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Mullett v. Duke Energy Indiana, LLC

Court of Appeals of Indiana

May 21, 2018

Michael A. Mullett and Patricia N. March, Appellants-Intervenors,
v.
Duke Energy Indiana, LLC, Nucor Steel-Indiana, Indiana Office of Utility Consumer Counselor, Appellees (Applicant/Petitioner, Intervenor, Statutory Party).

          Appeal from the Indiana Utility Regulatory Commission The Honorable James Atterholt, Commission Chair Honorable Sarah Freeman Honorable James Huston Honorable Angela Weber Honorable David Ziegner Commissioners Honorable David Veleta Senior Administrative Law Judge IURC Case No. 38707 FAC-113

          Attorney for Appellants Russell Ellis Indianapolis, Indiana

          Attorneys for Appellees Robert L. Hartley Maggie L. Smith Frost Brown Todd LLC Indianapolis, Indiana

          BRADFORD, JUDGE.

         Case Summary

         [¶1] Appellee Duke Energy Indiana, LLC ("Duke") and Benton County Wind Farm (the "Wind Farm") entered into a contract under which Duke agreed to buy power from the Wind Farm. In 2013, a dispute arose after Duke failed to buy energy from the Wind Farm. The Wind Farm filed suit claiming that Duke owed it money for lost production under the parties' contract. The parties eventually settled and Duke went to the Indiana Utility Regulatory Commission (the "Commission") seeking to recover its costs from ratepayers. Appellants Michael A. Mullett and Patricia N. March (the "Appellants") intervened in the proceeding and objected to Duke's request. After a hearing on the matter, the Commission approved Duke's request to recover the costs from its ratepayers over a twelve-month period.

         [¶2] Appellants now appeal arguing that the Commission's order is contrary to law because the damages are "liquidated" and "hypothetical" and it amounts to impermissible retroactive ratemaking. Finding that substantial evidence supports the Commission's order and no other error, we affirm.

         Facts and Procedural History

         [¶3] In 2006, Duke and the Wind Farm entered into a Renewable Wind Energy Power Purchase Agreement ("PPA") in which Duke agreed to purchase a portion of the energy generated by the Wind Farm. After purchasing the energy from the Wind Farm, Duke would immediately sell it into the Midcontinent Independent System Operator ("MISO") wholesale energy market. The Indiana Utility Regulatory Commission ("the Commission") approved the PPA in its entirety in 2006, concluding that "the terms of the Wind [PPA were] reasonable." Duke App. Vol. II, p. 17.

         [¶4] The Commission also recognized that Duke would be incurring significant costs in connection with the PPA. Consequently, in order to further the Commission's policy of encouraging the development of renewable resources, the Commission authorized Duke to recover all of its PPA costs from ratepayers for the entire twenty-year term:

[T]he Commission finds that Duke Energy Indiana should be authorized to recover the Wind [PPA] costs provided for in the contract for the full 20 year term of that contract[.]

Duke App. Vol. II, p. 19.

         [¶5] Following changes to certain rules and regulations in 2013, a dispute arose regarding the extent of Duke's contractual obligations to the Wind Farm. Duke believed that based upon the parties' contract, it was only required to accept and pay for energy that the Wind Farm generated and delivered to Duke. The Wind Farm, however, interpreted the contract to mean that Duke had to pay for lost production in addition to the power it delivered to Duke.

         [¶6] The Wind Farm sued Duke in federal court to resolve the disputed contract interpretation. The federal district court agreed with Duke's interpretation and granted Duke's motion for summary judgement in 2015. The Wind Farm appealed to the Seventh Circuit, which agreed with the Wind Farm's interpretation, reversed the district court's ruling, and remanded ...


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