Legal briefs

Legal briefs

ProLiance contracts with Indiana Gas and Citizens Gas under scrutiny

In September 1997, the Indiana Utility Regulatory Commission approved the contracts between Indiana Gas, Citizens Gas and ProLiance, a for-profit, unregulated affiliate of the two utilities.

Under these contracts ProLiance will purchase gas on behalf of the two utilities and provide gas supply planning and portfolio management services for the utilities on a combined basis. Allegedly, this arrangement will result in millions of dollars of savings each year. As a result, the IURC determined that the these contracts are "in the public interest."

However, CAC and the other complainants (other customers of the utilities and the Office of the Utility Consumer Counselor) disagree with the IURC. What the utilities really accomplished, and the IURC sanctioned, is the unilateral deregulation of their gas supply planning and procurement functions, and the collection of unregulated profits from the sale of gas to their customers. CAC does not believe that such an arrangement can be in the public interest.

CAC and the other complainants have appealed the IURC’s order to the Indiana Court of Appeals. A decision from the Court is expected this fall.

IPL agrees to implement "Green Power" as part of "Elect Plan"

The IURC has approved an alternative regulatory plan for Indianapolis Power & Light Company. CAC and the OUCC had been negotiating with IPL regarding the details and implementation of this plan and reached agreement in early 1998. Called the "Elect Plan," IPL will be offering its residential customers three different pricing options: a Green Power plan, a Fixed-Rate plan, and a Sure Bill plan. Customers will be able to choose one of these three options or stay with their current, standard regulated electric rates.

The Fixed-Rate option allows customers to lock in their existing electric rate for a year or more (bills would vary with usage, but the charge per kilowatt hours would remain the same); the Sure Bill option allows customers who want to know exactly how much their bill is going to be each month to pay 12 equal monthly bills.

The Green Power option allows customers to direct IPL to purchase environmentally friendly or "green" power that would displace power generated from the fossil fuel sources IPL currently uses. While customers will have to pay more for Green Power, IPL has agreed not to add a profit premium to the price. The only added cost will be the actual cost of purchasing the more expensive green power.

Pursuant to the settlement agreement, IPL has also agreed to conduct an ongoing feasibility study to monitor and evaluate technological, economic and marketing developments regarding renewable energy resources including solar, photovoltaic, wind, biomass and geothermal resources.

Court of Appeals rules that IURC has broad discretion

The Indiana Statewide Association of Rural Electric Cooperatives filed a petition for approval of an alternative regulatory plan on behalf of most of the rural electric cooperatives in Indiana. CAC, OUCC, Central Soya and General Motors moved to dismiss the petition before the IURC on the grounds that it was unlawful and unconstitutional, depriving REMC customers of just and reasonable rates and due process of law. After the IURC denied the motion to dismiss, CAC and the other customer parties appealed the decision to the Court of Appeals.

The Court of Appeals recently issued its decision upholding the IURC’s denial of the motion to dismiss. The court indicated that the Alternative Utility Regulation Act vests the IURC with wide authority to decide to what degree to exercise its jurisdiction over energy utilities. Consequently, the customer groups’ appeal was premature because the IURC had not yet approved an alternative regulatory plan for the affected REMCs. The court expressed no opinion concerning the merits of the Statewide plan, but indicated that if the plan is approved by the IURC, the legal merits of the plan can be appealed to the court at that time.

A hearing on the merits will be held in early September. CAC will continue to participate in the proceedings to ensure that the alternative regulatory plan proposed by the REMCs does not take advantage of consumers.

CAC to challenge federal bailout of high-cost electric utilities

CAC has joined with Indianapolis Power & Light, Indiana Industrial Electric Consumers and the OUCC to challenge in federal circuit court the orders of the Federal Energy Regulatory Commission that ordered "stranded cost recovery" from both wholesale and retail customers for high-cost electric utilities affected by competition.

The appeal of the Indiana groups will argue that FERC lacks the statutory authority under the Federal Power Act to order the recovery through customer rates of stranded costs, principally the sunk costs of high-cost generating plants, especially nuclear ones. Estimates of stranded cost recovery nationally have ranged as high as $200-300 billion, effectively eliminating any savings which could be realized through true competition.

This is CAC’s first appeal ever of a FERC order. Initial briefs in the appeal should be filed early this fall.

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