kilowatt hours (kWh) by 25.38 percent.

The rate case (IURC Cause No. 44075) is one of several I&M cases that may have a significant, cumulative impact on I&M customer bills. Separately from the rate case:

  •  I&M is seeking rate recovery for new pollution control equipment at its Rockport Generating Facility (in IURC Cause No. 44033). The utility’s testimony in that case does not specify how the $1.4 billion Rockport project would affect Indiana customer bills, with I&M scheduled to file additional testimony in late April.
  • I&M is also expected to request IURC approval of a Life Cycle Management project for its D.C. Cook Nuclear Plant this year. In its rate case testimony, I&M estimates the Cook project costs at “less than $2 billion.”

I&M customers may comment in the rate case in either or both of two ways:

1. By attending and speaking at one of the IURC’s public field hearings. These will be held in Fort Wayne, South Bend and Muncie on upcoming dates to be determined.

2. By sending written comments to the OUCC. Comments the OUCC receives by April 20, 2012 will be filed with the IURC, to be included in the case’s formal evidentiary record.

The OUCC invites consumer comments through the agency’s Website at http://www.in.gov/oucc/2361.htm, and by mail, email, or fax:

• Mail: Consumer Services Staff; Indiana Office of Utility Consumer Counselor; 115 W. Washington St., Suite 1500 South; Indianapolis, IN 46204

• email: uccinfo@oucc.IN.gov

• Fax: (317) 232-5923

Written comments should include the consumer’s name, mailing address, and a reference to “IURC Cause No. 44075.”

“Whether consumers wish to write to us, attend a field hearing, or both, we want to hear from them,” said Stippler. “While the OUCC’s attorneys and technical experts are examining I&M’s rate case very closely, consumer input is extremely important to this process.”

The OUCC is scheduled to complete its technical and legal review of I&M’s request and file testimony on April 27, 2012.

Other parties that have intervened in this case (including the cities of South Bend and Fort Wayne, a number of I&M’s industrial customers, and the Citizens Action Coalition of Indiana) are also scheduled to file testimony on April 27. Witnesses for the OUCC and other consumer parties will face cross-examination and Commission questioning at an evidentiary hearing to be held in June.

For more information on the base rate case and other I&M cases, please visit the OUCC’s Website at www.in.gov/oucc/2680.htm.

I&M, a wholly owned subsidiary of American Electric Power (AEP), provides service to approximately 458,000 customers in 24 Indiana counties.

(IURC Cause No. 44075)

The Indiana Office of Utility Consumer Counselor (OUCC) represents Indiana consumer interests before state and federal bodies that regulate utilities. As a state agency, the OUCC’s mission is to represent all Indiana consumers to ensure quality, reliable utility services at the most reasonable prices possible through dedicated advocacy, consumer education, and creative problem solving. To learn more, visit www.IN.gov/OUCC

Source: Indiana Office of Utility Consumer Counselor

Duke CEO Jim Rogers about Edwardsport IGCC plant: ‘Yes, it’s expensive’ October 27, 2011

Posted by Laura Arnold in Duke Energy, Edwardsport IGCC Plant, Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
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Company tries to explain cost overruns to IURC

Original article http://www.indystar.com/article/20111027/NEWS14/110270360/star-watch-duke-energy-Edwardsport-iurc?odyssey=tab|topnews|text|News

Written by John Russell Indianapolis Star, 11:33 PM, Oct. 26, 2011
Duke Energy CEO James Rogers testified before the Indiana Utility Regulatory Commission in Indianapolis on Wednesday about cost overruns at the company’s coal-gasification plant in Edwardsport. / Joe Vitti / The Star

Duke Energy Corp.’s troubled power plant in Edwardsport now ranks as the company’s most expensive project ever built per kilowatt of electricity generated, the utility’s chairman admitted under questioning Wednesday.

The massive plant, originally billed as a producer of low-cost energy, has run into numerous construction problems that have pushed its price tag above $3 billion, from an original estimate of $1.9 billion.

