Rather than discuss each bill by number, as that would be an incredibly difficult process to recreate in a coherent manner, I think it best to discuss the issues that the utilities and the Governor’s office attempted to pass into law, and surely will be back with in future sessions. Their efforts ultimately failed. For the most part, we have Rep. Moses, Rep. Grubb, and believe it or not, AT&T, (yes, I said AT&T), to thank for stopping this language. For one brief moment in mid-April, our old nemesis, AT&T, became our best friend, more on that later. For the sake of reference, the bills I am combining are as follows: SB 201, SB 420, SB 519, and HB 1305. Two attempts were made to move the language from those bills; first into HB 1360, and then eventually in the 11th hour into the conference committee report on SB 420. So we can hold legislators accountable for their votes, I will briefly describe how those events unfolded and provide the votes on the aforementioned bills.
“Renewable” energy legislation
Originally, HB 1360 was Rep. Kreg Battles (D, Vincennes) bill which intended to create an alternative energy fund for the REMCs. After the bill moved out of the House, it was assigned to the Senate Tax and Fiscal Policy committee and became a vehicle for Sen. Hershman to do the bidding of the utilities and insert all of their requested language, explained below, into the bill. The bill moved out of committee by a vote of 10-1. However, when the bill was scheduled for 2nd reading on the Senate floor, 15 amendments were offered, most of which were offered by CAC and AT&T. The amendments muddied the waters so much, that the bill was not called down and essentially died.
SB 420, authored by Sen. Hershman, Sen. Marlin Stutzman (R, Howe) and Sen. Michael Young (R, Indianapolis), included all of the language that will be discussed below. It was first heard in the Senate Utilities Committee. The hearing was held in the Senate Chamber. It passed by a vote of 8-3. On 2nd reading in the Senate, Sen. Hershman offered an amendment to change the name of the bill from Renewable Energy to State Energy Policy, as he confessed the “title Renewable Energy was deceiving.” It was the first honest thing Sen. Hershman said the whole session. I guess there is a first for everything. The amendment was adopted by a voice vote. The bill then moved on 3rd reading by a vote of 42-7. The bill then moved to the House and was sponsored by Rep. Grubb, Rep. Koch, Rep. Battles, and Rep. Randy Borror (R, Ft. Wayne). It was heard in the House Utilities Committee and significantly amended by Chairman Moses. He removed any and all language dealing with nuclear power, and watered down the tracker language. It still however defined coal as a renewable resource, and mandated that ratepayers pay for the utility infrastructure necessary to deliver electricity and natural gas to ethanol and bio-fuel facilities, provisions which CAC strongly opposes. It moved out of committee by a unanimous vote. For some reason, the committee roll call is unavailable on the General Assembly website (although it is posted on ours), but the committee report shows an 11-0 vote. A vote of 93-3 on 3rd reading sent the bill back to the Senate. Sen. Hershman dissented on the House amendments, so a conference committee was formed. The committee was comprised of Sen. Hershman, Sen. Errington, Rep. Moses, and Rep. Koch. Sen. Hershman did not offer a committee report until late Tuesday night, the day before the session was to conclude. The report not only returned the bill to the original language of SB 420, but added even more provisions written by the utilities that had not been vetted in any committee hearing. Needless to say, Rep. Moses would not agree to the committee report, offered his own, which mirrored the House engrossed version of SB 420, which was rejected by Sen. Hershman, killing the legislation.
SB 519, authored by Sen. Phil Boots (R, Crawfordsville), included the language extending CWIP provisions to nuclear power plants. No committee hearing was held on SB 519, but the language did find a home on the Senate versions of HB 1360 and SB 420.
HB 1305, authored by Rep. Grubb, was a renewable energy standard which included coal in the definition of renewable resources and was loaded with tracking provisions for the utilities and the ethanol industry. A hearing was held in the House Utilities Committee but no vote was taken, killing the bill. However, Rep. Grubb did cross chambers and ask for Sen. Hershman’s help in moving his legislation, which is how Rep. Grubb’s language ended up in both HB 1360 and SB 420 in the Senate.
SB 201 was written by Gov., Daniels office. It was authored by Sen. Gard, Sen. Stutzman, and Sen. Merritt and contained the eminent domain language and open-ended tracking provisions for “green” energy development. It was heard in the Senate Utility Committee. The only opposition to the bill was offered by CAC and INDIEC, the advocacy group for industrial ratepayers. SB 201 was voted out of committee unanimously 11-0. It then moved out of the full Senate on 3rd reading 50-0. The bill was sponsored in the House by Rep. Moses, Rep. Murphy, and Rep. Grubb. Rep. Moses elected not to give the bill a hearing, however, the language from the bill found its way into the Senate versions of HB 1360 and SB 420.
Trackers for transmission, distribution, and “green” infrastructure projects
Trackers allow the utilities to bypass most of the regulatory process so that they can raise rates when their costs go up without having to lower rates when their costs go down. This language would have required the IURC to allow the recovery of costs incurred by an energy utility in connection with a green infrastructure project that provides electric, steam, or gas service to or receives electric, steam, or gas service from an alternate energy production facility. It also provided that an energy utility may implement a rate adjustment if the IURC failed to act on an application.
