Sen. Merritt strips bonding from SB 260 to create anti-PACE bill February 7, 2011
Posted by Laura Arnold in 2011 Indiana General Assembly, Property Assessed Clean Energy (PACE), Uncategorized.Tags: Indiana PACE bill, Rep. Tim Neese, SB 260 Clean energy improvement financing district, State Sen. Jim Merritt
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Sen. James Merritt, Jr. (R-Indianapolis) unleashed a surprise move on Thursday morning (2/03/2011) in the Senate Utilities and Technology Committee with a “strip and insert” amendment to SB 260 Clean Energy Improvement Financing. Renewable energy advocates encouraged both Sen. Merritt and Rep. Tim Neese (R-Elkhart) to introduce bills to create an Indiana PACE bill or Property Accessed Clean Energy program.
The reprinted version of SB 260 incorporating the six-page amendment is not available yet on the Indiana General Assembly website. However, please find below a scanned copy of the amendment obtained during the committee hearing.
SB 260 “strip and insert” amendment AM0260.001 The damaging portion of the amendment is as follows:
Sec. 7. The legislative body of a unit may adopt a preliminary resolution or ordinance to establish a clean energy improvement financing program. The preliminary resolution or ordinance must do the following:
…
(2) Prohibit the legislative body from issuing bonds to finance clean energy improvements under this chapter.
Informed speculation is that Sen. Merritt was forced to remove the bonding provision from SB 260 otherwise he would not have had the votes from his fellow Senate Republicans to get his own bill voted out of the committee he chairs. Hence, if he did not remove the bonding provision the bill was “dead on arrival” or DOA.
Given the presence and participation of David Pippin from the Governor’s Office during the committee hearing, the Governor’s Office has some as of yet undetermined role with the proposed legislation at this stage.
Earlier last week, PACE proponents were told that Rep. Neese would schedule his PACE bill, HB 1457, for a committee hearing in the House Local Government Committee on February 17th. Watch this blog for details.
For additional information about PACE please visit https://indianadg.wordpress.com/pace/
Indy Star Editorial: “Let’s have a say about utility rate increases” February 1, 2011
Posted by Laura Arnold in 2011 Indiana General Assembly, Indiana Utility Regulatory Commission (IURC), Uncategorized.Tags: State Sen. Jim Merritt
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Jan 31, 2011
The Indiana Utility Regulatory Commission has had its problems of late, but the solution is not to diminish its role in consumer protection.
That is precisely what is called for in Senate Bill 512, which would create a mechanism whereby utilities’ rate increases would kick in without the annual IURC review.
The author is state Sen. James Merritt, R-Indianapolis, chairman of the Utilities and Technology Committee and the most influential Indiana lawmaker when it comes to electric, gas, water and wastewater issues.
The utilities industry knows his importance. It is the largest of his election campaign supporters. Last year, Merritt also became vice president of corporate affairs with the railroad that hauls coal to electricity-generating plants.
It appears no coincidence, then, that Merritt is proposing a change that the utilities want.
Nor is it surprising that consumer advocates, from the industrial to the residential level, are outraged by a plan that would shut them out of the ratemaking process.
They are right to demand a say in the oversight of monopolies that charge $14 billion a year for an array of essential services. They are right to demand that the IURC keep that oversight.
Proponents of the measure insist it would serve consumers by making rate increases more stable and less subject to sudden spikes. Also, they say, it would provide transparency by requiring utilities to open their books wider.
To take the second argument first, there should be no question about transparency when a utility comes before the people’s regulatory body to make its case for needing more money, with opponents on hand for rebuttal. If there is, the IURC needs to toughen up, not back out.
As for making rate increases more steady, how is that of greater benefit to consumers than forcing utilities to justify those increases, small or large?
The proposal would do for private companies what the General Assembly did for itself several years ago when it pegged its pay to that of judges, guaranteeing regular increases without the inconvenience of public debate. Making life easier and quieter for those in power is not a worthy goal of government, and the regulation of government-franchised industries is no exception.
The scandals that have plagued the IURC in recent months resulted from chumminess with one side of the ratemaking debate. The remedy is not to close down the debate.
Indiana utilities back bill to cut rate regulation January 27, 2011
Posted by Laura Arnold in 2011 Indiana General Assembly, Indiana Utility Regulatory Commission (IURC).Tags: State Sen. Jim Merritt
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Jan 27, 2011
Written by John Russell
Major utilities across Indiana are pushing to change the way customer rates are set, supporting new legislation that would diminish the power of state regulators in favor of a formula that could set rates automatically.
