Author Archives Laura Arnold

US Sen. Smith Urges Nation to Follow Minnesota’s Lead on Expanding Use of Clean Energy

Posted by Laura Arnold  /   September 14, 2018  /   Posted in Uncategorized  /   No Comments

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U.S. Senator Tina Smith (D-Minnesota)

IndianaDG Note: Laura Ann Arnold participated in a Midwest Lobby Day on Capitol Hill with the Solar Energy Industries Association (SEIA) on 9/13/18. We visited with Pete Wyckoff, Energy & Environment Policy Advisor to US Senator Tina Smith of Minnesota who shared the following with us.

For Immediate Release:

September 12, 2018

Contact:

Molly Morrissey

molly@smith.senate.gov

202-224-9857

***VIDEO RELEASE***

 

In Floor Speech on Climate Change, Sen. Smith Urges Nation to Follow Minnesota's Lead on Expanding Use of Clean Energy

 

WASHINGTON, D.C. [09/12/18]—In a speech delivered on the Senate floor, U.S. Senator Tina Smith (D-Minn.) said the push to fight climate change is not only urgent, but presents economic opportunities in Minnesota and across the country. She also criticized several actions taken by the Trump administration, including rolling back the Clean Power Plan and pulling out of the Paris Agreement.

Sen. Smith, a member of the Senate Energy Committee, said Minnesota has already benefited from the expanded production and use of clean energy, which has created jobs and economic development in communities across the state. She urged the rest of the nation to follow Minnesota's lead and take advantage of those same benefits. You can watch Sen. Smith's speech here.

“The old idea that responding to climate change would come at the expense of the American economy is outdated and inaccurate,” said Sen. Smith. “The clean energy economy is the economy of the 21st century. We are seeing that every day in Minnesota, which is a national leader in the clean energy transition.”

Earlier this year, Sen. Smith worked to include provisions in the Senate-passed Farm Bill that expanded investment in renewable energy and rural energy programs. She also recently introduced legislation designed to enhance the nation’s energy storage capabilities.

You can read a copy of Sen. Smith's remarks as prepared for delivery below:

Floor Statement on Climate Change

Senator Tina Smith

(as prepared for delivery)

Mr. President, I rise today to join my colleague Senator Whitehouse as he takes to the Senate Floor to speak on climate change for the 219th time. Senator Whitehouse is the Senate leader on climate change and his foresight, his actions and his determination on this issue are remarkable. I’m proud to join him today.

Climate change is a dire threat to our environment and to our children’s future. And yet, if we rise to the challenge of responding to climate change, it will offer us a major economic opportunity—the clean energy transition is already creating jobs, reducing the costs of generating electricity, clearing the air, and improving our health.

The old idea that responding to climate change would come at the expense of the American economy is outdated and inaccurate. The clean energy economy is the economy of the 21st century. We are seeing that every day in Minnesota, which is a national leader in the clean energy transition.

The climate is rapidly changing. These changes are caused by human activities that release greenhouse gases. I know this because it is what science tells us.

In Minnesota, we take special pride in the severity of our winters. But, Minnesota winter temperatures have increased by 6 degrees since 1970, and much more than our pride is at stake with this change. Agricultural and forest pests that were once held in check by severe winter cold are now thriving. Summer temperatures are on pace to make Minnesota as warm as Kansas by the end of the century. Some models suggest that changing climate and spreading pests could eliminate Minnesota’s iconic evergreen forests by 2100.

Urgent action is needed to limit further climate change. If we don’t reduce greenhouse gas emissions to near zero by 2060, the world will cross a dangerous warming threshold—a threshold the United States and other nations have pledged to avoid.

I am deeply worried about these threats, and so are our children, but I am also hopeful, because I have seen how tapping into our abundant wind and sunshine is building a new energy economy that is clean, green, and full of opportunity.

Here’s an example: shortly after becoming a U.S. Senator, I visited the Vetter family farm near Mankato, MN and saw first-hand how renewable energy can provide new sources of income for farmers. The Vetters raise hogs, but they also farm the sun via a 14-acre Community Solar Garden. The Vetters inspired me to become a champion for the Energy Title in the Farm Bill, which provides federal support for rural renewable energy projects.