This language was presented under the guise of creating an infrastructure for "green" power. In fact, this language did not give the utilities any authority to do anything that they cannot already do. Consumer protections have been in place for decades to protect consumers from the profit-driven greed of monopoly utility companies. These protections have been under attack by those same utilities for years. This language is another example of the utilities’ attack on those protections, at a time when consumers are most vulnerable. With the state of the economy and unemployment rates going up, the last thing we need right now is to give the utilities a blank check to prey on ratepayers in order to pad the pockets of their shareholders.
Allowing the utilities to pass on costs to ratepayers with no regulatory oversight is unthinkable. That would essentially be deregulation without actually deregulating anything. Also, forcing ratepayers to subsidize the utility infrastructure to ethanol plants is economic suicide. Ethanol plants are going bankrupt across the State right now because it is not a financially viable industry anymore. Asking ratepayers to subsidize new plants, while current plants declare bankruptcy and plants under construction are abandoned is insanity!!!! The ethanol and bio-fuel industry is receiving millions from States and billions from the Feds in taxpayer subsidies, to add ratepayer subsidies to that dying industry is unthinkable; as if taxpayers and ratepayers were different people.
Trackers for infrastructure were found in the language of SB 201, SB 300, SB 420, HB 1305, and the Senate version of HB 1360. Rep. Grubb's language, in SB 420 and HB 1360, allowed recovery of up to $50 million of ratepayer dollars for every ethanol or bio-diesel plant, and up to $150 million of ratepayer dollars, per utility, per year!! The tracker language in SB 201 did not cap the amount utilities could recover and eliminated regulatory oversight!!!
Utilities have been trying for years to get trackers for transmission and distribution. Let’s keep in mind that utilities are charged by law to provide reliable electric service to the public. In exchange for this legal contract, the utilities receive a monopoly service territory, a captive ratebase, and a guaranteed rate of return. Moving and distributing electricity is part of the normal cost of doing business. They should not be allowed to bypass the regulatory process for operating and maintenance costs associated with fulfilling their legal obligation to the public.
This is where our good buddies at AT&T came into the picture. With all the talk of a Smart Grid, or a transmission system that acts as a two way communication system between the utilities and their customers, the electric utilities would be able to participate in offering telecommunications services. This was of course made possible by AT&T and the rest of the telecom cabal pushing to deregulate telecommunication services during the 2006 session. AT&T feels it is unfair for electric utilities to use electric ratepayer dollars to subsidize their participation in the telecom market. Essentially, this would put AT&T and the other telecom providers at a competitive disadvantage as they do not have a captive ratebase to pay for infrastructure, even though they asked for a deregulated market. Therefore, AT&T offered an amendment on the 2nd reading of HB 1360 in the Senate that would have required the electric utilities to refund electric ratepayers any dollars used through the transmission trackers that was then used to provide telecom services. The utilities would have none of this nonsensical talk of refunding ratepayers and effectively ordered Sen. Gard to kill HB 1360. Apparently, this caused quite the ripple in the Senate Republican Caucus about which paymaster to carry water for, the Indiana Energy Association or the Indiana Telecommunications Association. Oh to be a fly on the wall!!
Eminent Domain for new transmission
This language would have allowed a public utility that proposed to take, acquire, condemn, or appropriate land, real estate, or any interest in land or real estate for certain projects related to electric line facilities to obtain from the IURC a certificate of authority. It modified common law to provide that the owner of land against which eminent domain is initiated may object to the public purpose and necessity of the project only if the condemnor has not been issued a certificate of authority. It also limited the recourse of a land owner to challenge only the compensation amount, and not the taking of land if the IURC issued a certificate of authority.
This language essentially granted full authority of routing and siting of transmission to the IURC, removing local jurisdiction. The utilities don’t want to be bothered and delayed by localities and landowners who may object to transmission lines over their schools, or new pipelines burrowing through their farm fields or neighborhoods. Not only do they want to erode ratepayer protections, they are now trying to re-write decades of property law, all in the name of corporate profit and greed.
CWIP for non-carbon or low carbon power plants (a.k.a. nuclear power)
It should be noted that prior to 2002, utilities could not charge ratepayers for building power plants until after those power plants were actually producing electricity (used and useful). In 2002, the Indiana General Assembly passed a bill for CWIP, or construction work in progress. CWIP allows utilities to charge ratepayers for building “clean coal” power plants (defined as power plants that burn Illinois Basin coal with reduced emissions) before those power plants are actually producing electricity. Indiana’s CWIP law goes beyond that to give the utilities an extra 1.5% profit for building more expensive coal-fired power plants.
Non-carbon or low-carbon is industry code for nuclear power. This is an attempt by the utility industry and the Daniels administration to amend the “clean coal” statute to add nuclear generation to the definition so they can CWIP a nuclear reactor. The starting price for building a nuclear reactor is $10 billion, and this bill would allow the utilities to begin recovering this money before the power plant is operational and producing electricity. This language also added trackers for the associated transmission and distribution systems necessary for the new generation, and added trackers for the cost recovery of fees associated with siting, design, licensing, and permitting of the new generation facility even if the new facility is never built or placed in service.