Some consumer groups and large utility customers are howling that the move is a power grab by utilities that could result in large, frequent rate increases. But the industry said the move could benefit customers, because it would provide stable rate increases rather than sudden spikes.
“In a rising cost environment, we want to avoid rate shocks,” said Stan Pinegar, president of the Indiana Energy Association, a trade group that represents more than a dozen utilities, including Duke Energy, Citizens Energy and Indianapolis Power & Light Co. “This would allow for a more gradual increase, but it won’t guarantee there will always be an increase in rates.”
Pinegar said the measure also could provide more transparency about utility finances because the companies would be required to open their books wider.
Consumer groups had a very different take.
“This is a horrible concept and a horrible bill,” said Timothy Stewart, a lawyer who represents a group of large industrial customers, such as steel mills and shopping centers that buy millions of dollars of electricity a year. “It leaves very little opportunity for ratepayers to make arguments against rate increases.”
The legislation, Senate Bill 512, would allow electric, gas, water and wastewater utilities to choose whether to take part in the annual rate review. If they take part, it would change the way their rates are set.
Currently, utilities that want to raise rates have to file a request with the Indiana Utility Regulatory Commission. The commission holds hearings and considers evidence, then sets a rate that offers the utility the opportunity for a certain rate of return.
Under the bill, sponsored by Sen. James Merritt, R-Indianapolis, much of that process would be replaced by a rate-making mechanism, greatly diminishing the IURC’s role. Companies would provide certain financial information and would receive a guaranteed rate of return, tied to their common equity or net income. If the utility has a slow year and falls short of revenues and its targeted return, it could recover the difference through higher rates. There’s no dollar limit or percentage limit to how much rates could rise every year.
Some critics say the bill would remove incentives to control costs and would give utilities too much power. The IURC now regulates about $14 billion a year in rates paid by Indiana consumers for electricity, water, natural gas, steam and sewer utilities, as well as parts of the telecommunications and cable industries.
“This is all about protecting utility stock prices at the expense of consumers,” said Kerwin Olson, program director with Citizens Action Coalition. “It essentially guts the commission’s authority to set rates and makes it a rubber stamp to protect monopoly utility profits.”
The bill is headed for a hearing Feb. 3 before the Senate Utilities and Technology Committee, though details about the time and place of that meeting have yet to be posted. Merritt said Wednesday the bill originally was to be heard today, but he canceled the hearing because he was not satisfied with some of the measure’s provisions. He said he might revise some language to deal with concerns raised by state agencies and others.
Merritt said the primary goal of the bill is to provide transparency over utility company finances and avoid rate spikes.
“One of the overriding concerns we hear from people is they want utilities to open their books,” Merritt said. “This gives a mechanism for utilities to come in once a year and talk about their costs.”
It’s unclear how much support Merritt’s bill has from state agencies that would be affected. The IURC is “evaluating the legislation and speaking with all of the various interested parties with respect to the bill’s impact,” said agency spokeswoman Danielle McGrath.
Anthony Swinger, a spokesman for the Office of Utility Consumer Counselor, said the staff is still reviewing the bill and “it would be premature” to comment.
Jane Jankowski, a spokeswoman for Gov. Mitch Daniels, also declined to comment.
A few other states have already moved in this direction, including Alabama, Georgia and South Carolina. The trend is gaining popularity and is widely supported by industry, said Ken Costello, a principal with the National Regulatory Research Institute in Silver Spring, Md.
“The industry always pushes this because it gives them more protection,” Costello said. “If they’re able to adjust rates more often, it reduces risk to them.”
Janice Beecher, director of the Institute of Public Utilities at Michigan State University, sounded a note of caution against stripping away too much power from state regulators, as some states have done, in favor of automatic mechanisms.
“I think there is no substitute for regulatory review,” Beecher said. “You want to be very careful here not to limit or circumvent regulatory review, especially now, because we’re in a rising cost environment.”
Call Star reporter John Russell at (317) 444-6283.
Indpls Star Front Page: “Is Indiana Senate utilities chairman too cozy with coal?” January 14, 2011
Posted by Laura Arnold in 2011 Indiana General Assembly.Tags: Indiana Railroad Company, State Sen. Jim Merritt
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Senate leader’s day job is ripe for conflict of interest, watchdogs say
12:36 AM, Jan. 14, 2011
12:36 AM, Jan. 14, 2011 Written by John Russell. Call Star reporter John Russell at (317) 444-6283
Original article http://www.indystar.com/article/20110114/BUSINESS/101140345/Key-lawmaker-coal-too-cozy-?odyssey=tab|topnews|text|IndyStar.com
State Sen. James Merritt and electric utilities bump into each other at nearly every turn.