Company officials, including Chairman James Rogers, found themselves on the defensive Wednesday, trying to explain how the costs got so out of hand and who should pay the bill.

It’s an issue the Indiana Utility Regulatory Commission will decide in coming weeks, as it hears from more than a dozen witnesses. The agency will determine whether Duke was prudent in managing the project and should be allowed to bill customers for much of the costs.

So far, the IURC has ruled that customers should pay $2.35 billion of the plant’s cost. Duke wants the commission to increase that to more than $2.7 billion, raising monthly electricity bills for more than 700,000 Indiana households and businesses.

Rogers faced a barrage of questions about the plant’s problems, such as its wildly wrong estimates on the amount of steel, piping and concrete needed to construct the facility, along with labor productivity issues and a costly, unforeseen water-disposal system.

Rogers acknowledged, under questioning by Randall Helmen, chief deputy at the Indiana Office of Utility Consumer Counselor, that the cost of the Edwardsport plant per kilowatt has climbed to $5,593, up from $3,364 when the regulators originally approved the project in 2007. [Emphasis added.]

That figure takes in the capital costs of the plant, not the annual costs of running it once it goes online. Many of Duke’s other plants or units were built at a fraction of the cost per kilowatt generated by those facilities.

“How is this low-cost energy?” Helmen demanded.

Rogers said he has been disappointed by the soaring costs but maintained that the plant, when completed, will produce cleaner electricity for decades to come.

“Yes, it’s expensive,” Rogers said. “But it will be the cleanest plant in Indiana.”

He said the project is 96 percent complete and should be in service a year from now, adding much-needed generating capacity to Indiana households and businesses as Duke begins to retire other, aging plants.

But Helmen hammered Rogers on the costs, much of which Duke wants customers to pay in the form of higher electricity bills.

“Is there any plant in the whole Duke family anywhere near $5,000 a kilowatt?” Helmen asked. [Empasis added.]

“No sir,” Rogers replied.

Among its vast fleet, Duke owns 14 coal plants, three nuclear plants and more than a dozen oil or gas plants.

Despite the grilling, Duke officials did not budge Wednesday from their position that they prudently managed the project and costs, and that the plant will be good for Indiana, using about 1.5 million tons of coal per year, much of it mined in Southern Indiana, to generate about 618 megawatts of electricity at its peak.

The company said the challenges of building such a large plant — the biggest coal-gasification plant in the world — took it by surprise each time there was a setback. But Duke has said it relied on its outside contractors and engineers for expert guidance.

“With the benefit of hindsight, of course, different choices might have been made as the project unfolded, but that does not equal imprudence under the law,” Kelley Karn, a Duke attorney, said in her opening statement.

She added: “The company is not required to make perfect decisions or even optimal decisions. Rather, as long as the decision falls within the range of reasonable choices at the time it is made, it is a prudent decision.”

The commission also will consider, in a separate hearing, whether Duke hid vital information from regulators, committed fraud or grossly mismanaged the project.

Rogers told the commission Wednesday he has worked hard to get the plant finished, despite the problems. He said he urged the major contractors, Bechtel and General Electric, to “stop pointing fingers” and get the job done.

“I said, let’s finish with the least cost possible and then we’ll sort out who owes what,” Rogers said. “My first priority was to finish the project.”

But a group of large industrial customers wants the commission to hold Duke’s feet to the fire over costs. The utility’s position is “it’s someone else’s fault,” said Jack Wickes, a lawyer at Lewis & Kappes, representing the industrial customers.

“Duke’s assumptions were too rosy,” he said.

A group of public-action groups said the project was a novelty that presented special risks in overall planning and management, and Duke failed to manage the risks.

“Many of those risks have come to fruition,” said Jerry Polk, attorney for Citizens Action Coalition of Indiana, one of the public-action groups.

During more than three hours on the witness stand, Rogers repeatedly deferred questions about the project’s engineering setbacks to other executives, who will testify in coming days. He could not describe, for example, where the plant’s main components were located on the property, or the basic layout of the project, even though a huge image of the plant was set on an easel near him.

