The main problem with the energy debate in Washington D.C. is that no one is thinking out of the box. The entire discussion has revolved around 20th Century fixes for 21st Century issues. Both political parties are business-as-usual thinkers when it comes to energy technology and meeting electric demand in the future. The mainstays of our electric generation system today are still coal and nuclear plants. The assumption in Congress is that these technologies must be relied upon to provide power well into the future. That assumption is wrong, particularly for coal-fired power.

A report prepared by Synapse-Energy Economics (a firm that consults on energy and utility issues) for the Civil Society Institute (a Boston-based think tank) titled “Beyond Business as Usual: Investigating a Future Without Coal and Nuclear Power in the US” demonstrates that 100% of coal and 30% of nuclear plants can be phased out by 2050 at a net savings (on purely a cost basis) to ratepayers using existing technology. Wind power (26% of electric generation by 2050) and energy efficiency play large roles in this scenario, as does natural gas-fired plants.

The report takes into account the variability of wind by projecting that existing gas-fired plants, which are much more flexible than coal-fired plants, would pick up the slack where the wind isn’t blowing. The report also projects that 70% of the nuclear fleet would remain intact. Energy efficiency would reduce electric energy use by 40% over business as usual, with an easily achievable 1.3% average annual decrease in electric demand over the 2010 to 2040 timeframe, thereby keeping natural gas prices under control. The report demonstrates that the huge summer electric power reserve margins (25% in Indiana’s region when 15% suffices) we enjoy today allow us to reduce demand systematically with efficiency measures while we steadily deploy more renewable resources and customer-owned generation that ultimately replaces the coal fleet.

Coal and utility industry spin doctors are now tying coal to patriotism. CAC sees no patriotism in killing 24,000 people prematurely with air pollution annually (the equivalent of 7 twin tower incidents per year), causing brain damage to numerous children with mercury pollution, and the destruction of thousands of acres of land and streams with mining operations.

Besides the important moral issue here, it is simply less expensive to phase out coal plants than to sustain them.

Within a matter of 18 months, 4 to 5 woody biomass to energy facilities have been proposed in Indiana, which brings about a critically important question—is this regionally sustainable?

The underlying reason for this is the dangling carrot, also known as the 30% federal investment tax credit, for biomass to energy facilities. This handout, courtesy of President Obama, has created an industry boon across the nation. With such an infusion of equity, biomass developers are salivating to enter and navigate the gauntlet of legal and regulatory barriers to begin operation. Or are there any barriers?

Biomass industry stakeholders insist that the Indiana Utility Regulatory Commission (IURC) has NO jurisdiction over their operations.

A number of issues, however, should lead us to question the overwhelming lack of regulation. Water source and usage, wastewater disposal, fuel sourcing, the need for additional capacity, and the impacts on local health and infrastructure need to be intimately understood before woody biomass plants are hastily considered a public benefit.

Logging State forests under the Daniels administration has already increased over 400%. Despite this fact, Purdue University tells us there is virtually no available wood products or wood waste to feed the voracious appetite of these facilities. This leads CAC to believe there are only 2 possibilities: 1) increased logging of our public and private forests or 2) switching to more hazardous fuel materials, like tires or garbage. We find both choices highly objectionable and unacceptable.

There is enormous and virtually untapped potential in Indiana for investments in energy efficiency and true renewable resources, like wind and solar. Until we maximize this potential, the answer to the sustainability question regarding biomass is a resounding NO.

“We simply didn’t know what we didn’t know,” and “the plant is just a bigger plant than we expected,” are actual quotes from Duke Energy executive officers in testimony filed before the Indiana Utility Regulatory Commission (IURC). To be fair, I’ll put these quotes into the context they were presented.

These quotes were pulled from testimony filed in a new sub docket before the IURC in which Duke Energy is seeking approval for a $530M cost increase for their science project, aka the Edwardsport IGCC plant. These “executives” are attempting to justify why a power plant that was originally projected to cost $1.2B, now is going to cost Duke ratepayers nearly $3B, and that’s the best they’ve got?

The reason for these cost overruns is a State policy, Construction Work in Progress, passed by the General Assembly as part of the clean coal law in 2002. CWIP allows investor owned utilities to charge ratepayers for coal-fired power plants while they are under construction. Essentially, CWIP gives Duke Energy a blank check and removes any responsibility for Duke to control costs.

The reality here is that this plant would not be under construction without CWIP. Duke points out that this is a new technology and a “first”-of-a-kind plant. It’s far too risky for Wall Street to invest in, so the only way for Duke to make this boondoggle happen was to lobby the Statehouse for legislation that forces ratepayers to be the involuntary financiers of Duke’s science project.

Duke admits in their testimony that detailed engineering for the IGCC did not begin until a full year after construction began. Do you think a bank would give you a loan for a house with no floor plan?

Duke Energy, along with the other Indiana investor owned utilities, are now lobbying State lawmakers to extend CWIP to nuclear power plants. Have we all forgotten about the massive costs overruns, delays, and cancellations that led to the demise of the nuclear industry?

If anything, the Edwardsport experience should lead State lawmakers to repeal CWIP, not extend it to include nuclear power.

The Duke Coal-Gasification Plant, aka Edwardsport IGCC
To date, Duke’s expenditures plus rate of return amount to approximately $581M. CAC continues to oppose the inclusion of Edwardsport costs arguing that the project is not needed and not least cost, especially in light of the growing amount of renewable energy in Indiana, the declining use of electricity, and the decreasing cost and Federal push for more energy efficiency.