In his re-election campaign last year, Merritt raised money from American Electric Power, Duke Energy Corp., NiSource and other utilities, making them the largest single industry to support him.
Merritt, R-Indianapolis, has championed many of the industry’s pet issues, from redefining coal as a renewable energy source to permitting the state to buy and sell billions of dollars worth of substitute natural gas made from coal.
As chairman of the Senate Utilities and Technology Committee, Merritt gets to decide which bills affecting utilities get a hearing and which die in committee.
But his latest connection to the industry is raising some eyebrows among government watchdogs and consumer advocates.
Last year, Merritt took a job as vice president of corporate affairs with the Indiana Rail Road Co., a regional freight carrier that specializes in hauling coal from southwestern Indiana mines for customers such as Duke, Indianapolis Power & Light Co. and Hoosier Energy. The utilities burn coal to create electricity.
The railroad seems to make no bones that it is counting on Merritt’s experience in state government to promote its business. The company wrote about Merritt’s hiring in a recent company newsletter, pointing out he has been in the Senate since 1990, serves as majority caucus chairman and is a member of numerous legislative committees.
“Jim is well respected and very capable, both in business and in the Statehouse,” the newsletter story said. “These leadership qualities that he brings to the Indiana Rail Road Company will represent us very well where our business goals and growth strategies relate to broader issues of public policy.”
Merritt said he sees no conflict between his job as a railroad executive and chairman of the Senate utilities committee. Neither did the Senate Ethics Committee, which cleared him to take the job after Merritt asked the panel to review the issue.
But consumer advocates and government watchdog groups are howling over the move.
“I think it’s a huge problem, because he’s the chair of the utilities committee, and he has control over what bills are heard or not heard,” said Grant Smith, executive director of watchdog group Citizens Action Coalition of Indiana. “He should remove himself as committee chair. It’s a clear conflict.”
Merritt pointed out that the Indiana Rail Road hauls much more than coal — such as lumber, plastics, grain, refrigerators and food sweeteners.
The company’s website, however, points out that one of Indiana Rail Road’s “primary businesses is transporting coal” from southwestern Indiana and other regions for such customers as IPL’s generating station in Indianapolis, Duke’s Wabash River Generating Station in Terre Haute and Hoosier Energy’s generating station in Merom, Ind.
Coal accounts for more than half of the railroad’s business, the company said. Last year, its trains hauled more than 15 million tons of coal.
A few months ago, the railroad began hauling coal from Peabody Energy’s Bear Run Mine in Sullivan County after winning a contract to become the mine’s exclusive railroad. Peabody Energy has said the mine will become the largest coal mine east of the Mississippi River when it reaches full capacity.
Some of that mine’s coal now goes to Duke Energy’s power plants in southwestern Indiana. Duke also has said it could use Bear Run Mine coal for its controversial Edwardsport coal-gasification plant in Knox County, where construction costs have ballooned to $2.9 billion.
Merritt said he hasn’t hidden his daytime job as a railroad executive. He has included the fact on campaign and Senate websites and discussed it with reporters during last year’s re-election campaign. He said his railroad duties would include things such as organizing town meetings, working on clothing giveaways for the poor, participating in breakfast groups and the like.
“It’s really a lot of community outreach,” Merritt said.
His boss, Tom Hoback, president of Indiana Rail Road Co., described the job more broadly. In an interview, he said Merritt would act as a senior business adviser to him, dealing with high-level strategic issues, identifying market opportunities and “targeting business we may be able to get.”
Hoback took exception to any suggestion that Merritt’s job would present a potential conflict with his Senate duties, including his chairmanship of the Senate utilities committee. He said he hired Merritt for his entrepreneurial and business skills, not to influence state policies or laws.
He said Merritt’s job does not include lobbying and pointed out that most railroad issues are decided by federal agencies, not state agencies.
“It’s disturbing that someone would take away from Jim’s reputation and cast aspersions on his ethics,” Hoback said. “Trying to say there is a conflict is just plain wrong.”
He added: “We’ve hauled coal without Jim Merritt, and we’re going to continue to haul coal.”
But some observers say that Merritt, in his new job, might be a little too close to the industry he oversees as chairman of an important Senate committee that considers issues relating to utilities, one of the railroad’s biggest customer groups.
Julia Vaughn, director at Common Cause/Indiana, said Merritt’s two roles have the “potential to be a huge conflict.”