“I think it’s painfully clear I’m not an engineer, based on my testimony so far today,” he said, eliciting laughter in the room.

Helmen grilled Rogers relentlessly, asking him whether he was familiar with Bechtel’s other projects worldwide, including the Hoover Dam, and about the qualifications of Duke’s early team of engineers.

Rogers said he was familiar with some of Bechtel’s work and said Duke later hired more qualified managers to take over the project.

Follow him on Twitter @johnrussell99

Call Star reporter John Russell at (317) 444-6283.

Procedural schedule established for I&M rate case in Cause 44075 October 25, 2011

Posted by Laura Arnold in American Electric Power (AEP), Indiana Michigan Power Company (I&M), Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
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Dear Blog Readers:

To make it easier to follow the recent rate increase request filed by Indiana Michigan Power Company (I&M), I have created a new page on the blog. For details on the procedural schedule established last week at the prehearing conference, please visit:

https://indianadg.wordpress.com/iurc/indiana-utility-rate-cases/indiana-michigan-power-company-aep-44075/

Why go anywhere else when what you need to know about renewable energy and distributed generation in Indiana is right here.

Laura Ann Arnold

Indiana Michigan Power Rate Case IURC Prehearing Conference 11/20/2011 October 20, 2011

Posted by Laura Arnold in American Electric Power (AEP), Indiana Michigan Power Company (I&M), Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC).
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Indiana Michigan Power (I&M), a subsidiary of American Electric Power (AEP)  filed a petition with the Indiana Utility Regulatory Commission (IURC) on 9/23/2011 requesting a $178 million (net $149 million) rate increase request under the Commission’s Minimum Standard Filing  Requirements (MSFR) See 170 IAC 1-5-2(c) for details on MSFR.

The IURC has scheduled a prehearing conference in Cause No. 44075 this afternoon to address procedural issues such as filing deadlines and hopefully will rule on whether or not I&M can proceed under MSFR which would allow an expedited schedule within about 10 months from the date of their request to a final order from the IURC.

Parties of interest which have interevened thus far include: Inovateus Solar of South Bend and Ecos Energy. Also intervening are the City of Ft. Wayne, the City of South Bend and the Citizens Action Coalition (CAC). The Office of the Utility Consumer Counselor (OUCC) is also a party to this proceeding as required by Indiana state law.

Watch this blog for the outcome of the prehearing conference and other details as this case unfolds.

Download I&M’s petition HERE: 44075 I&M Petition_23Sept2011 

IBJ: Ethics scandal costs Duke Energy in two Indiana Utility Commission rulings October 20, 2011

Posted by Laura Arnold in Duke Energy, Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
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Original Article: http://www.ibj.com/ethics-scandal-costs-duke-energy-in-two-rulings/PARAMS/article/30251

by Chris O’Malley, Indianapolis Business Journal (IBJ)

October 19, 2011
 

A 2010 ethics scandal involving the chief legal counsel for the state’s utility regulatory agency, who presided over cases favorable to Duke Energy Corp. in the months prior to taking a job at the utility, has come back to bite the state’s biggest electric utility.

The Indiana Utility Regulatory Commission on Wednesday reversed a ruling made by former chief counsel and administrative law judge Scott Storms. It would have allowed Duke at its next rate case to seek to recover from ratepayers $12 million in costs the utility incurred during a 2009 ice storm.

Also on Wednesday, the commission dismissed a case handled by Storms in which Duke sought permission to tap ratepayers to install “smart” electric meters in central Indiana to help better regulate loads. That project was estimated to cost $22 million.

The case in which Duke sought to collect storm damage costs is most notable. It was the only Scott Storms case the commission decided to reopen for further review after the ethics scandal came to light last year.

It was the also the only proceeding involving Storms in which one of the parties—the Indiana Office of Utility Consumer Counselor—had appealed to the state Court of Appeals.

The OUCC argued that Duke’s attempts to recover the ice storm damages during a future rate case amounted to retroactive ratemaking, which is only permitted in the case of extraordinary financial events. Charlotte-based Duke reported 2010 operating earnings of $14.2 billion.

