Duke Energy asks for rehearing in court over recovering coal ash costs in light of new law

Duke Energy hopes to get an Indiana Supreme Court case overturned in light of a new state law. The utility filed a petition for a rehearing in front of an appeals court last week — one day after the bill was signed by the governor.

Consumer advocates are calling the law a “bailout,” but it’s unclear if Duke Energy will be successful.

Last year, the state Supreme Court ruled that Duke couldn’t recover more than $200 million from its customers in extra costs that came with complying with federal coal ash rules. Because the utility had already budgeted for those costs, the court said asking its customers for more money would be "retroactive ratemaking" — which is illegal.

The new law, SEA 9, aims to undo the effect of that Indiana Supreme Court ruling by letting utilities recover additional costs that come with complying with federal mandates without pre-approval — as long as the Indiana Utility Regulatory Commission approves them after the fact.

Some worry this will lead to higher bills. Lawmakers who oppose the legislation have said that the IURC rarely protects ratepayers from rate increases and that this process could give other stakeholders less of a say.

READ MORE: Bill to let Indiana utilities charge for additional costs without pre-approval passes House

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Kerwin Olson with Citizens Action Coalition said the law could also allow utilities to start coal ash cleanup without making sure it complies with rules from the Environmental Protection Agency.

“The agency could later come back and say, ‘Nope, you did it wrong. you got to do it this way.' So then, does that mean that utility pursuant to the law will be able to recover costs for what they spent that didn't comply?” Olson said.

But the bill’s sponsor, Rep. Ed Soliday (R-Valparaiso), said the law will hold utilities accountable and make sure they get the best cost estimates for their customers.

He said the bill’s intent was to provide clarity for cases with other utilities that are pending before the IURC — not to help Duke Energy in its coal ash battle. In fact, Soliday said the reason lawmakers pushed the law through this session was to avoid having legislation while Duke was in the middle of an appeal with the court.

“They can do whatever they want to do, but SB 9 — I don’t think saves them because it was a matter of law at the time," he said.

Duke Energy seems to disagree. It cites the newly-signed law as the main reason why it should be granted a rehearing. It’s unclear if the courts will consider Duke Energy’s case in the context of the new law.

Olson said there have been several bills this legislative session that aim to reduce regulatory oversight — which often leads to rate increases for customers.

He said CAC was pleased to see that "affordability" was one of the things lawmakers said the IURC had to consider as part of a bill laying out a statewide energy plan. But other utility legislation this year seems to conflict with that goal.

"We're disappointed so far with where this legislative session is going. Because it seems to us to be all about, you know, insulating the utility companies from all of this risk and all these costs and making sure the public has to pick up the tab. And that only stands to exacerbate this affordability crisis that ratepayers are facing. We don't understand," Olson said.

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

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