Duke Energy revises $1.8B plan to update its Indiana electric grid
Changes include "self-healing" systems to reduce power outages in storms; consumer advocacy group says "not much has changed" with utility's revised plan.
Duke Energy has revised its $1.83 billion plan to update its electrical system in Indiana, trying again to persuade reluctant regulators to approve the spending without the utility filing a full-blown rate case.
Duke's new plan trims its wish list of things it wants ratepayers to pay for, including two-way radios in trucks and an educational facility that would teach schoolchildren and the public about electric power. The modernization plan alone would raise electric prices on Duke's 810,000 Indiana customers by 6 percent from 2017 to 2022.
But the head of the Citizens Action Coalition, an independent consumer group that often opposes utility rate hikes, vowed Tuesday to keep fighting Duke's revised plan. The group said Duke shouldn't be allowed to hike rates on customers for system modernizations without going through a formal rate case, where it would have to submit evidence justifying its costs and open its books to scrutiny by regulators and others.
"Not much has changed" between Duke's original plan and the revised one, said Kerwin Olson, executive director of the CAC. "We will oppose it and ask the (Indiana Utility Regulatory) commission to reject it."
Duke is filing the $1.8 billion spending plan as a surcharge called a tracker. Tracker filings let a utility recover certain cost increases it faces in between rate hike cases, which often are filed only once a decade or even longer. In 2013, the Indiana General Assembly gave utilities a much-sought-after gift by passing legislation allowing trackers for system modernizations if utilities lay out their needs in a seven-year plan.
The result has been a flurry of tracker requests from Duke and other utilities to pay for system modernizations.
The Indiana Court of Appeals threw a wrench into the utilities' plans to file those trackers, however, when it overturned the IURC's approval of the Northern Indiana Public Service Co.'s $1.2 billion modernization plan. The court said in its April ruling that the IURC erred in approving the plan and NIPSCO didn't provide enough evidence to support raising prices on industrial customers.
After the court ruling came down, the IURC subsequently rejected both Duke's tracker request and one from Indiana Michigan Power last spring.
Duke said its revised plan complies with the IURC's request to explain its costs and confine modernization projects to its electric grid.
"We responded to the commission’s guidance and removed all the projects that the commission said were not covered under the new law, such as expanded vegetation management and radio systems for field work," Duke said in a statement from spokeswoman Angeline Protegere. "We also provided more details around cost estimates, including documentation to support costs estimates, specifics on costs by categories, and better identification of projects over the seven-year plan."
Charlotte, N.C.-based Duke, the state's largest electric utility, wants to make its Indiana grid more reliable through extensive technology upgrades, including:
• "Self-healing" systems that detect outages during storms or other disruptions, and reroute power so each outage is confined to as few customers as possible.
• Installation of smart meters on customers' properties that can be read remotely, eliminating the need for walk-by meter readers.
• New power transmission lines that optimize voltage and reduce electric use by about 1 percent.
• "Time-of-use" rates for residential customers and small businesses to give them cheaper choices in using electricity.
CAC's Olson said he's not opposed to Duke installing the new technology, but he wants the request made in a regular rate case where Duke would be forced to justify its costs, answer questions from customers and others and divulge any decreases in costs it has seen since its last rate case filing in 2002.
"What they're doing with these trackers is continuing to pile on cost after cost after cost," Olson said. "All it looks at are the costs. (Trackers) don't analyze expenses. They're not looking at where costs are going down."
Olson said Duke has probably enjoyed decreases in financing costs since 2002, for instance, since interest rates have come down since then. But those interest savings haven't been passed on to customers through a rate case because Duke hasn't filed one, he said.
Call Star reporter Jeff Swiatek at (317) 444-6483. Follow him on Twitter: @JeffSwiatek.
Consumer office opposes Duke Energy�s $1.9B Indiana upgrade plan