Vectren Electric Rate Case
Despite having the highest electric rates in the State and realizing a 65% increase in their average bills since 2003, Vectren has filed for yet another increase in rates. To make matters worse, the increase they seek has little to do with servicing their customers, and everything to do with feeding their investors with unjust profits. CAC has intervened and will work to get this increase denied.

The Leucadia Coal-Gasification Plant
It appears the State is close to contractual agreements as the Indiana Finance Authority has hired a coal gasification expert to review the plans for the Leucadia plant. CAC will continue our vigilance in opposing this environmental and economic travesty.

NIPSCO Electric Rate Case
It has been over 2 years since NIPSCO filed its request for an 16.5% increase in residential electricity rates. A ruling was expected in December 2009, yet, we still wait. However, NIPSCO has indicated that regardless of the outcome, they are prepared to file another request for additional increases in early 2010. CAC will be watching.

NIPSCO Gas Rate Case
NIPSCO has also filed for an increase in their base rates for their natural gas ratepayers. CAC has yet to review the case, but we have intervened and will work as the voice for residential ratepayers before the IURC.

I&M: Uprate at DC Cook Nuclear Plant
I&M has indicated they will soon be filing at the IURC seeking close to $2B from ratepayers for additional power output at their DC Cook nuclear plant. Once filed, CAC will intervene. Why do they need additional power when reserve margins are close to 30% and they are idling 10 of their existing power plants? Questions need answered.

Crawford County and Scott County biomass plants
CAC has worked with community leaders and residents of Milltown and Scottsburg on opposing the construction of dirty and unnecessary biomass electric generation plants. In a recent victory for local citizens, the Crawford County Commissioners passed an ordinance requiring a detailed environmental impact study from the developer, Liberty Green (run by former Enron executives), who then withdrew their land permit.

2011 Legislative Session
CAC is expecting an all out assault on utility ratepayers and our environment as Gov. Daniels is expected to unleash a comprehensive energy bill. CAC will oppose further investments in coal and nuclear power, and instead continue our work towards shifting Indiana’s energy policy to the economically and environmentally superior options of energy efficiency and renewable energy.

The current climate legislation being debated in Congress should be dumped. The bill aims to create clean energy jobs, achieve energy independence, reduce global warming pollution and transition to a clean energy economy.  These stated goals were originally meant to be realized through a least-cost policy approach designed to invigorate the renewable energy sector, update efficiency and conservation standards, and to directly reduce emissions through a cap and trade system.  However, industry lobbying efforts and stark political realities in the U.S. House of Representatives effectively undermined the bill’s efficacy. The same is unfortunately true in the U.S. Senate debate.

Emissions Targets in the House and Senate Fall Short:
The best available science tells us that the U.S. and developed nations must achieve emissions cuts ranging between 25-40% below 1990 levels by 2020 and 80-95% by 2050.   Under a cap and trade system to reduce emissions, the government creates permits to pollute in one ton increments that are bought and sold by those who either have significantly reduced their emissions or must have more allowances to operate.  The catch is that a complex, corruption-prone set of complementary policies have been introduced to “ease the burden on polluters and the general public” by making pollution compliance easier.  While these policies may ease the burden of compliance, they render the emissions reduction mechanism useless.

One of these complementary policies, and perhaps the worst, is the carbon offset market.  Offsets allow polluters to avoid making real emission reductions by subsidizing projects to prevent deforestation, to plant saplings, or to prevent additional emissions elsewhere - either domestically or internationally.  The nature of the offset market makes it difficult to calculate real emissions reduction, is prone to corruption, and is arguably the reason why the European Union’s cap and trade scheme failed to reduce emissions.

Polluters Receive Massive Giveaways in Both Bills:
The most serious issue is which technologies will be emphasized to address the issue of reducing carbon dioxide emissions.  This is critically important because of financial and social risk, cost, efficacy of reducing carbon emissions, job creation, environmental and public health impact, and consumer affordability issues. 

Least-cost investments in efficiency, renewable energy, and distributed power resources can accomplish these goals.  However, polluters have no incentive to harvest the low-hanging fruit when they are being handed bushels for free in the form of carbon allowances, massive subsidies for high-cost coal-fired and nuclear technologies, offshore drilling, and a complex set of complementary policies that enable nothing more than business as usual.

It is time to shift gears and implement policies that will bolster the economy while reducing our enormous budget deficit and cut carbon dioxide emissions. Least-cost efficiency, renewable and distributed power investments can accomplish these goals. High-cost coal and nuclear investments cannot.

The legislature can enact a proven policy that will create jobs for Hoosiers, make the state a leader in renewable energy development, and stabilize energy costs for consumers. The question is whether the legislature has the political will to buck the coal and utility industries to do it.

The general concept of the policy is simple: guarantee those who generate renewable energy a long-term purchase contract with their local electric utility that covers their costs and provides a return on their investment. This is the same approach the state already takes with base-load power plants. Electric utilities are allowed to recover their costs and a reasonable profit when they build their own major generating facilities. Why not give small generators of renewable energy the same opportunity?

Known as Feed-in Tariffs, many European nations and now a growing number of locations in North America are offering advanced renewable energy contracts to spur the growth of renewable energy. Germany is a prime example of how effective advanced renewable energy contracts can be. Since enacting this policy, Germany has become the leader in solar power despite the fact it gets about as much sun as Maine or Alaska. It has created a lot of jobs and now exports solar and wind technology throughout the world. It’s no accident the companies building wind farms in northern Indiana are subsidiaries of European companies headquartered in countries with advanced renewable energy contracts.

