Indiana 2023 Regular Session

Indiana House Bill HB1417 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
	1	+	EH1417.1
	2	+	March 24, 2023
	3	+	ENGROSSED
	4	+	HOUSE BILL No. 1417
	5	+	_____
	6	+	DIGEST OF HB 1417 (Updated March 23, 2023 12:33 pm - DI 119)
	7	+	Citations Affected: IC 8-1.
	8	+	Synopsis: Utility deferred costs and accounting practices. Amends the
	9	+	Indiana Code provision concerning a system of accounting for public
	10	+	utilities to provide the following: (1) That a public utility, municipally
	11	+	owned utility, or not-for-profit utility may defer for consideration by the
	12	+	Indiana utility regulatory commission (IURC) and for future recovery
	13	+	costs incurred or to be incurred in a regulatory asset, to the extent that
	14	+	the specific costs are incremental and are not otherwise already
	15	+	included for recovery in the utility's rates. (2) That preapproval of the
	16	+	IURC is not required for the creation of a regulatory asset. (3) That a
	17	+	public utility, municipally owned utility, or not-for-profit utility may
	18	+	recover through the utility's rates over a reasonable period, as
	19	+	determined by the IURC, costs that are: (A) deferred under these
	20	+	provisions; and (B) found to be reasonable and prudent by the IURC.
	21	+	Amends the Indiana Code provision concerning a public utility's
	22	+	depreciation account and depreciation rates to provide the following:
	23	+	(Continued next page)
	24	+	Effective: Upon passage.
	25	+	Soliday, Frye R
	26	+	(SENATE SPONSOR — KOCH)
	27	+	January 17, 2023, read first time and referred to Committee on Utilities, Energy and
	28	+	Telecommunications.
	29	+	February 9, 2023, amended, reported — Do Pass.
	30	+	February 14, 2023, read second time, amended, ordered engrossed.
	31	+	February 15, 2023, engrossed.
	32	+	February 20, 2023, read third time, passed. Yeas 68, nays 28.
	33	+	SENATE ACTION
	34	+	March 1, 2023, read first time and referred to Committee on Utilities.
	35	+	March 23, 2023, reported favorably — Do Pass.
	36	+	EH 1417—LS 7054/DI 101 Digest Continued
	37	+	(1) That depreciation rates shall be calculated to recover a reasonable
	38	+	estimate of the future cost of removing retired assets of the public
	39	+	utility. (2) That in a proceeding in which the costs of a capital asset are
	40	+	being recognized for ratemaking purposes, a public utility may account
	41	+	for any asset retirement obligations and recover, through rates charged
	42	+	to customers, reasonably and prudently incurred costs associated with
	43	+	asset retirement obligations, to the extent the specific asset retirement
	44	+	obligation costs are incremental and have not been included in
	45	+	depreciation rates. (3) That the IURC shall make changes in a public
	46	+	utility's depreciation rates as necessary to reflect changes in: (A) the
	47	+	public utility's estimated asset retirement costs, including all reasonable
	48	+	and prudent costs of removing retired assets; and (B) the estimated
	49	+	retirement dates of the public utility's assets. Amends the Indiana Code
	50	+	chapter concerning federally mandated requirements for energy utilities
	51	+	to specify that recovery of the 80% of IURC-approved federally
	52	+	mandated costs that an energy utility may recover through a rate
	53	+	adjustment mechanism must commence no earlier than: (A) the date of
	54	+	a final agency action regarding the federally mandated requirement; or
	55	+	(B) in the absence of a final agency action, the date on which the
	56	+	federally mandated requirement becomes effective.
	57	+	EH 1417—LS 7054/DI 101EH 1417—LS 7054/DI 101 March 24, 2023
1	58		First Regular Session of the 123rd General Assembly (2023)
2	59		PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
3	60		Constitution) is being amended, the text of the existing provision will appear in this style type,
4	61		additions will appear in this style type, and deletions will appear in this style type.
5	62		Additions: Whenever a new statutory provision is being enacted (or a new constitutional
6	63		provision adopted), the text of the new provision will appear in this style type. Also, the
7	64		word NEW will appear in that style type in the introductory clause of each SECTION that adds
8	65		a new provision to the Indiana Code or the Indiana Constitution.
9	66		Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
10	67		between statutes enacted by the 2022 Regular Session of the General Assembly.