“Given the scrutiny that is being placed on everything related to utilities, electricity and coal, it’s going to be interesting to see what his agenda is for the Senate utilities committee, how closely people are watching and what questions are raised,” she said.
And Merritt, as chairman of the utilities committee, has a lot of influence over coal and utility issues. He has pushed many bills supported by the industries.
He voted for a bill that redefined “renewable energy” to include coal, protecting the market for Indiana’s abundant coal reserves. He voted to allow utilities that transport carbon dioxide by pipeline to acquire land through eminent domain.
He also co-sponsored and voted for a bill that allows the Indiana Finance Authority to enter into contracts to buy and sell substitute natural gas from coal-gasification plants. The bill, which was signed into law, will pave the way for a $2.6 billion coal-gasification plant in Rockport, Ind., which will open a new market for the state’s coal mines. Some consumer groups, however, have criticized the deal as risky for taxpayers.
Hoback brushed aside any connection between those issues and his company. He said his railroad does not have tracks near Rockport, and “it is unlikely we would ever move coal there.” He added that his railroad can haul “only so much coal,” and anything the state might do to increase coal markets would not necessarily help his business.
“The thought that there is a huge bonanza out there for us just doesn’t fit the reality,” he said.
Last year, Merritt and Rep. Ryan Dvorak, D-South Bend, each introduced bills on “net metering,” a policy that allows businesses and institutions to generate their own electricity and get a credit for their surplus power.
Merritt’s proposal was much more favorable to the industry. The House and Senate were unable to reach an agreement on the issue, and Dvorak blamed Merritt for not compromising, dooming the measure. “Jim Merritt took the bill to conference, did absolutely no compromise at all and killed it,” said Dvorak, one of the leading champions of net metering. “He’s always been supportive of the utility industry position.”
Merritt said he thought the Indiana Utility Regulatory Commission could craft an effective rule to expand net metering. Late last year, the IURC approved a rule to expand net metering beyond homeowners and schools, allowing business and government bodies to generate their own power and receive a credit.
That’s not to say Merritt has never voted against utility, coal or railroad interests. According to a legislative report card prepared by Citizens Action Coalition, Merritt sided with consumers in 50 percent of important energy or utility issues last year, up from 45 percent a year earlier, including net metering and establishing a revolving loan fund to allow schools to finance geothermal heating and cooling systems.
But Kerwin Olson, program director for Citizens Action, called that 50 percent score misleading.
“He may have voted — and even authored — some decent net metering bills, but he killed them in conference committee,” Olson wrote in an e-mail. “It was all theater.”
In an interview, Merritt said he hasn’t set a firm agenda yet for the utilities committee in this session, which began last week and runs through the spring. But he said the committee might discuss issues concerning utility rate stabilization, wind power and nuclear energy.
He said he would decide issues on their merits, not because of campaign contributions or how they might affect business for the Indiana Rail Road.
Several months ago, the Senate Ethics Committee issued a report clearing Merritt’s employment, pointing out that Indiana maintains a part-time citizen legislature. “There is an expectation that most members will maintain outside full-time employment,” the report said.
“The committee finds there is no inherent conflict between Senator Merritt’s private employment and his service in the Senate arising from the Senate rules,” the ethics report said. The report was passed by a 4-0 vote, with an equal number of Republicans and Democrats. Last week, the Senate accepted the report.
His boss at the railroad said the issue has been settled by the Senate ethics report and by a favorable opinion from the company’s outside attorneys at Ice Miller.
“They’ve all said there is no conflict,” Hoback said. “I think the issue is settled. Who is the final arbiter?”
FOLLOW THE MONEY
Electric utilities were the largest single industry to contribute to state Sen. James Merritt’s re-election last year, following only contributions from other candidates.
- Contributions from candidates: $27,800.
- Electric utilities: $9,750.
- Health professionals: $5,489.
- Beer, wine and liquor: $4,100.
- Telecom services and equipment: $3,500.
Here are the individual utility contributions:
- American Electric Power: $2,750.
- Duke Energy: $2,500.
- NiSource: $2,000
- Indiana Statewide Association of Rural Electrical Cooperatives: $1,500.
- Indianapolis Power & Light Co.: $1,000.
Source: www.FollowTheMoney.org
Editor’s Note: The only really interesting factoid about the information above is that Vectren Corp (aka Southern Indiana Gas & Electric) was NOT LISTED as a contributor to Sen. Jim Merritt in 2010. For details on Vectren’s Indiana contributions in 2010 see:
http://www.followthemoney.org/database/StateGlance/contributor.phtml?d=1950460975
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