Consumers would benefit from this policy, too. Advanced renewable energy contracts encourage the development of smaller generating facilities distributed throughout the power grid. Bringing the power generation closer to electric consumers avoids the need for new expensive transmission lines. Consumers also benefit because the cost of renewable energy is stable, unlike fossil fuel prices that can spike with little notice. And adding new renewable energy sources helps to avoid the need to build expensive new power plants.

The legislature has spun its wheels for years now debating whether to mandate a renewable energy portfolio that requires utilities to purchase a certain percentage of their power from renewable sources. Rather than continuing the same stale debate over a policy that essentially entrusts the promotion of renewable energy to utilities that are heavily invested in coal-fired power plants, the legislature should push Indiana to the forefront of renewable energy development by making advanced renewable energy contracts available in the state.

The General Assembly has been more than willing to saddle electric utility ratepayers with the costs of new power plants that the private market won’t fund and has thrown tens of millions of dollars in incentives at so-called “clean coal” technology. Renewable energy contracts would provide far greater benefits to the citizens of Indiana by creating renewable energy jobs throughout the state that can’t be outsourced to China or Mexico and reducing future energy costs for consumers. Now is the time for the legislature to show it also has the willingness to seize the opportunity to bring these benefits to Indiana.

Rep. Pierce (D, Bloomington) represents District 61

Investors were unwilling to accept the risks related to the construction of the nuclear power plants without some limitation on liability. So it was deemed necessary to indemnify the nuclear industry against liability claims in order to expand nuclear generation in the United States. So in 1957, the Federal Government granted the industry just that with the passage of the Price-Anderson Act.

Now the utility industry is facing similar obstacles with the implementation of carbon waste capture and sequestration (CCS), or so-called “clean” coal. Too much legal, regulatory, and scientific uncertainty and risk surround CCS. Those uncertainties and risks include, but are certainly not limited to:

Utilities are actively seeking protection from those, and many other issues before they will venture into any large scale project. They and their investors want complete assurance that they will not be liable for any harm or damage that CCS may cause to the public. They are asking for protection from local regulators, state regulators, federal regulators, state legislatures and the Federal Government. Duke Energy has made it quite clear they intend to introduce legislation in Indiana regarding those issues, possibly as soon as the 2010 session. Duke and others are also aggressively seeking the same protections, along with massive public subsidies, in Congress right now via the various climate and energy bills, or in amendments offered to other bills.

The same economic realities that caused the end of the nuclear age in the early eighties, is now catching up to the coal industry. Coal usage and consumption is in serious decline over the last 12 months in the United States. Peabody Coal and others are realizing lower profits as a result.

Failure to obtain indemnity and massive public subsidies may prove fatal to the coal industry; so they will continue their all out assault on democracy and flood the halls of our Statehouse and the halls of Congress with their lobbyists and their cash, and clutter the airwaves with their lies and propaganda until they get their way. This is why the public must engage and demand that our elected officials and our regulators finally begin to protect the public by forcing the utility industry to assume the financial and liability risks of storing carbon waste.

The Duke Coal-Gasification Plant, aka Edwardsport IGCC
To date, Duke’s expenditures plus rate of return amount to approximately $581M. CAC continues to oppose the inclusion of Edwardsport costs arguing that the project is not needed and not least cost, especially in light of the growing amount of renewable energy in Indiana, the declining use of electricity, and the decreasing cost and Federal push for more energy efficiency.

Duke Carbon Waste Storage Study
In March of 2009, Duke filed to force ratepayers to pay $121M to study the storage of carbon waste. CAC has intervened in the cause. The basic proposition underlying utility law is that customers pay for the utility service they receive and are not guarantors of investor risk. Although Indiana has been undermining the requirement that capital investments be “used-and-useful” with Construction Work In Progress (CWIP), what’s being proposed is even more heinous– Construction Work In Mind (CWIM).

The Leucadia Coal-Gasification Plant
Negotiations are stalled because a requirement of the latest legislation was that Leucadia had to guarantee ratepayer savings. With natural gas at record lows, proving savings is a challenge Leucadia cannot overcome. We are expecting more legislation regarding this plant. Stay tuned, the insanity continues.

NIPSCO Electric Rate Case
We are still waiting for a decision on NIPSCO’s request for an 16.5% increase in residential electricity rates. A ruling is expected in December. However, NIPSCO has indicated that regardless of the outcome, they are prepared to file another request for additional increases in early 2010. CAC will be watching.

Gas Universal Service Program
CAC was joined by AARP and United Senior Action in filing testimony in support of renewal and expansion of Universal Service programs designed to help keep gas service affordable for seniors and low-income gas customers of Citizens Gas, NIPSCO, and Vectren. The utilities support renewal, but oppose expansion. The Indiana Utility Regulatory Commission (IURC) Chairman, David Hardy, opposes the programs. The case has been fully briefed and is awaiting a final decision.

Efficiency and Renewables: Feed in Tariffs
We have been working for many years at the Indiana Statehouse for a progressive and sustainable energy policy that is focused on energy efficiency and renewable energy. The evidence is clear that efficiency and renewables are better for our health and our environment, save consumers money, and create far more jobs than fossil fuels. As discussed by Rep. Pierce, a feed in tariff is the best policy option. We won’t stop until we make it happen!

2010 Legislative Session
The 2010 session of the Indiana General Assembly begins on January 5, 2010. Please sign up for our e-mail alerts and check our website to follow the legislation that CAC is tracking. Rest assured, CAC will be on guard protecting our environment and our pocketbooks from the greed of the utilities.