11		-	HOUSE ENROLLED ACT No. 1417
12		-	AN ACT to amend the Indiana Code concerning utilities.
	68	+	ENGROSSED
	69	+	HOUSE BILL No. 1417
	70	+	A BILL FOR AN ACT to amend the Indiana Code concerning
	71	+	utilities.
13	72		Be it enacted by the General Assembly of the State of Indiana:
14		-	SECTION 1. IC 8-1-2-10 IS AMENDED TO READ AS FOLLOWS
15		-	[EFFECTIVE UPON PASSAGE]: Sec. 10. (a) Every public utility shall
16		-	keep and render to the commission, in the manner and form prescribed
17		-	by the commission, uniform accounts of all business transacted. In
18		-	formulating a system of accounting for any class of public utilities, the
19		-	commission shall consider any system of accounting established by any
20		-	federal law, commission, or department and any system authorized by
21		-	a national association of such utilities.
22		-	(b) A public utility, municipally owned utility, or not-for-profit
23		-	utility, including any utility owned, operated, or held in trust by a
24		-	consolidated city, may defer for consideration by the commission
25		-	and for future recovery costs incurred or to be incurred in a
26		-	regulatory asset consistent with the accounting rules that concern
27		-	the recognition of regulatory assets and that are in effect at the
28		-	time the deferral decision is made by the utility, including any of
29		-	the following costs, to the extent those specific costs are
30		-	incremental and are not otherwise already included for recovery
31		-	in the utility's rates:
32		-	(1) Financing costs.
33		-	(2) Depreciation expenses.
34		-	HEA 1417 2
35		-	(3) Asset retirement obligations.
36		-	(4) Operation and maintenance costs.
37		-	(5) Capital costs.
38		-	(6) Tax costs.
39		-	(7) Tax credits.
40		-	(8) Incurred costs that are directly related to the preparation
41		-	and conduct of a regulatory proceeding.
42		-	(c) Commission preapproval for the creation of a regulatory
43		-	asset is not required.
44		-	(d) Notwithstanding section 68 of this chapter, a utility
45		-	described in subsection (b) may recover through the utility's rates
46		-	over a reasonable period, as determined by the commission, costs
47		-	that are:
48		-	(1) deferred under this section; and
49		-	(2) found to be reasonable and prudent by the commission.
50		-	SECTION 2. IC 8-1-2-19 IS AMENDED TO READ AS FOLLOWS
51		-	[EFFECTIVE UPON PASSAGE]: Sec. 19. (a) Every public utility shall
52		-	carry a separate, proper and adequate depreciation account whenever
53		-	the commission, after investigation, shall determine that such
54		-	depreciation account reasonably can be required.
55		-	(b) The commission, from time to time, shall ascertain and
56		-	determine the proper and adequate rates of depreciation of the several
57		-	classes of property of each public utility. The Depreciation rates
58		-	under this subsection shall be calculated to recover a reasonable
59		-	estimate of the future cost of removing retired assets of the public
60		-	utility.
61		-	(c) A public utility's rates, tolls and charges shall be such as will
62		-	provide the amounts required over and above the reasonable and
63		-	necessary operating expenses, to maintain such property in an
64		-	operating state of efficiency corresponding to the progress of the
65		-	industry. In a proceeding in which the costs of a capital asset are
66		-	being recognized for ratemaking purposes, a public utility may
67		-	account for any asset retirement obligations and recover, through
68		-	rates charged to customers, reasonably and prudently incurred
69		-	costs associated with asset retirement obligations, to the extent the
70		-	specific asset retirement obligation costs are incremental and have
71		-	not otherwise been included in depreciation rates. Each public
72		-	utility shall conform its depreciation accounts to such the rates so
73		-	ascertained and determined by the commission.
74		-	(d) The commission shall make changes in such a public utility's
75		-	rates of depreciation, from time to time, as it may find the commission
76		-	finds necessary, including as necessary to reflect changes in:
77		-	HEA 1417 3
78		-	(1) the public utility's estimated asset retirement costs,
79		-	including all reasonable and prudent costs of removing
80		-	retired assets; and
81		-	(2) the estimated retirement dates of assets of the public
82		-	utility.
