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Indiana Gas Company, Inc. v. Indiana Utility Regulatory Commission

Court of Appeals of Indiana

April 27, 2017

Indiana Gas Company, Inc. and Southern Indiana Gas & Electric Company, Appellants-Petitioners,
v.
Indiana Utility Regulatory Commission, et al, Appellee-Statutory Parties.

         Appeal from the Indiana Utility Regulatory Commission The Honorable Loraine L. Seyfried, Chief Administrative Law Judge The Honorable Carol A. Stephan, Commissioner Indiana Utility Regulatory Commission Cause Nos. 44429-TDSIC-3 44430-TDSIC-3

          ATTORNEYS FOR APPELLANT VECTREN ENERGY Robert E. Heidorn P. Jason Stephenson Vectren Corporation Evansville, Indiana Wayne C. Turner Patrick A. Ziepolt Hoover Hull Turner LLP Indianapolis, Indiana

          ATTORNEY FOR AMICUS CURIAE INDIANA ENERGY ASSOCIATION Brian J. Paul Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE INDIANA UTILITY REGULATORY COMMISSION Curtis T. Hill, Jr. Attorney General of Indiana David Lee Steiner Deputy Attorney General Indianapolis, Indiana Beth E. Heline General Counsel Jeremy R. Comeau Assistant General Counsel Indianapolis, Indiana

          ATTORNEYS FOR APPELLEE INDIANA OFFICE OF UTILITY CONSUMER COUNSELOR, Randall C. Helmen Lorraine Hitz-Bradley Jeffrey M. Reed Indianapolis, Indiana

          ATTORNEYS FOR AMICUS CURIAE INDIANA INDUSTRIAL ENERGY CONSUMERS, INC. Todd A. Richardson Jennifer W. Terry Joseph P. Rompala Indianapolis, Indiana

          Pyle, Judge.

         Statement of the Case

         [¶1] This case concerns the interpretation of Indiana Code § 8-1-39-1 et seq, the Transmission, Distribution, and Storage System Improvement Charges and Deferrals ("TDSIC") statute ("TDSIC statute"). Specifically, the parties dispute whether a utility may, once it has established a seven-year plan for its transmission, distribution, and storage system improvements under Section 10 of the TDSIC statute, update its seven-year plan by adding new projects under Section 9 of the TDSIC statute. Appellants/Plaintiffs, Indiana Gas Company, Inc. ("Vectren North") and Southern Indiana Gas & Electric Company ("Vectren South") (collectively, "Vectren"), filed a petition with the Appellee, Indiana Utility Regulatory Commission ("the Commission"), under Section 9 of the TDSIC statute, requesting to update their seven-year Section 10 TDSIC plan with additional projects. The Commission partially denied Vectren's petition, and now Vectren appeals the Commission's denial. The Indiana Office of Utility Consumer Counselor ("OUCC") is also an Appellee, and we will refer to the Commission and the OUCC collectively as "the Appellees."

         [¶2] On appeal, Vectren argues that the Commission erred when it partially denied their petition because the Commission misinterpreted the TDSIC statute. They also argue that the Commission should be barred from denying their petition on the basis of res judicata. Because we conclude that the Commission did not misinterpret the TDSIC statute and the doctrine of res judicata does not apply, we affirm the Commission's decision.

         [¶3] We affirm.

         Issues

1. Whether the Commission erred when it partially denied Vectren's petition to update its seven-year TDSIC plan.
2. Whether the Commission should be barred from denying Vectren's petition to add new projects under the doctrine of res judicata.

         Facts[1]

         [¶4] Traditionally, a utility's rates charged to customers are adjusted through periodic general rate cases. These can be "expensive, time consuming, and sometimes result in large, sudden rate hikes for customers." NIPSCO Indus. Group v. N. Ind. Pub. Serv. Co., 31 N.E.3d 1, 4 (Ind.Ct.App. 2015). Another way to adjust rates is through a "tracker" proceeding, which is a cost-recovery proceeding that allows smaller increases in rates so that a utility can recover costs for specific projects between general rate case proceedings.[2] Id.

         [¶5] In 2013, the Legislature enacted the TDSIC statute, Indiana Code § 8-1-39-1 et seq, which allows a utility to petition for a tracker proceeding for new or replacement electric or gas transmission, distribution, or storage projects, and thereby recover its costs in a timelier manner than through a general rate case. Under Section 10 of the TDSIC statute ("Section 10"), a utility may create a seven-year plan for its predicted transmission, distribution, and storage improvements and may seek approval of that plan from the Commission. Ind. Code § 8-1-39-10. Following notice and a hearing on the petition, the Commission is required to issue an order that includes the following:

(1) A finding of the best estimate of the cost of the eligible improvements included in the plan.
(2) A determination whether public convenience and necessity require or will require the eligible improvements included in the plan.
(3) A determination whether the estimated costs of the eligible improvements included in the plan are justified by incremental benefits attributable to the plan.

I.C. § 8-1-39-10(b). Section 10 provides that "[i]f the [C]ommission determines that the public utility's seven (7) year plan is reasonable, the [C]ommission shall approve the plan and designate the eligible transmission, distribution, and storage improvements included in the plan as eligible for TDSIC treatment." Id.

         [¶6] Once the Commission has approved a utility's Section 10 seven-year plan, the utility may recover 80% of the capital expenditures and costs approved by the Commission, although it must wait to recover the remaining 20% during its next general rate case. During the seven years of the plan, the utility may petition to recover 80% of its costs or for an "update" of the plan under Section 9 of the TDSIC statute ("Section 9"). A utility's Section 9 petition must, in relevant part:

* * *
(2) include the public utility's seven (7) year plan for eligible transmission, distribution, and storage ...

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