While much debate was being held on the budget, unemployment, abortion, puppy mills, sugar cream pie, transit, stimulus dollars, and rainy day funds, CAC largely stayed away from these discussions (although I must confess I had more than one slice of the pie) and continued working to protect ratepayers and advocate for a sustainable energy policy focused on renewable energy and energy efficiency. Close to 50 bills and resolutions were introduced dealing with the topics of energy, utilities, coal, net metering, and the associated issues, an unprecedented number for our State. Unfortunately , thanks to partisan politics and the arrogance, deep pockets, and greed of the utility lobby, all efforts to pass meaningful clean, and renewable energy legislation failed.

SB 300 and HB 1347 would have improved Indiana’s net metering rule to allow all customers to interconnect renewable energy systems to the grid. SB 300 went a step further and would have also established a renewable energy standard for Indiana of 15% by 2025. Despite bi-partisan support in the House, the Senate Republican majority refused to take action on either bill, and allowed both of them to die.

The utility lobby made their desires clear as they attempted to force their agenda on Indiana ratepayers using several different bills, SB 201, SB 420, and HB 1360. Fortunately, all their efforts failed. They sought to eliminate regulatory oversight, remove the rights of property owners, define coal and uranium as renewable resources, and force Indiana ratepayers to pay for the construction of unnecessary and enormously expensive nuclear reactors (Nuclear CWIP), well before the power plants would produce any electricity.

HB 1348 passed both Chambers with overwhelming, bi-partisan support. Authored by Rep. Ryan Dvorak (D, South Bend), HB 1348 requires the State to adopt the most current version of energy conservation codes for commercial structures. Indiana currently operates on 1993 energy codes, wasting an enormous amount of energy and resources. This bill is a step in the right direction to reduce energy bills for Hoosier ratepayers and taxpayers and start to address Indiana’s enormous carbon footprint. However, Gov. Daniels vetoed the bill. CAC will encourage legislators to override the veto. Please contact the Governor and express your disappointment with his veto and be sure to thank Rep. Dvorak for his continued leadership on protecting the taxpayers and the environment of Indiana.

Click here for a more in depth discussion on the 2009 legislative session.

Be advised, CAC will always be consistent in working to protect ratepayers and in working to pass sustainable energy legislation that focuses on renewable energy and energy efficiency. As Thom Hartmann always says: "Activism begins with you, Democracy begins with you, get out there, and get active! Tag, you're it!"

Democrats screamed bloody murder when Vice President Dick Cheney met secretly with representatives of the fossil fuel industry to craft U.S. energy policy. Not to be outdone, Henry Waxman (D-CA), chair of the U.S. House Committee on Energy and Commerce, and Congressman Ed Markey (D-MA) committed the same offense by embracing the utility/coal industry blueprint for climate policy, which is now nestled in Waxman’s so-called American Clean Energy and Security Act, House Resolution (HR) 2454 (now HR 2998).

Is it really better for Americans if Jim Rogers, CEO of Duke Energy, exerts undue influence behind the scenes in calling the shots on energy policy instead of Exxon and Halliburton?

The legislation is a total wreck at the moment. Congressman Waxman should now change the name of his bill to the Utility & Coal Industry Profit Enhancement Act.

Pro-consumer provisions in HR 2454 (HR 2998) were amended and weakened in committee to point of accomplishing nothing. These include two mandates on utility companies. One was the mandate to force electric utilities to provide 25% of their power with renewable resources by 2025. The other is a similar mandate for end-use energy efficiency investments amounting to 15% of their energy mix by 2020. The two standards were combined in the committee amendment and the percentages greatly reduced. As a result, we may end up with less renewable energy investment by 2020 than without the legislation and far less investment in energy efficiency.

The “cap and trade” provisions for dealing with carbon dioxide emissions will only serve to enrich the utility industry and Wall Street hedge managers, while doing little or nothing to reduce carbon emissions.

Another self-serving utility provision promoted by Duke’s CEO last year is the tax on ratepayers to pay for research and development of carbon capture and sequestration (CCS). If anyone saw Rogers’ interview with 60 Minutes in April, you noticed he admitted that he has not spent a dime on carbon capture and sequestration research & development. He’s waiting for Congress to force ratepayers to pay for it.

Adding insult to injury, the legislation has a so-called “moratorium” on coal-fired power plants that just so happens to exempt 45 plants in various stages of permitting or construction.

The Waxman legislation is another Wall Street boondoggle waiting to happen. Not only do utility companies get to make billions off of carbon allowances, but ratepayers get to see their electric rates become even more volatile as hedge managers speculate on those allowances.

Please call or e-mail Senators Evan Bayh and Richard Lugar, as well as your U.S. Representative. Urge them to oppose HR 2998. Click here for a more in depth discussion of federal energy and health care legislation and how we can improve the finances of households through pro-consumer energy and health care legislation now.

Despite no renewable energy standard, no new baseload generation, and only one utility company rate case, Indiana electric ratepayers have seen their electric bills rise almost 30% since 2003. How can that be? The reasons behind that are many. First off, the days of cheap coal are over. Indiana relies almost exclusively on coal for electricity and a good portion of that 30% increase is related directly to coal. Second, the influence of the utility lobby over the halls of our Statehouse is undeniable. But lastly, and most important, is the manner in which our public utilities are regulated.

The Indiana Utility Regulatory Commission, or IURC, and the Utility Consumer Counselor are all appointed by the Governor. No elections, no confirmation process, no ballot initiatives, just anointed, sorry I meant appointed, by the Governor. The current chairman of the IURC, David Hardy, was a utility attorney for 35 years, most notably for PSI, now Duke Energy. Our Consumer Counselor, David Stipler, spent almost 25 years in the private sector representing utilities; 17 of those years as counsel for SBC and Ameritech, now AT&T. To make matters worse, Gov. Daniels recently put a former coal lobbyist in charge of enforcement and investigation of the coal industry within the Department of Environmental Management! This good ol’ boy system of cronyism has had and will continue to have a devastating effect on Indiana consumers and our environment. Our regulatory process epitomizes the old adage of the fox guarding the hen house.