The reason they want power plant CWIP is the same reason they wanted it for “clean coal,” the utilities want to build power plants that Wall Street is reluctant, and in most cases refusing, to finance. This bill will dramatically increase utility rates by incentivizing excessively expensive nuclear power, and would undermine the move toward renewable energy and energy efficiency which create more jobs, save ratepayers money, improve the quality of our environment, and vastly improve public health. Nuclear power also does nothing towards mitigating climate change as nuclear plants take on average ten years to construct, much too slow to have any meaningful impact on climate change. A new reactor would have to be built every two weeks to reduce carbon dioxide emissions 20% by 2050, at a cost of over $1,800 trillion dollars. Obviously, nuclear power is the slowest and costliest way to reduce carbon dioxide emissions, and would further divert resources away from renewables, efficiency, and distributed resources.
Redefining “renewable energy”
The utilities have been relentless in their pursuit to make sure that any renewable energy standard defines coal as a renewable resource. They went a step further this year, attempting to add nuclear to that definition. There were also legislators who attempted to add tire incineration, coal bed methane, coal mine methane, and batteries charged at coal plants as renewable. There was even an attempt to differentiate between “clean” coal and IGCC, and make those definitions separate. This was clearly an attempt by Duke Energy to make sure that their Edwardsport project would count towards any mandate. The definition of IGCC also defined it as either producing electricity or substitute natural gas, which means that the Leucadia developers and supporters, and the potential buyers of their SNG were working hard behind the scenes to make sure that the Rockport project would count towards any mandate as well.
The way this language was written, any standard, other than the one offered in SB 300, could have been met by the utilities without them having to construct a single wind turbine or having to hang a single solar panel. This is just the utilities refusing to change their behavior. The reason the utilities resist investments in renewable energy is because renewable energy is cheaper than coal and nuclear. The more money they spend, the more money they make. Therefore, they choose the more expensive option.
Trackers for “federally mandated costs”
This language was introduced in the conference committee report prepared by the Indiana Energy Association, sorry, I mean Sen. Hershman. This short, but loaded paragraph would have allowed the electric utilities to pass any and all costs related to any federal renewable energy standard, carbon legislation, pollution control requirement, or any other legislation passed by the Federal government related to their dirty energy onto utility ratepayers with little regulatory oversight.
Just as the utilities don’t want to invest a dime of their own money into the R&D of carbon capture or storage, they also don’t want to be held accountable for the pollution and toxins that their business plan has been spewing out for decades now. They don’t want to have any skin in the game and expect their captive ratepayers to pay any and all costs associated with their bad business decisions; decisions I must add that has wreaked horrifying damage on our environment, has been killing people for decades now, is starting to bankrupt our State, and is now melting the planet. The energy utilities must be held accountable for their pollution and greed, and it should be the stockholders of these corporations that bear the costs, not captive ratepayers who had nothing to do with their business plan. Where is the incentive for these polluters to change their behavior when it is the ratepayers being hit with all the pain?
So once again, thanks to the arrogance, hubris, and greed of the investor owned utility companies, the Indiana General Assembly fails to pass an energy policy that focuses on energy efficiency and renewable energy. I hesitate to call it a successful session, but I can’t help but feel somewhat gratified that the investor owned utilities failed to reach any deeper into the pockets of Indiana ratepayers.
Despite that fact, we do owe gratitude to Rep. Dvorak, Rep. Pierce, Rep. Moses, Rep. Grubb, Sen. Breaux and Sen. Errington for protecting the ratepayers of Indiana. We also owe Rep. Battles a debt of gratitude for agreeing to pull out the nuclear energy language from his alternative energy incentives for REMCs (rural cooperatives) bill, which he successfully got through by inserting that language into another bill during the conference committee process.
Be advised, CAC will always be consistent in working to protect ratepayers and in working to pass progressive energy legislation that focuses on renewable energy and energy efficiency. I will leave you with the words of my favorite progressive radio host Thom Hartmann: "Activism begins with you, Democracy begins with you, get out there, and get active! Tag, you're it!"
-Kerwin Olson, CAC Program Director
SB 201: State energy policy (The Utility Tracker Christmas Tree)
SB 519: Cost recovery for low carbon energy facilities
SB 420: Renewable energy (Redefining “renewable energy” & Opening Indiana’s Door to Nuclear Power)
Authors: Sen. Hershman (R), Sen. Stutzman (R), Sen. Young (R), and Sen. Kruse (R)
Sponsors: Rep. Grubb (D), Rep. Borror (R), Rep. Koch (R), and Rep. Battles (D)
Conferees: Sen. Hershman (R), Sen. Errington (D), Rep. Moses (D), and Rep. Koch (R)
Status: Died in Conference Committee
HB 1305: (Redefining) Renewable energy
HB 1306: Voluntary renewable portfolio standard program
HB 1360: State Energy Policy
These are the issues of immediate importance we are working on right now.