83		-	SECTION 3. IC 8-1-8.4-7, AS ADDED BY P.L.150-2011,
84		-	SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
85		-	UPON PASSAGE]: Sec. 7. (a) As a condition for receiving the
86		-	certificate required under section 6 of this chapter, an energy utility
87		-	must file with the commission an application that sets forth the
88		-	information described in section 6(b) of this chapter, supported with
89		-	technical information in as much detail as the commission requires.
90		-	(b) The commission shall hold a properly noticed public hearing on
91		-	each application and grant a certificate only if the commission has:
92		-	(1) made a finding that the public convenience and necessity will
93		-	be served by the proposed compliance project;
94		-	(2) approved the projected federally mandated costs associated
95		-	with the proposed compliance project; and
96		-	(3) made a finding on each of the factors set forth in section 6(b)
97		-	of this chapter.
98		-	(c) If the commission approves under subsection (b) a proposed
99		-	compliance project and the projected federally mandated costs
100		-	associated with the proposed compliance project, the following apply:
101		-	(1) Eighty percent (80%) of the approved federally mandated
102		-	costs shall be recovered by the energy utility through a periodic
103		-	retail rate adjustment mechanism that allows the timely recovery
104		-	of the approved federally mandated costs, with recovery
105		-	commencing no earlier than:
106		-	(A) the date of a final agency action regarding the federally
107		-	mandated requirement; or
108		-	(B) in the absence of a final agency action, the date on
109		-	which the federally mandated requirement becomes
110		-	effective.
111		-	The commission shall adjust the energy utility's authorized net
112		-	operating income to reflect any approved earnings for purposes of
113		-	IC 8-1-2-42(d)(3) and IC 8-1-2-42(g)(3).
114		-	(2) Twenty percent (20%) of the approved federally mandated
115		-	costs, including depreciation, allowance for funds used during
116		-	construction, and post in service carrying costs, based on the
117		-	overall cost of capital most recently approved by the commission,
118		-	shall be deferred and recovered by the energy utility as part of the
119		-	next general rate case filed by the energy utility with the
120		-	HEA 1417 4
121		-	commission.
122		-	(3) Actual costs that exceed the projected federally mandated
123		-	costs of the approved compliance project by more than
124		-	twenty-five percent (25%) shall require specific justification by
125		-	the energy utility and specific approval by the commission before
126		-	being authorized in the next general rate case filed by the energy
127		-	utility with the commission.
128		-	SECTION 4. An emergency is declared for this act.
129		-	HEA 1417 Speaker of the House of Representatives
130		-	President of the Senate
131		-	President Pro Tempore
132		-	Governor of the State of Indiana
133		-	Date: Time:
134		-	HEA 1417
	73	+	1 SECTION 1. IC 8-1-2-10 IS AMENDED TO READ AS FOLLOWS
	74	+	2 [EFFECTIVE UPON PASSAGE]: Sec. 10. (a) Every public utility shall
	75	+	3 keep and render to the commission, in the manner and form prescribed
	76	+	4 by the commission, uniform accounts of all business transacted. In
	77	+	5 formulating a system of accounting for any class of public utilities, the
	78	+	6 commission shall consider any system of accounting established by any
	79	+	7 federal law, commission, or department and any system authorized by
	80	+	8 a national association of such utilities.
	81	+	9 (b) A public utility, municipally owned utility, or not-for-profit
	82	+	10 utility, including any utility owned, operated, or held in trust by a
	83	+	11 consolidated city, may defer for consideration by the commission
	84	+	12 and for future recovery costs incurred or to be incurred in a
	85	+	13 regulatory asset consistent with the accounting rules that concern
	86	+	EH 1417—LS 7054/DI 101 2
	87	+	1 the recognition of regulatory assets and that are in effect at the
	88	+	2 time the deferral decision is made by the utility, including any of
	89	+	3 the following costs, to the extent those specific costs are
	90	+	4 incremental and are not otherwise already included for recovery
	91	+	5 in the utility's rates:
	92	+	6 (1) Financing costs.
	93	+	7 (2) Depreciation expenses.
	94	+	8 (3) Asset retirement obligations.
	95	+	9 (4) Operation and maintenance costs.
	96	+	10 (5) Capital costs.
	97	+	11 (6) Tax costs.
	98	+	12 (7) Tax credits.
	99	+	13 (8) Incurred costs that are directly related to the preparation
	100	+	14 and conduct of a regulatory proceeding.