The IURC mission states: “An advocate of neither the public nor the utilities, the IURC is required by state statute to make decisions that balance the interests of all parties to ensure the utilities provide adequate and reliable service at reasonable prices.” Yet the decisions handed down by the IURC amount to nothing less than an unapologetic rubber stamp to the wishes and desires of the investor owned utilities, consumer be damned. Chairman Hardy has publicly stated that he sees his role as ensuring Indiana has a positive investment climate for utilities.

The Consumer Counselor is supposed to be the state agency representing the interests of utility ratepayers. Yet they walk the halls of the Statehouse, testifying in support of bills that weaken, and often eliminate, consumer protections and allow the utilities to fatten the pocketbooks of their shareholders, at the expense of consumers.

In 2006, Hoosiers spent over $13 billion on home utility bills (IURC annual report 2008) compared to $9.5 billion on state income and state sales tax combined (Public Policy Institute, AARP 2008). We feel it necessary to elect not only our Governor and 150 Representatives and Senators, but also our Attorney General, Secretary of State, Treasurer, and auditors (both at the State level and local levels) to oversee our tax dollars, yet we allow our utility dollars to leave our bank accounts, with little to no oversight or accountability. Why? Where’s the outrage?

We must demand change. We must demand public accountability of regulators through an open and transparent election process. We must stop the hemorrhaging of ratepayer dollars into the coffers of monopoly utility companies. The utility business plan is bankrupting consumers and wreaking horrifying damage on our environment. The public deserves a voice in how our dollars are spent. Our future depends on it.

The Duke Coal-Gasification Plant
The Governor’s office stymied our efforts to get significant information from our public information request regarding communications with regulators during the proceeding to approve the plant by claiming confidentiality. CAC is looking into suing for the information. CAC also intervened in a second subdocket and requested that regulators order a new cost estimate and analysis for the need of the plant, as economic conditions have changed and indications are that the drop in electric usage appears to be a long term trend.

The Leucadia Coal-Gasification Plant
Negotiations between Leucadia and utility companies broke down and the proceeding before the IURC was halted. However, the Governor pushed through legislation this year that foresees having the State (the Indiana Finance Authority, or IFA) sign contracts with Leucadia for synthetic natural gas produced from coal. Leucadia still must receive a federal loan guarantee and has to change state law to receive state tax credits, as current statute provides the tax credit through the utility receipts tax which does not apply to the IFA. The insanity continues.

NIPSCO Rate Case
The IURC has scheduled a second field hearing in the NIPSCO rate case. It will be held in Michigan City on July 15th at the Orak Shrine Center, 3848 Frontage Road. It will be held from 1:30 until 4 PM and then resume at 6 PM until the last person has spoken. The first hearing in Gary was a packed house, so be sure, if you are able, to attend (and bring 10 of your closest friends) and tell the IURC to DENY NIPSCO’s unjustified and immoral request for a 16.5% rate increase! CAC has intervened in the case on behalf of residential ratepayers.

AEP Rate Case
CAC was a party to the recent settlement in the AEP rate case. AEP initially asked for a 20% rate increase, but during negotiations, the increase to residential customers was cut down to 6%. In addition to reducing the rate impact, we helped to ensure ratepayers are credited for surplus power sales and helped to ensure AEP invest more ratepayer dollars in energy efficiency programs. We did sign onto the settlement as we felt the agreement was much better than any decision the IURC would have come to come to behind closed doors. (See previous section for explanation.)

Efficiency and Renewables
We have been working for several years to get a Renewable Electricity Standard passed through the Indiana General Assembly. An RES would mandate that the investor owned electric utilities meet a percentage of their electric demand using energy efficiency and renewable resources. We won’t stop until we make it happen.

2009 Legislative Session
Click here for a complete summary of all the bills CAC followed and either supported or opposed.

2008 CAC Membership Survey Results

CAC members are mainly moderate to conservative but well educated. Fifty percent work. Fifty percent are retired.

We attempted to gauge what people thought of major actions and policy positions of the Daniels Administration and of utility ratemaking schemes. We added the utility issues because, in CAC’s estimation, there is no discernable difference between Governor Daniels’ position on energy/utility issues and the utility business plan.

Both the Governor and electric utilities oppose a true renewable electricity standard (RES) for the state. Both dismiss energy efficiency as a powerful economic development tool and way to significantly reduce utility bills, which flies in the face of every serious study on efficiency.

Other developments should be of great concern to ratepayers. The IURC violated the letter and spirit of the law by sending out memos to Duke ratepayers touting coal gasification technology prior to a decision made by the IURC to approve the Edwardsport plant (currently under appeal), which is supposed to maintain objectivity in these quasi-judicial proceedings.

An Administration official proclaimed that Daniels was protecting ratepayers by opposing an RES due to rate shock. However, no RES in any state has resulted in more than a 5% rate increase over extended periods of time, most experience a 1% rate increase. However, the proposed coal plant at Edwardsport could raise rates more than 30%.

At the Regulatory Flexibility Meeting in September, 2008, The chairman of the IURC, David Lott Hardy, said that energy efficiency is nice but nice things aren’t always worth it.