Just three years ago, Minnesota wasn’t much of a player in solar energy, despite the fact that Minnesota has nearly the same solar potential as Houston, Texas. However, new state policy has led to strong growth in solar energy development. The state began a Community Solar Garden program in 2013, and Minnesota now has enough solar energy to power nearly 120,000 homes. During the first quarter of 2018, Minnesota was 5th in the nation for new solar installations.

Minnesota is a model, but we can expand solar energy to other parts of the country. The southeastern United States and almost all of the western half of our country have as much or more sunshine than Minnesota and lots of opportunity.

Minnesota is new to solar, but we have long been a national leader in wind energy. Today, nearly 20% of our electricity comes from wind turbines. Like solar, the fuel costs for an installed turbine are zero, and so wind energy is sheltered from the ups and downs of fossil fuel prices. Wind energy is also a rural economic engine. A single industrial-sized turbine can bring a farming family 4000 to 8000 dollars in lease revenue every year.

My state is home to the two largest wind and solar installation companies in the country—Mortenson Energy in the Twin Cities and Blattner Energy in rural Avon. Together they have installed non-emitting renewable energy capacity across the country equivalent to over 100 coal plants.

Clean energy brings good jobs. For example, “wind technician” is one of the fastest growing jobs in the country with an average salary of 54,000 dollars—and it doesn’t require a 4-year college degree.

Jobs in Minnesota’s clean energy sector are growing twice as fast as jobs in other parts of our state’s economy, and employers report that they are having trouble finding the skilled workers they need. To address this problem, I recently introduced legislation to help employers partner with high schools and community colleges so students can gain the skills they need to get these jobs.

Last year, renewable energy contributed 25% of the electricity generated in Minnesota. Nuclear power—which also does not release greenhouse gases--contributed an additional 23%. From a climate change perspective, Minnesota is already half way to becoming a 100% percent clean electricity state.

And we are not slowing down. Xcel, our largest utility, is on track to deliver 60% renewable and 85% clean energy by 2030. Great River Energy, which serves many of our rural electric cooperatives, is committed to 50% renewable by that same date. Why are they doing this?  It is not all about saving the planet. Wind energy has become the cheapest way to add new electricity to the Minnesota electrical grid.

Yes, Minnesota is windy, but so is every state in the middle of the country, and—as Senator Whitehouse described—most coastal states have tremendous wind power potential through offshore wind farms.

This summer, the McKnight Foundation released a groundbreaking analysis of what “decarbonizing” Minnesota’s economy would mean. If Minnesota continues to move away from fossil fuels and towards clean energy, we can achieve a dramatic reduction in greenhouse gas emissions by 2050. That would mean an electric mix that includes at least 91% clean energy. The outcome would be total energy bill savings of 600 to 1200 dollars per Minnesota household each year. It would also mean 20,000 more jobs in our state compared to a “business as usual” scenario with continued reliance on fossil fuels.

Given all of the upsides, it is disheartening that President Trump is clearly doing everything in his power to slow down the clean energy transition. He would rather take us backwards than have America remain a world leader pushing forward.

He is pulling the United States out of the Paris Climate Agreement. He is taking steps to roll-back auto fuel efficiency standards and trampling on the rights of states who want to maintain rigorous targets. He has tried repeatedly to keep uneconomic and polluting coal plants open—a move that, if successful, would cost American taxpayers and electric bill payers billions of dollars per year.

In a recent attack on clean energy, President Trump has proposed replacing the Clean Power Plan with an alternative that will actually increase greenhouse gas emissions and—by the Administration’s own calculation—cause up to 1,400 additional death’s per year due to air pollution. And, just yesterday, the Trump administration proposed weakening rules that limit the release of methane, a potent greenhouse gas.

Instead, the federal government can, and should, partner with states to encourage the spread of clean energy. The federal government should help states lead and not hold them back.

First, we should set national clean energy targets. These should be a floor, not a ceiling, setting states free to innovate and adopt the best way to meet emission reductions given their local resources, local economics, and local sensibilities. Second, the federal targets should be technology neutral. The goal is to reduce greenhouse gas emissions. In one place, that might mean wind power, in another, nuclear power. Some states have great hydropower resources, while others might choose to utilize carbon capture and storage upgrades to existing coal plants.

Third, we should work with states to enhance the interstate transmission system. I have talked a lot about what Minnesota is doing on clean energy, and states like California and Hawaii are certainly also leading the way. With transmission, the Texas grid expansion provides a potential national model. That expansion is helping bring clean electricity from the windy western part of Texas to the large cities in the east.

