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Indiana House Bill HB1382

Indiana 2024 Regular Session

Indiana House Bill HB1382 Compare Versions

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22 Introduced Version
33 HOUSE BILL No. 1382
44 _____
55 DIGEST OF INTRODUCED BILL
66 Citations Affected: IC 8-1.
77 Synopsis: Retirement of electric generating units. Amends the
88 descriptions of "reliability" and "resiliency" as attributes of electric
99 utility service in the Indiana Code section that sets forth state policy
1010 concerning Indiana's electric generation resource mix, energy
1111 infrastructure, and electric service ratemaking constructs. Repeals the
1212 Indiana Code section concerning the retirement, sale, or transfer of
1313 electric generation facilities. Adds new language that does the
1414 following: (1) Defines an "electric generating unit" as one or more
1515 fossil fuel fired: (A) combustion; or (B) steam; generating sources that
1616 are used for generating electricity and that deliver all or part of the
1717 electricity generated to the electric grid for sale. (2) Provides that the
1818 Indiana utility regulatory commission (IURC) has the authority to
1919 approve or deny the retirement of an electric generating unit (unit). (3)
2020 Provides that before retiring a unit, a public utility must apply to the
2121 IURC for an order approving the retirement. (4) Provides that in an
2222 application to retire a unit, a public utility must: (A) provide evidence
2323 regarding the costs of retiring the unit; and (B) demonstrate that the
2424 retirement will result in a cost savings to customers. (5) Requires the
2525 IURC to issue an order: (A) approving; (B) approving with conditions;
2626 or (C) denying; an application to retire a unit not later than 180 days
2727 after receiving the application. (6) Provides that there is a rebuttable
2828 presumption against the retirement of a unit. (7) Prohibits the IURC
2929 from: (A) approving the retirement of unit; (B) authorizing a surcharge
3030 in connection with the retirement of a unit; or (C) authorizing or
3131 allowing for the recovery of costs in connection with the retirement of
3232 a unit; unless the IURC makes certain findings. Requires the IURC to
3333 (Continued next page)
3434 Effective: July 1, 2024.
3535 Ledbetter
3636 January 11, 2024, read first time and referred to Committee on Utilities, Energy and
3737 Telecommunications.
3838 2024 IN 1382—LS 7049/DI 101 Digest Continued
3939 include in its annual report certain information about the retirement of
4040 electric generating units with respect to the state fiscal year covered by
4141 the report. Authorizes the IURC to: (1) issue a general administrative
4242 order; or (2) adopt administrative rules; to implement the bill's
4343 provisions. Makes corresponding changes to the Indiana Code section
4444 concerning public utilities' depreciation rates.
4545 2024 IN 1382—LS 7049/DI 1012024 IN 1382—LS 7049/DI 101 Introduced
4646 Second Regular Session of the 123rd General Assembly (2024)
4747 PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
4848 Constitution) is being amended, the text of the existing provision will appear in this style type,
4949 additions will appear in this style type, and deletions will appear in this style type.
5050 Additions: Whenever a new statutory provision is being enacted (or a new constitutional
5151 provision adopted), the text of the new provision will appear in this style type. Also, the
5252 word NEW will appear in that style type in the introductory clause of each SECTION that adds
5353 a new provision to the Indiana Code or the Indiana Constitution.
5454 Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
5555 between statutes enacted by the 2023 Regular Session of the General Assembly.
5656 HOUSE BILL No. 1382
5757 A BILL FOR AN ACT to amend the Indiana Code concerning
5858 utilities.
5959 Be it enacted by the General Assembly of the State of Indiana:
6060 1 SECTION 1. IC 8-1-2-0.6, AS ADDED BY P.L.55-2023, SECTION
6161 2 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1,
6262 3 2024]: Sec. 0.6. The general assembly declares that it is the continuing
6363 4 policy of the state that decisions concerning Indiana's electric
6464 5 generation resource mix, energy infrastructure, and electric service
6565 6 ratemaking constructs must consider each of the following attributes of
6666 7 electric utility service:
6767 8 (1) Reliability, including
6868 9 (A) the adequacy of electric utility service, including the
6969 10 ability of the electric system to supply the aggregate electrical
7070 11 demand and energy requirements of end use customers at all
7171 12 times, taking into account:
7272 13 (i) scheduled; and
7373 14 (ii) reasonably expected unscheduled;
7474 15 outages of system elements; and
7575 2024 IN 1382—LS 7049/DI 101 2
7676 1 (B) the operating reliability of the electric system, including
7777 2 the ability of the electric system to withstand sudden
7878 3 disturbances such as electric short circuits or unanticipated
7979 4 loss of system components. having adequate electric
8080 5 generation capacity to safely deliver electric energy in the
8181 6 quantity, with the quality, and at a time that customers
8282 7 demand.