71% of CAC members opposed the Governor’s lease/sale of the Indiana Toll Road, 78% opposed the proliferation of Confined Animal Feeding Operations, 58% opposed ethanol production from corn, 90% opposed the BP water permit, and 65% opposed including coal in the definition of renewable energy. (Gov. Daniels will support an RES or alternative energy standard if coal’s included.)

59% of CAC members do not like the idea of construction work in progress for power plants (having to pay for a power plant before it is producing electricity). 63% do not like the idea of trackers (mechanisms that allow utilities to raise rates when their costs go up without having to lower rates when their costs go down - allowing them to deregulate bit by bit).

In a national, scientific survey of Hoosiers conducted this month (funded by Civil Society Institute and conducted by Opinion Research), 81% did not want to proceed with 2 coal gasification plants the Governor supports. Hoosiers want efficiency and renewables first.

Governor Daniels is supporting an energy policy that, if successful, will lead to extreme rate increases, suppressed job growth, more carbon dioxide emissions and more lung disease.

Indiana General Assembly Not a Friend of Consumers During 2008 Session

With few exceptions, members of the Indiana General Assembly voted consistently against consumer interests during the 2008 legislative session.

The worst legislation failed due to the excellent work of CAC’s lobbyist (Paul Chase - now with AARP), legislative friends in key positions at the right time, and CAC members weighing in with letters and calls.

The accumulative pro-consumer voting record for the Indiana House on key issues for ratepayers was 37%. The accumulative vote in the Senate was 17%.

The notable pro-consumer legislators with 100% voting records were Representatives:

• Dennis Avery
• Mara Candelaria-Reardon
• Ryan Dvorak
• Phil Hoy
• Win Moses
• David Orentlicher
• Scott Pelath
• Matt Pierce

CAC considers an 80% pro-consumer voting record as a passing grade. The only Representative with an 80% record was Craig Fry.

Some Senators (mainly Democrats) improved their voting percentage on consumer issues towards the end of the session . However, the highest pro-consumer percentage reached in the Senate was 60%.

Thirty-two out of 100 Representatives had a 0% voting record. These were Representatives:

Bob Behning	Mark Bell	Randy Borror
Brian Bosma	Tim Brown	Jim Buck
Bob Cherry	Suzanne Crouch	Bill Davis
Dick Dodge	Sean Eberhart	Jeff Espich
Dave Frizzell	Eric Gutwein	Tim Harris
Phil Hinkle	Tom Knollman	Eric Koch
Don Lehe	Dan Leonard	Cindy Noe
Kathy Richardson	Michael Ripley	Bill Ruppel
Tom Saunders	Milo Smith	Greg Steuerwald
Marlin Stutzman	Andy Thomas	Jeff Thompson
Jerry Torr	Eric Turner

Twenty-eight out of fifty State Senators had a 0% pro-consumer voting record, including Brandt Hershman (Monticello) who is chair of the Senate Utilities and Regulatory Affairs Committee. His counterpart in the House, ranking minority member on the Commerce, Energy and Utilities Committee, Jack Lutz had a 10% voting record. The others were:

Ron Alting	Phil Boots	Ed Charbonneau
Bob Deig	Mike Delph	Gary Dillon
Jeff Drozda	Bev Gard	Luke Kenley
Dennis Kruse	Connie Lawson	David Long
Robert Meeks	Jim Merritt	Patricia Miller
Ryan Mishler	Johnny Nugent	Allen Paul
Brent Steele	Greg Walker	Brent Waltz
John Waterman	Thomas Weatherwax	Thomas Wyss
Mike Young	Joe Zakas

Kerwin’s Korner: Volume 2

This blind and misguided pursuit of “clean” coal is an attempt by the industry, and its paid servants in government, to keep control not only of the money, but also of the grid.  They control the message, trying to scare the public into believing that we cannot survive as a society without coal.  At the Carbon Capture and Sequestration Summit in September, 2008, Governor Daniels said, “It does not go too far in my opinion to say, no coal, no country.” They have been dispatching countless TV ads, deploying operatives on college campuses and Earth Day events handing out “clean” coal t-shirts and hats, and buying off a few environmental groups to deliver their message.  It is reminiscent of the activities of GM, Standard Oil, and Firestone in the 1940’s, dismantling the street cars and replacing them with gasoline powered buses.  These activities are proof positive that there is an energy revolution on the very near horizon and their stranglehold on society is waning.

Despite their attempts to skew the numbers and deny the truth, new large-scale wind farms are now 1/2 the cost of new coal-fired power plants, and 1/3 the cost of new nuclear plants.

Advances in photovoltaic's are driving down the cost, so much so, that Duke Energy Carolinas is proposing leasing roofs to install solar panels.  Duke of course wants to own those panels, and deploy them when they want to; another clear indication that the industry is very aware that they are losing their grip, and homeowners everywhere soon may not require their services.

Improvements in energy efficient technology can bring about significant reductions in energy usage, and thus utility profits.  Unfortunately, we live in a state that ranks 49th in spending on energy efficiency and continues to construct new buildings and homes using 1992 energy codes.  We also live in a state where the chairman of our state regulatory commission believes that energy efficiency “sounds nice, but a lot of things that sound nice, aren’t worth it.”  That must change.  We must hold office holders accountable and demand they do their job.  That job, according to the IURC website, is “An advocate of neither the public nor the utilities, the IURC is required by state statute to make decisions that balance the interests of all parties.” By continuing to ignore energy efficiency and dismiss renewables as “not economic at this point,” the commission is not balancing the interests of all.  They are complicit in maintaining the status quo and helping to push the agenda of the utilities, while ignoring the interests of ratepayers and the environment.