Fourth, the Federal Energy Regulatory Commission must properly account for greenhouse gas emissions when it approves projects. It also should allow states to value their nuclear plants as zero emission sources. And, as the original fleet of nuclear plants retire, it is imperative that they are replaced by non-emitting power sources.

And last, the federal government should expand support for cutting-edge energy research, at our national labs and at state universities. The federal government must also recognize that discoveries in the lab only help if they are actually deployed. We must help states and utilities take risks on new, potentially game changing technologies. To these ends, I recently introduced legislation to help fund both research and initial deployment of new energy storage technologies.

We have everything to lose if we fail to meet the challenge of climate change. That is unacceptable. We owe our children and the next generation a better alternative.

Thank you again to Senator Whitehouse for your leadership on this issue and thank you for inviting me to join you today.

Mr. President, I yield the floor.

Solar farms still a possibility for Knox County (IN)

Posted by Laura Arnold  /   September 09, 2018  /   Posted in solar, Uncategorized  /   No Comments

9/8/2018 10:26:00 AM

Solar farms still a possibility for Knox County, local EDC president says

Jenny McNeece, Vincennes Sun-Commercial Assistant Editor

Producers of solar energy continue to find Knox County appealing, Kent Utt, president of the Knox County Development Corp., told his board of directors on Friday.

Utt said during the board's regular monthly meeting, held at Vincennes University's Isaac K. Beckes Student Union, that he will host yet another meeting next week — the fifth, to be exact — with officials from Tenaska, a solar energy company based in Nebraska.

Utt has been working with Tenaska over the last several months to help them locate as many as 1,500 contiguous acres to either purchase or lease for the development of a solar farm.

“They've realized they need even more land, so I've gone and met with another farmer that owns ground adjacent to the ground they were already interested in,” Utt said. “We had a good visit, and (Tenaska) will be back in town next week.”

Utt isn't yet sure how it will all play out, but he is hopeful that Knox County may soon be home to its first solar farm.

“It's looking like this could move forward,” he said.

Utt said he also recently met representatives of another solar company, Origis Energy in Miami, Florida, and they, too, have paid a visit to Knox County in search of solar farm-appropriate ground.

“The way they've explained it to me is that our climate here is just right for a solar farm,” Utt said. “The amount of sun we receive in a day, the elevation, or really lack thereof, we just have a lot of that flat, sunny land they need.”

The Indianapolis Airport Authority currently operates one of the largest airport solar panel farms in the country. The farm was completed years ago then nearly doubled in size in 2014 to 76,000 solar panels, generating 31 million kilowatt hours, enough to power 3,200 average U.S. homes, according to a report in the Indianapolis Star.

Vectren Corp. announced early this year that it was developing two solar farms in the Evansville area, according to a report by the Associated Press. One is adjacent to Evansville's Oak Cemetery and another is located near North Junior-Senior High School.

Together they are expected to produce 4 megawatts of electricity, enough to power about 600 homes.

Vectren, too, announced plans in March for a 50-megawatt solar farm to be built in Spencer County.

Situated near Troy, it will consist of about 150,000 solar panels, according to a report in the Evansville Courier & Press.

Solar farms continue to pop up across the Hoosier state, but southwest Indiana isn't home to a lot of alternative energy sources, which makes it appealing to companies searching for a place on the grid, Utt said.

Duke Energy is developing a 17-MW solar plant at the Crane Naval Surface Warfare Center, and UDWI REMC and Daviess-Martin REMC along with Hoosier Energy REC have a 1-MW “solar array” along Intestate 69 sough of Bloomfield.

According to the state, Indiana ranks 23rd among the 50 states in solar power with almost 300 MW of generation. That equals almost $475 million in investment providing almost 2,800 jobs.

Over the next five years, again according to the state, another 525 MW of solar power is expected to be added.

These solar farms would bring a generous, short-term contribution to Knox County in that they would provide a lot of construction jobs up front, Utt stated. When completed, however, solar farms typically only employ 4-5 people full-time.

But they do often represent $150 million in capital investment, which would bolster local property tax revenue as solar farms are taxed at a higher rate than agricultural land, Utt said.

“It would just really help with our overall property tax base,” he said.