8383 8 (2) Affordability, including ratemaking constructs that result in
8484 9 retail electric utility service that is affordable and competitive
8585 10 across residential, commercial, and industrial customer classes.
8686 11 (3) Resiliency, including the ability of the electric system or its
8787 12 components to
8888 13 (A) adapt to changing conditions; and
8989 14 (B) withstand and rapidly recover from disruptions or
9090 15 off-nominal events. quickly and effectively respond to and
9191 16 recover from events that compromise grid reliability.
9292 17 (4) Stability, including the ability of the electric system to:
9393 18 (A) maintain a state of equilibrium during:
9494 19 (i) normal and abnormal conditions; or
9595 20 (ii) disturbances; and
9696 21 (B) deliver a stable source of electricity, in which frequency
9797 22 and voltage are maintained within defined parameters,
9898 23 consistent with industry standards.
9999 24 (5) Environmental sustainability, including:
100100 25 (A) the impact of environmental regulations on the cost of
101101 26 providing electric utility service; and
102102 27 (B) demand from consumers for environmentally sustainable
103103 28 sources of electric generation.
104104 29 SECTION 2. IC 8-1-2-19, AS AMENDED BY P.L.170-2023,
105105 30 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
106106 31 JULY 1, 2024]: Sec. 19. (a) Every public utility shall carry a separate,
107107 32 proper and adequate depreciation account whenever the commission,
108108 33 after investigation, shall determine that such depreciation account
109109 34 reasonably can be required.
110110 35 (b) The commission, from time to time, shall ascertain and
111111 36 determine the proper and adequate rates of depreciation of the several
112112 37 classes of property of each public utility. Subject to the required
113113 38 findings by the commission under IC 8-1-8.5-2.2(g), depreciation
114114 39 rates under this subsection shall be calculated to recover a reasonable
115115 40 estimate of the future cost of removing retired assets of the public
116116 41 utility.
117117 42 (c) A public utility's rates, tolls and charges shall be such as will
118118 2024 IN 1382—LS 7049/DI 101 3
119119 1 provide the amounts required over and above the reasonable and
120120 2 necessary operating expenses, to maintain such property in an
121121 3 operating state of efficiency corresponding to the progress of the
122122 4 industry. Subject to the required findings by the commission under
123123 5 IC 8-1-8.5-2.2(g), in a proceeding in which the costs of a capital asset
124124 6 are being recognized for ratemaking purposes, a public utility may
125125 7 account for any asset retirement obligations and recover, through rates
126126 8 charged to customers, reasonably and prudently incurred costs
127127 9 associated with asset retirement obligations, to the extent the specific
128128 10 asset retirement obligation costs are incremental and have not
129129 11 otherwise been included in depreciation rates. Each public utility shall
130130 12 conform its depreciation accounts to the rates so ascertained and
131131 13 determined by the commission.
132132 14 (d) Subject to IC 8-1-8.5-2.1(d), the required findings by the
133133 15 commission under IC 8-1-8.5-2.2(g), the commission shall make
134134 16 changes in a public utility's rates of depreciation, from time to time, as
135135 17 the commission finds necessary, including as necessary to reflect
136136 18 changes in:
137137 19 (1) the public utility's estimated asset retirement costs, including
138138 20 all reasonable and prudent costs of removing retired assets; and
139139 21 (2) the estimated retirement dates of assets of the public utility.
140140 22 SECTION 3. IC 8-1-8.5-2.1 IS REPEALED [EFFECTIVE JULY 1,
141141 23 2024]. Sec. 2.1. (a) This section does not apply to the retirement, sale,
142142 24 or transfer of:
143143 25 (1) a public utility's electric generation facility if the retirement,
144144 26 sale, or transfer is necessary in order for the public utility to
145145 27 comply with a federal consent decree; or
146146 28 (2) an electric generation facility that generates electricity for sale
147147 29 exclusively to the wholesale market.