We must not remain silent when we hear “clean” coal, or “nuclear renaissance.”  We must not allow the public to be bought, sold, and manipulated.  We must not allow these corporate polluters to dictate our energy future, just as we watched them change the course of public transportation.

Current Campaigns

The Duke Coal-Gasification Plant: We intervened in Duke’s request to build the coal-gasification plant in Edwardsport. The Indiana Court of Appeals upheld the IURC’s decision to approve the plant. CAC has also intervened to oppose a new cost estimate for the plant and submitted a public information request to the Governor’s office asking for e-mails and other communication to state regulators and Duke with respect to the plant. Actions and comments by Administration officials have led us to believe that the approval for the plant was hard-wired.

The Leucadia Coal-Gasification Plant: Negotiations between Leucadia and Vectren and NIPSCO to build the Leucadia coal-gasification plant were started back in 2006. Fortunately, no contracts have been produced yet.  If contracts are agreed upon and approved by the Regulatory Commission, there is no way out for Indiana ratepayers.  We are working to put pressure on the CEO’s of both Vectren and NIPSCO to follow the lead of Citizens Gas in Indianapolis, and withdraw their companies from negotiations with Leucadia. CAC has also petitioned the IURC to end the proceedings because no progress has been made in the negotiation process.

AEP, NIPSCO and Citizens Gas Rate Cases: AEP (I&M) has filed a rate case with the Indiana Utility Regulatory Commission (IURC) and is asking for a 20% rate increase and more trackers, which may lead to even more rate increases every six months. They currently earn an extra $96 million per year by selling extra electricity to other utilities. That electricity is generated by power plants paid for by I&M ratepayers. We have intervened in the case. We want the IURC to deny the rate increase, deny the trackers, and force AEP to credit 100% of those off-system sales to ratepayers.

NIPSCO has also filed a rate case with the IURC, but we do not know the details of what they are asking for yet. However, we have already intervened in the rate case.

Outlook for 2009 General Assembly: This is a budget session; therefore any bill with new spending (a.k.a. tax dollars) probably won’t pass.  As a result, we expect an all out assault by the utilities at passing additional trackers, or legislative mechanisms by which they can pass costs onto ratepayers with little or no regulatory oversight.  The General Assembly and the Administration continue failing to recognize that the ratepayer wallet and the taxpayer wallet are one and the same, therefore they force ratepayers to fund the utility agenda, thereby avoiding spending tax dollars.  CAC will stand firm and oppose legislation containing trackers.  We also know that several legislators will introduce some version of a renewable energy standard.  There have been attempts in the past to have an RES that includes language supporting Alternative Energy, or “clean” coal and nuclear power.  We will stand guard, diligently working to make sure that the RES bill remains clean and is void of any language mandating coal or nuclear power.  In addition to protecting consumers against further trackers and working towards a clean RES, we will work to improve Indiana’s net metering rules, work to pass green building legislation, and continue working towards legislation that increases our state’s investments in energy efficiency.

Duke Energy: Bad for Ratepayers, Bad for Business

Duke Energy’s (formerly Cinergy, formerly PSI) CEO, Jim Rogers is feverishly traversing the country hyping the false benefits of Duke’s new profit schemes to the media, public and policymakers. Indiana is one his prime targets for implementation.

Costs for Proposed Duke Coal Plant at Edwardsport Already Spinning Out of Control
Rogers is pushing construction of costly and unnecessary new coal plants here and in North Carolina. Duke grossly underestimated the costs of its proposed coal gasification plant in Indiana from the start and recently asked for regulatory approval of an 18% increase in construction costs, bringing the total cost to $2.35 billion. Duke is most likely still underestimating the current cost by at least $500 million. More “adjustments” are surely on the way. CAC has intervened in this proceeding, arguing that this is one of many increases, the plant is too expensive, and cheaper alternatives, like energy efficiency and renewable sources of energy can meet electric energy demand, save ratepayers money, and stimulate our ailing economy.

Save-A-Watt Is Actually Steal-A-Lot
Duke has proposed a new rate structure for its energy efficiency programs called Save-A-Watt. Instead of only recovering the actual costs of the program and letting ratepayers enjoy the savings, Duke is:

• Charging you for a phantom power plant.
  Duke is saying that since its alternative to efficiency is building a more expensive natural-gas fired plant, it should be able to charge you up to 85% of the cost of that phantom plant, eliminating most if not all savings benefits to ratepayers by charging ratepayers far more than the actual cost of the program.

• Not reducing overall energy consumption.
  Duke’s plan primarily reduces demand during times of high energy use (peak demand) during the day by strategies such as remotely cycling-off you air conditioner compressor or having companies shift their demand to other times of the day and not placing an emphasis on making homes and businesses more energy efficient. This allows them to claim the need for more power plants while boosting their profit margin with a sham energy efficiency program.

The bottom line is that Duke’s plan will cost us billions while an emphasis on true energy efficiency programs and renewable energy technologies would save us billions.

Blowing Taxpayer and Ratepayer Dollars on Carbon Capture

Greenpeace recently released a report titled “False Hope: Why Carbon Capture and Storage Won’t Save the Climate.”

Carbon capture and storage (or sequestration) is:

1. Diverting carbon dioxide from the air emission stream of a power plant;
2. Compressing it into a liquid using the coal plants own power; and,
3. Shooting it deep into the ground - hoping it stays there.

In its report, Greenpeace used myriad sources to arrive at the conclusion that this technology is:

1. Not available and won’t be for 15 to 20 years;
2. Highly expensive;
3. Unproven at a large scale; and,
4. Wastes energy.

After the report’s release, utility and coal companies mobilized. They want to get this technology commercialized or new coal plants (how they make the majority of their profit) won’t be built, and the country could move to slowly phase out coal plants over the next 40 to 50 years.