“We are pleased with the outcome. … We think that it’s commendable that the commission reconsidered,” Anthony Swinger, spokesman for the OUCC, said of Wednesday’s IURC ruling on the storm cost case.

“It’s been our position all along that we did not believe the facts supported Duke’s request.”

Swinger said Duke is already authorized to collect $2.6 million a year from ratepayers for storm damage costs.

Two IURC commissioners, Kari Bennett and David Ziegner, dissented from the decision to reverse the storm damage case handled by Storms.

They wrote that, “upon reopening this cause, no evidence was offered concerning allegations of [Storms having] undue influence associated with the original proceeding.”

Bennett and Ziegner said the majority views the decision to reopen the case to mean that it is authorized “to reconsider and reweigh” all the evidence and reach a different outcome despite the fact that none of the resubmitted evidence is materially different than the original.

“We do not agree that such an expansive reconsideration is appropriate.”

Duke officials said late Wednesday they continue to believe that its storm damage costs were “prudently incurred” and will address the issue in its next rate case.
Although it now cannot seek to recover the $12 million in 2009 storm damage in a lump sump, per se, it is possible Duke could instead seek to increase the current $2.6 million a year it’s permitted to collect for general storm costs.

As for the other ruling Wednesday — the dismissal of Duke’s request to invest in smart grid features such as advanced metering — the spectre of the Scott Storms scandal loomed large.

The commission said Storms presided over the 2010 evidentiary hearing in the case after he accepted a job offer from Duke as an attorney for its Indiana operations.

The Indiana Ethics Commission in May said the move was in violation of state ethics laws, although Storms has appealed the ethics board’s final report in Marion County Circuit Court.

“The ethics case  … which relates directly to this cause, has resulted in and continues to cause, substantial delay in the commission’s ability to review and decide the merits of this case,” the IURC said Wednesday.

The delay means that cost estimates presented in Duke’s smart grid case may havebecome outdated.

“In addition, the commission has concerns about rendering an opinion on the current record in light of the Indiana Ethics Commission’s factual finding in its final report,” the  IURC said, adding that it is thus “not in the public interest” to decide the merits of Duke’s smart grid deployment.

Duke Energy spokesman Lew Middleton said the utility respects the commission’s decision given the passage of time. He noted that the IURC did not dismiss the case based on the merits in the smart grid proposal.

 “We will evaluate our next steps,” he said.

Kerwin Olson, interim executive director of utility watchdog group Citizens Action Coalition, said he was still trying to make sense of the IURC rulings late Wednesday.

Olson noted that the commission in these two cases made decisions that centered on orders involving Storms. Yet the commission isn’t taking into consideration Storms’ rulings involving Duke’s controversial Edwardsport coal-gasification plant, which has $530 million in cost overruns.

“I fail to understand the difference,” Olson said.

The Storms scandal proved an embarrassment for both Duke and the IURC.

Duke later fired Storms, along with Michael Reed, the head of Duke’s Plainfield-based Indiana operations.

Another casualty was IURC chief David Hardy, who Gov. Daniels fired last fall. E-mails revealed Hardy knew Storms was handling Duke cases even after immersed in job discussions with the utility. They also showed Hardy making light of a routine state ethics panel hearing triggered after Storms announced his intention to seek work at Duke.

E-mails also show that Hardy was chummy with Duke Energy executives to the point it may have tainted commission decisions involving Duke, including those of the controversial Edwardsport project.

South Bend Tribune Editorial: “Shine a light on this Indiana Michigan rate case” October 8, 2011

Posted by Laura Arnold in American Electric Power (AEP), Indiana Michigan Power Company (I&M), Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
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http://articles.southbendtribune.com/2011-10-06/news/30252925_1_iurc-rate-case-residential-rates

South Bend Tribune: OUR OPINION

October 06, 2011

If you are among Indiana Michigan Power’s 458,000 customers in Indiana, you already may be worrying about how you’ll pay your bill if the utility makes its case for a 22.7 percent increase in residential rates.