Aggregation paves the way for a more diverse corporate renewables market

Posted by Laura Arnold  /   September 08, 2018  /   Posted in solar, Uncategorized, wind  /   No Comments

Editor’s note: This essay was contributed by one of the NGOs that make up the Renewable Energy Buyers Alliance (REBA), a consortium dedicated to growing large buyer demand for renewable power and helping utilities and others meet it. You can find the other articles here. REBA’s next annual summit will be Oct. 14-16 in Oakland, California ahead of VERGE 18.

Akamai, Apple, Etsy and Swiss Re last month announced a renewable energy purchase that the four companies negotiated together, with technical support from their advisor 3Degrees.

This deal will lead to the development over the next two years of 125 megawatts (MW) of wind energy near Chicago by Geronimo Energy, and a 165 MW solar photovoltaic array located in Virginia by sPower. Both projects will be connected to the wholesale electricity market PJM and will produce enough electricity to power 74,000 homes.

The collaboration among the four buyers may be the first successful all-corporate execution of "aggregation" — a process whereby two or more buyers leverage their collective purchasing power and enhance their chances of success — in renewable virtual power purchase agreements (VPPAs) in the United States.

Each buyer has a separate contract with the project developers and a different share of the overall 125 MW and 165 MW. Apple is the largest buyer, purchasing 111 MW on the Illinois project and 134 MW on the Virginia project. Akamai signed 9 MW in Illinois and 27 MW in Virginia. Apple, Akamai and Swiss Re shared the wind project, and Etsy joined Apple and Akamai on the solar deal.

By aggregating demand with Apple and Akamai, Etsy was able to sign a 4.5 MW contract, currently the smallest corporate VPPA on record in the United States. If replicated, this procurement model could offer large-scale renewable project access to corporate buyers well beyond the Fortune 500.

Renewable VPPAs: high-impact but challenging for small buyers

The four companies join over 30 other U.S. corporate buyers executing VPPAs with off-site renewable energy projects, which have become the prevalent structure for corporate renewables procurement in the United States.

A VPPA is "virtual" because it does not involve ownership or transfer of electrons. It is a financial transaction wherein a buyer pays a fixed price for electricity in exchange for variable wholesale market prices. This structure offers buyers access to economies of scale and is widely available across U.S. liberalized electricity markets.

A corporate buyer chooses a VPPA for two main reasons: to hedge against rising electricity costs and to make a large-scale renewable energy impact. As more companies set ambitious renewables goals, many aspire to the VPPA model. But it entails a complex deal process and exposes the buyer to financial risk and high transaction costs. These barriers usually prevent smaller and less experienced buyers from participating in this market.

How aggregation helps smaller VPPA buyers

These four deal partners have demonstrated that aggregation greatly can reduce transaction costs, risk and complexity, and that they enable smaller buyers to succeed in VPPAs. The Business Renewables Center (BRC) spoke to Chelsea Mozen, Etsy’s sustainability lead, and Nicola Peill-Moelter, senior director of environmental sustainability at Akamai, to gain insight into their groundbreaking partnership.

The partnership’s aggregation model has three main pillars: alignment and trust among the buyers; a lead buyer signing the largest contracts; and ongoing coordination efforts.

1. Alignment and trust among the buyers

The four companies have a strong commitment to renewable energy. Apple, Etsy and Swiss Re have all pledged to use 100 percent renewable electricity and are members of the RE100 campaign. Akamai has set a goal to use 50 percent renewable energy. What ultimately kept the four buyers together, however, is the trust they gained in one another.

The Akamai–Etsy connection was made at one of BRC’s workshops. Mozen recalls that Etsy was "exploring projects on our own in PJM and was not finding anything that worked for us at the small size we needed. We connected [with Akamai] at the BRC boot camp and the trust and the relationship that we developed there led to our collaboration on this project. [Peill-Moelter] of Akamai directed me to 3Degrees." Swiss Re came in through 3Degrees as well.

Akamai is a supplier of cloud computing services to Apple. Through Apple’s Supplier Clean Energy Program launched in October 2015, their supply chain participants are encouraged to use clean energy.

2. A lead buyer signing the largest contracts

Thanks to Apple being willing to sign the largest contracts with both renewable energy projects, Akamai, Etsy and Swiss Re were able to negotiate favorable contractual terms, including a better VPPA price.

Etsy, a first-time buyer, was able to leverage Apple’s influence on the project developers to finally close a deal. Additionally, being able to work in partnership with an experienced buyer such as Apple was helpful in Etsy’s securing internal approvals for the deal.

