NEWS

Appeals court upholds 16 percent rate increase for Duke customers

John Russell
john.russell@indystar.com

The Indiana Court of Appeals upheld a decision by state regulators to raise electricity rates on 790,000 customers to pay for Duke Energy’s $3.5 billion coal-gasification power plant in Edwardsport.

The court Wednesday ruled unanimously against a motion filed by environmental and citizens groups seeking to overturn the decision made by state regulators in 2012.

The decision allows Duke to charge its 790,000 Hoosier customers a 16 percent increase in their monthly bills to pay for the construction and financing costs of the utility company’s power plant in Knox County.

The groups had said ratepayers should not have to foot the bill for what they called “project mismanagement,” citing cost overruns and questions over proper regulatory oversight. The Sierra Club, Citizens Action Coalition and Valley Watch filed the appeal last fall.

The appeals court acknowledged that the plant, which originally was supposed to cost $1.985 billion, suffered huge cost overruns but said state regulators took that into account, and that Duke will pay for some of the higher costs.

“The record indicates that imprudence increased some construction costs,” the court wrote. “However, this reality was not ignored by the settlement terms.”

The Indiana Utility Regulatory Commission had ruled that Duke must swallow about $900 million for the plant. But the commission ruled that the 618-megawatt plant is necessary to meet the future energy needs of Indiana. It said customers must pay the bulk of construction costs: $2.595 billion, plus millions of dollars in financing costs.

Kerwin Olson, executive director of Citizens Action Coalition, criticized the decision and said his group might appeal to the Indiana Supreme Court.

Call Star reporter John Russell at (317) 444-6283. Follow him on Twitter: @johnrussell99.