You also may be concerned about the Indiana Utility Regulatory Commission’s decision-making.

The agency, of course, isn’t the same one that earned the ire of the governor and ratepayers last year because of its cozy relationship with Duke Energy. Gov. Mitch Daniels fired then IURC chairman David Lott Hardy. A former IURC lawyer who ran straight from the agency for a position at Duke also was among those who lost their jobs in the wake of the scandal.

Allegations that Duke exerted undue influence on the regulators, however, have left many Hoosiers suspicious about how the state’s utility board weighs consumer interests against those of the giant monopolies with their hosts of lawyers and lobbyists.

Electric customers all across the nation for years have heard warnings that energy costs would rise as coal-fired plants are refitted or retired and more expensive options brought into the mix.

Now comes I&M with rates it says currently are among the lowest in the state and country.

Company officials say, after decades of relatively flat rates, now’s the time I&M must hike revenues to meet the growing environmental mandates. The proposal before the IURC hits residential users hardest — an average of $20 a month.

In this struggling economy, that’s too much to ask.

And it’s likely this current rate request will be followed by a series of others. Several consumer groups have declared their opposition. Citizens Action Coalition is still reviewing the filing, but already has vowed to oppose the magnitude of the increase.

The governor took action to right the IURC’s course last year. But his administration must be more vigilant in monitoring ethics, especially given the revolving door between state offices and the private businesses that lobby them. Ensuring all sides get a fair shake in the decision on I&M’s rate case can help restore the IURC’s credibility.

I&M has requested a 9.72 percent rate increase in Michigan, as well. Michigan’s Public Service Commission is reviewing it.

Michigan consumers can comment on the proposal in their state online at http://www.michigan.gov/mpsc.

Indiana residents can mail comments to the Indiana Office of Utility Consumer Counselor, PNC Center, 115 W. Washington St., Suite 1500 South, Indianapolis IN 46204 or online at http://www.in.gov/oucc.

Whatever the states decide, each of us has some control over how much we pay for electricity by controlling our use of it.

Take this as a clarion call to do what you can to hold down your electricity costs at home and work. Educate yourself on alternative sources of power and efficiency and take even the little steps on conservation that will add up to meaningful savings. [Emphasis added.]

State Utility Consumer Counselor to I&M: Slow Down! I&M Filed “fast track” rate increase October 7, 2011

Posted by Laura Arnold in American Electric Power (AEP), Indiana Michigan Electric Power (I&M), Indiana Michigan Power Company (I&M), Indiana Utility Regulatory Commission (IURC), Office of Utility Consumer Counselor (OUCC), Uncategorized.
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Laura Ann Arnold

OUCC motion opposes Indiana Michigan Power’s request for an expedited rate case schedule; Base rate case is one of three that could have a significant, cumulative impact on I&M customers

Indiana Office of Utility Consumer Counselor
Media Contact: Anthony Swinger, 1-888-441-2494 or aswinger@oucc.in.gov

FOR IMMEDIATE RELEASE
October 7, 2011

The Indiana Office of Utility Consumer Counselor (OUCC) is objecting to Indiana Michigan Power’s (I&M’s) proposal to “fast-track” its pending base rate case.

In a filing made late Thursday, the OUCC is asking the Indiana Utility Regulatory Commission (IURC) to deny I&M’s request for an expedited schedule, a provision that would set a ten-month timeframe and require the IURC to issue a final rate order by July 2012. I&M’s request would increase average rates for its Indiana residential customers by at least 22 percent.

I&M has requested an accelerated schedule for its rate case under the IURC’s Minimum Standard Filing Requirements (MSFR). The MSFR process in IURC regulations provides an expedited option for utilities seeking rate recovery for general, less complex rate case requests. In exchange for the expedited schedule, a utility files testimony, exhibits and technical data at the beginning of the case and typically limits the scope of its request to general operating, maintenance, and capital improvement expenses.