Peill-Moelter, a more experienced buyer who already successfully had led Akamai’s first VPPA, 7 MW in the Electric Reliability Council of Texas (ERCOT) market in 2017, also found an advantage in working with a larger lead buyer: "Thanks to Apple being on our side of the negotiation table, we were able to secure … by far a better deal than with Akamai’s earlier project in Texas."

3. Ongoing coordination efforts

The biggest challenge presented by the aggregation model is keeping multiple buyers moving along in the deal process. Each needs to execute on plans and secure internal approvals promptly, to avoid holding up the entire group.

The successful coordination of the aggregation process requires a leader — a buyer or adviser. In the Dutch Wind Consortium (PDF) transactions, AkzoNobel, one of the four buyers, was the initiator and de facto leader of that aggregation initiative. Akamai, Apple, Etsy and Swiss Re delegated this important role to 3Degrees.

"Ensuring the participants had similar objectives and were able to move internal decision making forward on a common timeline, was important…. 3Degrees facilitated these conversations and helped each company reach the point where they could proceed with confidence," said Erin Craig, vice president, energy and climate practice, at 3Degrees.

Replicating the aggregation model

The aggregation model is a powerful proof of concept that collaboration among buyers can help break through some of the market barriers that hold back smaller buyers in large-scale renewables procurement. With care given to three elements, the model can be replicated by other groups of buyers in the United States.

First, developing alignment and trust among the buyers is key.

Second, this aggregation was powerful in giving Akamai, Etsy and Swiss Re access to favorable contract terms. Others looking to replicate their success will require a major buyer partner playing Apple’s role in negotiations with developers.

Third, the concerted action of two or more buyers in aggregation requires advance planning and ongoing coordination. In this example, advisor 3Degrees played that important role.

Learn more about corporate renewable energy procurement at VERGE 18 in October in Oakland, California.

We anticipate the aggregation model will become a familiar contracting method with standardized contracts that buyers, developers and financiers are all comfortable with. Buyers not previously engaged in renewables will gain confidence in knowing that other companies have used this method.

Clearly, there is a good amount of work yet to do for corporate buyers that are not only intent on sourcing renewable energy for themselves, but also passionate about shaping the market for collective benefit. The upcoming REBA Summit at VERGE 18 in October will unite, educate and provide opportunity for over 500 market participants to consider whether renewable energy aggregation is a viable option for reaching their sustainability goals.

Ameren Missouri approved for first pilot subscriber solar program

Posted by Laura Arnold  /   September 06, 2018  /   Posted in Uncategorized  /   No Comments

Ameren Missouri approved for first pilot subscriber solar program

IndianaDG Joins as Friend of the Court in Duke Case

Posted by Laura Arnold  /   September 06, 2018  /   Posted in wind  /   No Comments

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Several documents of interest to IndianaDG readers were filed on 9/4/18 with the Indiana Supreme Court. IndianaDG has joined with several other groups as a Friend of the Court or Amici Curiae in a Legal Brief that was filed.

The attorney representing Michael Mullett and his wife Patti March who are Duke Energy Indiana customers in Columbus, IN,  framed the issue on transfer on the first narrative page of the Petition:

 

 Whether the Court of Appeals’ decision conflicts with multiple decisions of this Court and departs from fundamental principles of Indiana utility and appellate law by upholding a provision of a final order of the Indiana Utility Regulatory Commission which authorized the recovery through customer rates of $29 million paid by an investor-owned utility as damages for its breach of a purchased power agreement with an energy supplier which had previously been fully and finally adjudicated by the Seventh Circuit of the United States Court of Appeals and had caused energy not to be generated or delivered for the benefit of customers?

The arguments explaining why the Supreme Court should grant transfer, vacate the Court of Appeals decision, and remand the case to the Commission for additional proceedings and relief for Duke Energy Indiana customers (including but not limited to a refund of the $29 million) is then set forth in detail in the remainder of the Petition.