	101	+	15 (c) Commission preapproval for the creation of a regulatory
	102	+	16 asset is not required.
	103	+	17 (d) Notwithstanding section 68 of this chapter, a utility
	104	+	18 described in subsection (b) may recover through the utility's rates
	105	+	19 over a reasonable period, as determined by the commission, costs
	106	+	20 that are:
	107	+	21 (1) deferred under this section; and
	108	+	22 (2) found to be reasonable and prudent by the commission.
	109	+	23 SECTION 2. IC 8-1-2-19 IS AMENDED TO READ AS FOLLOWS
	110	+	24 [EFFECTIVE UPON PASSAGE]: Sec. 19. (a) Every public utility shall
	111	+	25 carry a separate, proper and adequate depreciation account whenever
	112	+	26 the commission, after investigation, shall determine that such
	113	+	27 depreciation account reasonably can be required.
	114	+	28 (b) The commission, from time to time, shall ascertain and
	115	+	29 determine the proper and adequate rates of depreciation of the several
	116	+	30 classes of property of each public utility. The Depreciation rates
	117	+	31 under this subsection shall be calculated to recover a reasonable
	118	+	32 estimate of the future cost of removing retired assets of the public
	119	+	33 utility.
	120	+	34 (c) A public utility's rates, tolls and charges shall be such as will
	121	+	35 provide the amounts required over and above the reasonable and
	122	+	36 necessary operating expenses, to maintain such property in an
	123	+	37 operating state of efficiency corresponding to the progress of the
	124	+	38 industry. In a proceeding in which the costs of a capital asset are
	125	+	39 being recognized for ratemaking purposes, a public utility may
	126	+	40 account for any asset retirement obligations and recover, through
	127	+	41 rates charged to customers, reasonably and prudently incurred
	128	+	42 costs associated with asset retirement obligations, to the extent the
	129	+	EH 1417—LS 7054/DI 101 3
	130	+	1 specific asset retirement obligation costs are incremental and have
	131	+	2 not otherwise been included in depreciation rates. Each public
	132	+	3 utility shall conform its depreciation accounts to such the rates so
	133	+	4 ascertained and determined by the commission.
	134	+	5 (d) The commission shall make changes in such a public utility's
	135	+	6 rates of depreciation, from time to time, as it may find the commission
	136	+	7 finds necessary, including as necessary to reflect changes in:
	137	+	8 (1) the public utility's estimated asset retirement costs,
	138	+	9 including all reasonable and prudent costs of removing
	139	+	10 retired assets; and
	140	+	11 (2) the estimated retirement dates of assets of the public
	141	+	12 utility.
	142	+	13 SECTION 3. IC 8-1-8.4-7, AS ADDED BY P.L.150-2011,
	143	+	14 SECTION 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
	144	+	15 UPON PASSAGE]: Sec. 7. (a) As a condition for receiving the
	145	+	16 certificate required under section 6 of this chapter, an energy utility
	146	+	17 must file with the commission an application that sets forth the
	147	+	18 information described in section 6(b) of this chapter, supported with
	148	+	19 technical information in as much detail as the commission requires.
	149	+	20 (b) The commission shall hold a properly noticed public hearing on
	150	+	21 each application and grant a certificate only if the commission has:
	151	+	22 (1) made a finding that the public convenience and necessity will
	152	+	23 be served by the proposed compliance project;
	153	+	24 (2) approved the projected federally mandated costs associated
	154	+	25 with the proposed compliance project; and
	155	+	26 (3) made a finding on each of the factors set forth in section 6(b)
	156	+	27 of this chapter.
	157	+	28 (c) If the commission approves under subsection (b) a proposed
	158	+	29 compliance project and the projected federally mandated costs
	159	+	30 associated with the proposed compliance project, the following apply:
	160	+	31 (1) Eighty percent (80%) of the approved federally mandated
	161	+	32 costs shall be recovered by the energy utility through a periodic
	162	+	33 retail rate adjustment mechanism that allows the timely recovery
	163	+	34 of the approved federally mandated costs, with recovery
	164	+	35 commencing no earlier than:
	165	+	36 (A) the date of a final agency action regarding the federally
	166	+	37 mandated requirement; or
	167	+	38 (B) in the absence of a final agency action, the date on
	168	+	39 which the federally mandated requirement becomes
	169	+	40 effective.