148148 30 (b) A public utility shall notify the commission if:
149149 31 (1) the public utility intends or decides to retire, sell, or transfer
150150 32 an electric generation facility with a capacity of at least eighty
151151 33 (80) megawatts; and
152152 34 (2) the retirement, sale, or transfer:
153153 35 (A) was not set forth in; or
154154 36 (B) is to take place on a date earlier than the date specified in;
155155 37 the public utility's short term action plan in the public utility's
156156 38 most recently filed integrated resource plan.
157157 39 (c) Upon receiving notice from a public utility under subsection (b),
158158 40 the commission shall consider and may investigate, under IC 8-1-2-58
159159 41 through IC 8-1-2-60, the public utility's intention or decision to retire,
160160 42 sell, or transfer the electric generation facility. In considering the public
161161 2024 IN 1382—LS 7049/DI 101 4
162162 1 utility's intention or decision under this subsection, the commission
163163 2 shall examine the impact the retirement, sale, or transfer would have on
164164 3 the public utility's ability to meet:
165165 4 (1) the public utility's planning reserve margin requirements or
166166 5 other federal reliability requirements that the public utility is
167167 6 obligated to meet, as described in section 13(i)(4) of this chapter;
168168 7 and
169169 8 (2) the reliability adequacy metrics set forth in section 13(e) of
170170 9 this chapter.
171171 10 (d) Before July 1, 2026, if:
172172 11 (1) a public utility intends or decides to retire, sell, or transfer an
173173 12 electric generation facility with a capacity of at least eighty (80)
174174 13 megawatts; and
175175 14 (2) the retirement, sale, or transfer:
176176 15 (A) was not set forth in; or
177177 16 (B) is to take place on a date earlier than the date specified in;
178178 17 the public utility's short term action plan in the public utility's
179179 18 most recently filed integrated resource plan;
180180 19 the commission shall not permit the public utility's depreciation rates,
181181 20 as established under IC 8-1-2-19, to be amended to reflect the
182182 21 accelerated date for the retirement, sale, or transfer of the electric
183183 22 generation asset unless the commission finds that such an adjustment
184184 23 is necessary to ensure the ability of the public utility to provide reliable
185185 24 service to its customers, and that the unamended depreciation rates
186186 25 would cause an unjust and unreasonable impact on the public utility
187187 26 and its ratepayers.
188188 27 (e) The commission may issue a general administrative order to
189189 28 implement this section.
190190 29 (f) This section expires July 1, 2026.
191191 30 SECTION 4. IC 8-1-8.5-2.2 IS ADDED TO THE INDIANA CODE
192192 31 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
193193 32 1, 2024]: Sec. 2.2. (a) As used in this section, "electric generating
194194 33 unit" means one (1) or more fossil fuel fired:
195195 34 (1) combustion; or
196196 35 (2) steam;
197197 36 generating sources that are used for generating electricity and that
198198 37 deliver all or part of the electricity generated to the electric grid
199199 38 for sale.
200200 39 (b) As used in this section, "reliability" has the meaning set
201201 40 forth in IC 8-1-2-0.6(1).
202202 41 (c) As used in this section, "resiliency" has the meaning set forth
203203 42 in IC 8-1-2-0.6(3).
204204 2024 IN 1382—LS 7049/DI 101 5
205205 1 (d) As used in this section, "retirement", with respect to an
206206 2 electric generating unit, means the closure of, or the complete and
207207 3 permanent cessation of operations at, the electric generating unit.
208208 4 "Retire" has a corresponding meaning.
209209 5 (e) Notwithstanding any other law, the commission has the
210210 6 authority to approve or deny the retirement of an electric
211211 7 generating unit owned or operated by a public utility. Before
212212 8 retiring an electric generating unit, a public utility must apply to
213213 9 the commission for an order approving the retirement. Before
214214 10 submitting an application to the commission under this subsection,
215215 11 the public utility must give the commission thirty (30) days
216216 12 advance notice that the public utility seeks to retire the electric
217217 13 generating unit. In an application submitted under this subsection,
218218 14 a public utility must, at a minimum:
219219 15 (1) provide the commission with evidence of all known direct
220220 16 and indirect costs of retiring the electric generating unit; and
221221 17 (2) demonstrate that the retirement of the electric generating
222222 18 unit will result in a cost savings to customers.