 

Here are the documents filed 9/4/18 with the Court that includes Indiana Distributed Energy Alliance (IndianaDG):

Mullett v DEI--Motion to Appear as Amici Curiae--9-4-18

Mullett v DEI--Appearance of Counsel for Amici Curiae--9-4-18

Mullett v DEI--Amici Curiae Brief--9-4-18

Here is an excerpt from the Amici Curiae brief:

SUMMARY OF ARGUMENT
This case presents a fundamental question of law and fairness about whether Indiana utility consumers should be forced to pay higher rates and charges when a monopoly electric utility breaches a contract with a third-party energy provider, and the Indiana Utility Regulatory Commission (“Commission” or “IURC”) fails to fully analyze and determine the reasonableness and prudency of the utility’s breach of contract actions that created the financial liability. Duke Energy Indiana LLC (“Duke Energy”) breached its contract with the Benton County Wind Farm (“Benton”) that required Duke Energy to purchase 100 megawatts of wind energy and to procure
transmission to deliver the energy to the electricity grid managed by the Carmel, Indiana based Midcontinent Independent System Operator (“MISO”). Benton sued Duke Energy for damages
due to the breach of contract. In 2016, the United States Court of Appeals for the Seventh Circuit ultimately ruled in Benton’s favor. The U.S. Court of Appeals held that Duke Energy was at fault and liable for breach of contract based on its failure to reserve transmission capacity to carry the wind energy that was generated, and ordered Duke Energy to pay Benton damages for its breach of contract:

….Duke must pay Benton. The risk of inadequate transmission was contemplated by the contracting parties and allocated to Duke. By accepting this risk, Duke enabled Benton to finance its project; otherwise potential investors might have feared exactly the overcapacity situation that has come to pass. Duke wanted
Benton’s facilities to exist and called them into existence by promising to pay even if a shortfall of transmission services should lead to curtailment of deliveries.

Benton County Wind Farm v. Duke Energy Indiana, 843 F. 3d 298, 303-04 (7th Cir. 2016). The U.S. Court of Appeals remanded the case to determine damages, and the parties reached a settlement by which Duke Energy agreed to pay damages of $29 million to Benton.

After the settlement, Duke Energy filed a fuel adjustment case at the Commission requesting authorization to charge consumers for the entirety of the $29 million of its damages resulting from its breach of contract with Benton County. Application of Duke Energy Indiana for a Change in Its Fuel Cost Adjustment, Cause No. 38707 FAC 113, Sept. 27, 2017. Under Indiana law, the Commission must specifically examine and find any such charges to be just and
reasonable before it can permit a utility, such as Duke Energy, to force consumers to pay the charges–here, the $29 million in damages. Ind. Code. §8-1-2-4. Instead of analyzing the reasonableness of Duke Energy’s actions in breaching the contract, however, the Commission only looked at whether the amount of the settlement was reasonable. By asking and addressing
the wrong question, the Commission reached the wrong answer by failing to properly apply the just and reasonable standard and violating Indiana law in a manner that raises rates to Indiana
consumers without fundamental fairness. That result is unfair and is contrary to law.

Appellants Mullett and March argued on appeal that forcing consumers to pay these higher charges of $29 million was unreasonable as a matter of law because Duke Energy’s
breach of contract caused the financial damages and the loss of wind energy service.

Accordingly, Duke Energy and its shareholders should be responsible for Duke Energy’s errors. The Indiana Court of Appeals ruled in Duke Energy’s favor by joining the Commission in again
focusing on the reasonableness of the settlement amount, rather than Duke Energy’s breach that caused the damages and loss of service. Mullett v. Duke Energy Indiana, Court of Appeals Case
No. 93A02-1710-EX-2468 Opinion (May 21, 2018). With due respect, the Indiana Court of Appeals’ decision is erroneous and contrary to law. If left to stand, it sets an unfortunate precedent allowing consumers to be charged for a monopoly utility’s unreasonable decision to breach its contractual obligations, and it risks continued unfairness and illegality in future such
cases. Consumers should not be forced to pay for these types of utility mistakes.

The Supreme Court should grant the Petition to Transfer in this case in order to fully consider the important issues on appeal. The Supreme Court should then reverse and remand the Indiana Appellate Court’s decision and require the Commission to fully and fairly determine the reasonableness of Duke Energy’s actions in breaching its contract, as well as the fairness and legality in these circumstances of charging the entirety of the consequent damages to consumers who bear no fault at all.

ARGUMENTS:

  1. Indiana law does not allow Duke Energy to force customers to pay unreasonable and unjust higher utility charges for damages resulting from its breach of contract.
  2. Both the Indiana Utility Regulatory Commission and the Indiana Appellate Court asked the wrong question and then reached the wrong answer.