	170	+	41 The commission shall adjust the energy utility's authorized net
	171	+	42 operating income to reflect any approved earnings for purposes of
	172	+	EH 1417—LS 7054/DI 101 4
	173	+	1 IC 8-1-2-42(d)(3) and IC 8-1-2-42(g)(3).
	174	+	2 (2) Twenty percent (20%) of the approved federally mandated
	175	+	3 costs, including depreciation, allowance for funds used during
	176	+	4 construction, and post in service carrying costs, based on the
	177	+	5 overall cost of capital most recently approved by the commission,
	178	+	6 shall be deferred and recovered by the energy utility as part of the
	179	+	7 next general rate case filed by the energy utility with the
	180	+	8 commission.
	181	+	9 (3) Actual costs that exceed the projected federally mandated
	182	+	10 costs of the approved compliance project by more than
	183	+	11 twenty-five percent (25%) shall require specific justification by
	184	+	12 the energy utility and specific approval by the commission before
	185	+	13 being authorized in the next general rate case filed by the energy
	186	+	14 utility with the commission.
	187	+	15 SECTION 4. An emergency is declared for this act.
	188	+	EH 1417—LS 7054/DI 101 5
	189	+	COMMITTEE REPORT
	190	+	Mr. Speaker: Your Committee on Utilities, Energy and
	191	+	Telecommunications, to which was referred House Bill 1417, has had
	192	+	the same under consideration and begs leave to report the same back
	193	+	to the House with the recommendation that said bill be amended as
	194	+	follows:
	195	+	Replace the effective dates in SECTIONS 1 through 3 with
	196	+	"[EFFECTIVE UPON PASSAGE]".
	197	+	Page 1, line 11, delete "future recovery" and insert "consideration
	198	+	by the commission and for future recovery".
	199	+	Page 1, line 15, delete "as long as the costs are" and insert "to the
	200	+	extent those specific costs are incremental and are not otherwise
	201	+	already included for recovery in the utility's rates:".
	202	+	Page 2, line 1, delete "reasonable:".
	203	+	Page 2, line 9, delete "Costs incurred in planning, seeking approval
	204	+	of, or" and insert "Incurred costs that are directly related to the
	205	+	preparation and conduct of a regulatory proceeding.".
	206	+	Page 2, delete lines 10 through 14.
	207	+	Page 2, line 19, delete "period" and insert "period, as determined
	208	+	by the commission,".
	209	+	Page 2, line 38, delete "A" and insert "In a proceeding in which
	210	+	the costs of a capital asset are being recognized for ratemaking
	211	+	purposes, a".
	212	+	Page 2, line 40, after "reasonably" insert "and prudently".
	213	+	Page 2, line 41, delete "asset retirement obligation costs" and insert
	214	+	"specific asset retirement obligation costs are incremental and".
	215	+	Page 2, line 42, after "not" insert "otherwise".
	216	+	Page 3, line 7, after "all" insert "reasonable and prudent".
	217	+	Page 4, after line 11, begin a new paragraph and insert:
	218	+	"SECTION 4. An emergency is declared for this act.".
	219	+	and when so amended that said bill do pass.
	220	+	(Reference is to HB 1417 as introduced.)
	221	+	SOLIDAY
	222	+	Committee Vote: yeas 9, nays 4.
	223	+	EH 1417—LS 7054/DI 101 6
	224	+	HOUSE MOTION
	225	+	Mr. Speaker: I move that House Bill 1417 be amended to read as
	226	+	follows:
	227	+	Page 2, line 15, delete "chapter or any other" and insert "chapter,".
	228	+	Page 2, line 16, delete "provision of this title,".
	229	+	Page 2, line 16, delete "shall" and insert "may".
	230	+	(Reference is to HB 1417 as printed February 9, 2023.)
	231	+	SOLIDAY
	232	+	_____
	233	+	COMMITTEE REPORT
	234	+	Madam President: The Senate Committee on Utilities, to which was
	235	+	referred House Bill No. 1417, has had the same under consideration
	236	+	and begs leave to report the same back to the Senate with the
	237	+	recommendation that said bill DO PASS.
	238	+	(Reference is to HB 1417 as reprinted February 15, 2023.)
	239	+
	240	+	KOCH, Chairperson
	241	+	Committee Vote: Yeas 8, Nays 3
	242	+	EH 1417—LS 7054/DI 101