“The rate case I&M has filed contains numerous issues that go far beyond the type of case the MSFR rules envision covering,” said Indiana Utility Consumer Counselor David Stippler. “Fast-forwarding this case through the regulatory process would not give the OUCC adequate time to review the wide range of complex issues at stake. Ratepayers deserve the necessary amount of time be given to our attorneys, accountants, engineers, and economists to examine I&M’s justification for its request and to conduct the thorough examination that this case warrants.”

Today’s OUCC filing does not address the merits of I&M’s request for a $178 million base rate increase, but it does demonstrate concern over the broader scope of requests I&M has made with the IURC in recent months and the likelihood of others in the near future.

An IURC prehearing conference in the rate case is scheduled for October 20 for the purpose of scheduling filing and hearing dates in this case, including the OUCC’s testimonial deadline. A public field hearing will be required in Fort Wayne, with the OUCC planning to request more field hearings in I&M’s service territory.

Issues in I&M’s 3,954-page filing (IURC Cause No. 44075) that go beyond the scope of a general rate case include:

  • Proposed changes to I&M’s ongoing cost recovery for regional transmission matters
  • Reallocation of transmission costs and investments
  • Proposed creation of a major storm damage restoration reserve
  • Rate design issues involving I&M’s fuel adjustment clause (FAC) filings, through which I&M recovers coal, nuclear and other fuel costs
  • Proposed retirement of 3 units at I&M’s Tanners Creek Generating Facility in Dearborn County, Indiana

“It would be unrealistic to try to complete a thorough review of these broad and extremely complex issues within a few months,” continued Stippler. “Even more troubling, the utility’s requested schedule would appear to be an attempt to downplay its requested rate hike during these tough economic times while ignoring the fact that this is one of three major I&M cases that will likely have a substantial impact on I&M’s customers and their wallets in the near term.”

In a separate case from its $178 million base rate request, I&M is seeking approval to install new pollution control equipment (for sulfur dioxide and nitrogen oxide) at its Rockport Generating Facility in southwestern Indiana as required by a federal consent decree. I&M has filed testimony estimating its share of those project costs at $707 million.

In addition, I&M is expected to request IURC approval of the Life Cycle Management (LCM) project for its D.C. Cook Nuclear Plant in Bridgman, Michigan in 2012. The company’s rate case testimony estimates the cost for this project at “less than $2 billion.”

The OUCC estimates that the Rockport environmental case and Cook LCM case are likely to have a significant cumulative impact on I&M ratepayers, above and beyond the pending base rate case.

In addition, I&M continues to recover coal, nuclear and other fuel costs through its FAC tracker and regional transmission costs through another tracking mechanism.

I&M’s last base rate case (IURC Cause No. 43306) was initiated in June 2007 and concluded in March 2009. I&M, the OUCC, and all other formal parties in that case reached a settlement agreement that was approved by the IURC; the agreement allowed I&M roughly one-third of the base rate increase it was seeking.

Consumers are encouraged to visit the OUCC’s Website at www.in.gov/oucc/2667.htm for updates on the rate case as it moves forward. Also, the OUCC is inviting written consumer comments at www.in.gov/oucc and via mail, fax and email:

  • Mail: Consumer Services Staff
    Indiana Office of Utility Consumer Counselor
    115 W. Washington St., Suite 1500 South
    Indianapolis, IN 46204
  • Fax: (317) 232-5923
  • E-mail: uccinfo@oucc.in.gov

All written comments on the I&M rate case should include the consumer’s name, mailing address, and a reference to IURC Cause No. 44075.

(IURC Cause No. 44075)

The Indiana Office of Utility Consumer Counselor (OUCC) represents Indiana consumer interests before state and federal bodies that regulate utilities. As a state agency, the OUCC’s mission is to represent all Indiana consumers to ensure quality, reliable utility services at the most reasonable prices possible through dedicated advocacy, consumer education, and creative problem solving. To learn more, visit www.IN.gov/OUCC.

 Download a copy of the OUCC motion filed today HERE. 44075-I M_OUCC Notice-MSFR_100611