223223 19 (f) Not later than one hundred eighty (180) days after receiving
224224 20 an administratively complete application from a public utility
225225 21 under subsection (e), and subject to subsection (g), the commission
226226 22 shall issue an order:
227227 23 (1) approving;
228228 24 (2) approving with conditions; or
229229 25 (3) denying;
230230 26 the application.
231231 27 (g) There is a rebuttable presumption against the retirement of
232232 28 an electric generating unit. The commission shall not approve the
233233 29 retirement of an electric generating unit, authorize a surcharge in
234234 30 connection with the retirement of an electric generating unit, or
235235 31 take any other action that authorizes or allows for the recovery of
236236 32 costs in connection with the retirement of an electric generating
237237 33 unit, including the recovery of any costs associated with stranded
238238 34 assets, unless the presumption set forth in this subsection is
239239 35 rebutted by evidence sufficient for the commission to find the
240240 36 following:
241241 37 (1) That the public utility will replace the capacity of the
242242 38 electric generating unit to be retired with capacity that:
243243 39 (A) is dispatchable by:
244244 40 (i) the public utility; or
245245 41 (ii) the appropriate regional transmission organization
246246 42 (as defined in section 13(b) of this chapter);
247247 2024 IN 1382—LS 7049/DI 101 6
248248 1 (B) maintains or improves the reliability and resiliency of
249249 2 the electric transmission grid; and
250250 3 (C) allows the public utility to satisfy both:
251251 4 (i) its planning reserve margin requirement established
252252 5 by the appropriate regional transmission organization
253253 6 (as defined in section 13(b) of this chapter); and
254254 7 (ii) the reliability adequacy metrics set forth in section
255255 8 13(g) of this chapter.
256256 9 (2) That the retirement of the electric generating unit will not
257257 10 harm the public utility's ratepayers by causing the public
258258 11 utility to incur any net incremental costs:
259259 12 (A) to be recovered through rates; and
260260 13 (B) that could be avoided by the continued operation of the
261261 14 electric generating unit in compliance with applicable law.
262262 15 (3) That the public utility's decision to retire the electric
263263 16 generating unit is not the result of any financial incentives or
264264 17 benefits offered by any federal agency.
265265 18 (h) The commission shall include in its annual report under
266266 19 IC 8-1-1-14 the following information for the state fiscal year
267267 20 covered by the report:
268268 21 (1) The number of applications received by the commission
269269 22 under subsection (f).
270270 23 (2) The nameplate capacity of each electric generating unit
271271 24 sought to be retired in the applications received.
272272 25 (3) For each electric generating unit sought to be retired in the
273273 26 applications received, whether the commission:
274274 27 (A) approved;
275275 28 (B) approved with conditions; or
276276 29 (C) denied;
277277 30 the retirement.
278278 31 (4) For each retirement approved by the commission,
279279 32 including those retirements approved with conditions,
280280 33 information as to the impact of the retirement on the
281281 34 following, to the extent determinable:
282282 35 (A) Indiana's electric generation resource mix.
283283 36 (B) The ability of the public utility that retired the electric
284284 37 generating unit to satisfy both:
285285 38 (i) the public utility's planning reserve margin
286286 39 requirement established by the appropriate regional
287287 40 transmission organization (as defined in section 13(b) of
288288 41 this chapter); and
289289 42 (ii) the reliability adequacy metrics set forth in section
290290 2024 IN 1382—LS 7049/DI 101 7
291291 1 13(g) of this chapter.
292292 2 (C) The need for capacity additions or expansions at new
293293 3 or existing electric generating sites as a result of the
294294 4 retirement.
295295 5 (D) The need for additional power purchase agreements or
296296 6 capacity reserve arrangements as a result of the
297297 7 retirement.
298298 8 (5) For each retirement approved by the commission,
299299 9 including those retirements approved with conditions,
300300 10 information as to whether the retirement resulted in stranded
301301 11 costs that will be recovered by the public utility from
302302 12 ratepayers through a surcharge or another separate charge
303303 13 on customer bills.
304304 14 (i) The commission may:
305305 15 (1) issue a general administrative order; or
306306 16 (2) adopt rules under IC 4-22-2;
307307 17 to implement this section.
308308 2024 IN 1382—LS 7049/DI 101