Of course, the coal and utility industries do not want their stockholders to carry any financial risk for research and development. They want taxpayers and ratepayers to foot the bill. Again, Jim Rogers (CEO of Duke) is at the forefront calling for direct payments by ratepayers into his coffers to pay for the R&D and for Congress to use taxpayer dollars to support it through subsidies.

The rational approach is to use much of those dollars to deploy cheaper energy efficiency, renewable, and other clean technologies that are available now while the other portion would be used for R&D to reduce costs and improve efficiencies of true clean energy solutions.

A transition plan for the phase out of both coal-fired and nuclear power plants has been developed by Arjun Makhijani at the Institute for Energy and Environmental Research (IEER). The transition plan, entitled Carbon-Free and Nuclear-Free: A Roadmap for U.S. Energy Policy, is available for download online or in book form.

To download the Greenpeace report, visit www.greenpeace.org/australia/resources/reports/climate-change/false-hope-why-carbon-capture

To download the IEER transition plan, visit www.ieer.org/carbonfree/index.html

Kerwin’s Korner: Volume 1

Policymakers continue to fail us my friends. Our Federal Government continues failing to pass global warming legislation and fails to extend energy efficiency and renewable energy tax credits.  Both major party Presidential candidates support the incredibly risky, dirty, and expensive venture into the pipedream that is carbon capture and sequestration, while also supporting continued subsidies and further investments into nuclear energy (here we go again, prepare yourselves). Our Governor and General Assembly continue down the path of business as usual, using political will to force unneeded coal-fired power plants into our environment and our rate base.

Duke Energy’s proposed coal-gasification power plant in Edwardsport, as predicted, is becoming a huge $2.5 billion plus boondoggle.  Are we foolish enough to believe Duke did not know costs had increased 18%?  Does anyone believe that this 18% increase will be the last?

Meanwhile, up in Benton County, we have a 130 megawatt (MW) wind farm up and running and on the grid, in approximately 26 months after the initial bids were sent out.  After viewing the project, Lt. Gov Skillman stated: “Wind energy is an inexpensive, clean, renewable and simple solution to our current energy dilemma.”  At the Windiana 2008 Conference, Lt. Gov Skillman pointed out “we all know that renewables and wind create more jobs than fossil fuels.” When will our State’s energy policy reflect those comments?   In addition, the Fowler Ridge Wind Farm will have 400 MW of power on the grid by November, and another 340 MW by late next spring.  I spoke with the project manager of the Fowler Wind Farm from BP and he informed me by the time the entire 740 MW is online, he expects costs to be a shade over $1 billion, for the entire 740 MW!  Construction on the Fowler Ridge project was started in February, of this year!!!  Planning for the 630 MW Edwardsport coal-gasification plant began over 2 years ago, and the best case scenario would be to have the plant online in 2012.  That is presuming of course the White River does not flood the site again or another earthquake renders the location unfit.  Does it make any sense to continue with the Edwardsport coal-gasification plant??

We must bring these issues into the public forum.  We must flood our local newspapers with letters, clog the airwaves of our local and national talk shows, and clutter our elected officials e-mails and voicemails and demand that we stop this destructive path towards environmental and economic upheaval.  We must act now and stop the insanity.  Regressive taxation, foreclosures, stagnant and dropping wages, unaffordable health care, utility disconnects and gas prices at all time highs, global warming, the disappearance of the middle class, when will it end?  It will end when we start taking consistent, collective action: all of us, all of our voices together. Pick up the phone, write a letter, send an e-mail, talk to neighbors, friends, co-workers, spread the word. As Paul Wellstone always said: “I think we can do better. Won’t you join me?”

Current Campaigns

The Duke Coal-Gasification Plant:
We intervened in Duke’s request to build the coal-gasification plant in Edwardsport. Unfortunately, back in November, the Regulatory Commission approved the plant. Then, back in January, the Indiana Department of Environmental Management approved an air permit for the plant that we believe is in clear violation of the Clean Air Act. We are in the process of appealing both of those decisions.

The Leucadia Coal-Gasification Plant:
Negotiations between Leucadia and Vectren and NIPSCO to build the Leucadia coal-gasification plant were started back in 2006. Fortunately, no contracts have been produced yet.  If contracts are agreed upon and approved by the Regulatory Commission, there is no way out for Indiana ratepayers.  We are working to put pressure on the CEO’s of both Vectren and NIPSCO to follow the lead of Citizens Gas in Indianapolis, and withdraw their companies from negotiations with Leucadia.

AEP, NIPSCO, and Citizens Gas Rate Cases:
AEP (I&M) has filed a rate case with the Indiana Utility Regulatory Commission (IURC) and is asking for a 20% rate increase and more trackers, which may lead to even more rate increases every six months. They currently earn an extra $96 million per year by selling extra electricity to other utilities. That electricity is generated by power plants paid for by I&M ratepayers. We have intervened in the case. We want the IURC to deny the rate increase, deny the trackers, and force AEP to credit 100% of those off-system sales to ratepayers.

NIPSCO has also filed a rate case with the IURC, but we do not know the details of what they are asking for yet. However, we have already intervened in the rate case.

Citizens Gas has filed for a rate increase as well. Although we have not yet intervened, we are in the process of reviewing their testimony in the case.

Efficiency and Renewables:
We have been working for several years to get a Renewable Electricity Standard passed through the Indiana General Assembly. An RES would mandate that the investor owned electric utilities meet a percentage of their electric demand using energy efficiency and renewable resources. We won’t stop until we make it happen.