Here is what the Indiana Court of Appeals said in their order dated 5/21/18:

Case Summary

Appellee Duke Energy Indiana, LLC (“Duke”) and Benton County Wind Farm (the “Wind Farm”) entered into a contract under which Duke agreed to buy power from the Wind Farm. In 2013, a dispute arose after Duke failed to buy energy from the Wind Farm. The Wind Farm filed suit claiming that Duke owed it money for lost production under the parties’ contract. The parties eventually settled and Duke went to the Indiana Utility Regulatory Commission (the “Commission”) seeking to recover its costs from ratepayers. Appellants Michael A. Mullett and Patricia N. March (the “Appellants”) intervened in the proceeding and objected to Duke’s request. After a hearing on the matter, the Commission approved Duke’s request to recover the costs from its ratepayers over a twelve-month period.

Appellants now appeal arguing that the Commission’s order is contrary to law because the damages are “liquidated” and “hypothetical” and it amounts to impermissible retroactive ratemaking. Finding that substantial evidence supports the Commission’s order and no other error, we affirm.

The Indiana Court of Appeals goes on as follows:

Facts and Procedural History
In 2006, Duke and the Wind Farm entered into a Renewable Wind Energy Power Purchase Agreement (“PPA”) in which Duke agreed to purchase a portion of the energy generated by the Wind Farm. After purchasing the energy from the Wind Farm, Duke would immediately sell it into the Midcontinent Independent System Operator (“MISO”) wholesale energy market. The Indiana Utility Regulatory Commission (“the Commission”) approved the PPA in its entirety in 2006, concluding that “the terms of the Wind [PPA were] reasonable.” Duke App. Vol. II, p. 17.

The Commission also recognized that Duke would be incurring significant costs in connection with the PPA. Consequently, in order to further the Commission’s policy of encouraging the development of renewable resources, the Commission authorized Duke to recover all of its PPA costs from ratepayers for the entire twenty-year term:

[T]he Commission finds that Duke Energy Indiana should be authorized to recover the Wind [PPA] costs provided for in the contract for the full 20 year term of that contract[.]
Duke App. Vol. II, p. 19.

Following changes to certain rules and regulations in 2013, a dispute arose regarding the extent of Duke’s contractual obligations to the Wind Farm. Duke believed that based upon the parties’ contract, it was only required to accept and pay for energy that the Wind Farm generated and delivered to Duke. The Wind Farm, however, interpreted the contract to mean that Duke had to pay for lost production in addition to the power it delivered to Duke.

The Wind Farm sued Duke in federal court to resolve the disputed contract interpretation. The federal district court agreed with Duke’s interpretation and granted Duke’s motion for summary judgement in 2015. The Wind Farm appealed to the Seventh Circuit, which agreed with the Wind Farm’s interpretation, reversed the district court’s ruling, and remanded with instructions for a determination of damages, i.e. how much Duke owed the Wind Farm for lost production.

The Wind Farm and Duke entered into settlement negotiations. At the conclusion of the settlement negotiations, the parties agreed on $29 million, which Duke believed was approximately equal to what it would have cost Duke and its ratepayers had the parties agreed with the Wind Farm’s contact interpretation at the outset.

Duke reported to the Commission in its Fuel Cost Adjustment (“FAC”) filing on July 27, 2017, that the dispute between Duke and the Wind Farm had settled.1 In its report, Duke also indicated its intention to recover the lost production costs from ratepayers over a six-month period.2 The Office of Utility Consumer Counselor (the “OUCC”) had no objection to Duke’s recovery of the $29 million as costs Duke incurred under the PPA, but requested that the recovery be spread over a twelve-month period rather than the six-month period Duke had proposed. Duke agreed to spreading the recovery out over a twelve-month period. On September 21, 2017, Duke filed its Proposed Form of Order in which it proposed to recover the $29 million through rates over a twelve-month period.

Meanwhile, Appellants intervened in this proceeding as ratepayers and filed a Brief in Opposition to Approval of Liquidated Damages Payment as an Expense Recoverable through Rates as their legal objection to Duke’s Proposed Order. Thereafter, Duke filed its Response to Appellant’s Brief in Opposition. On September 27, 2017, the Commission entered its final order approving proposed Duke’s rate recovery over a twelve-month period.

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