Introduced Version
HOUSE BILL No. 1382
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 8-1.
Synopsis: Retirement of electric generating units. Amends the
descriptions of "reliability" and "resiliency" as attributes of electric
utility service in the Indiana Code section that sets forth state policy
concerning Indiana's electric generation resource mix, energy
infrastructure, and electric service ratemaking constructs. Repeals the
Indiana Code section concerning the retirement, sale, or transfer of
electric generation facilities. Adds new language that does the
following: (1) Defines an "electric generating unit" as one or more
fossil fuel fired: (A) combustion; or (B) steam; generating sources that
are used for generating electricity and that deliver all or part of the
electricity generated to the electric grid for sale. (2) Provides that the
Indiana utility regulatory commission (IURC) has the authority to
approve or deny the retirement of an electric generating unit (unit). (3)
Provides that before retiring a unit, a public utility must apply to the
IURC for an order approving the retirement. (4) Provides that in an
application to retire a unit, a public utility must: (A) provide evidence
regarding the costs of retiring the unit; and (B) demonstrate that the
retirement will result in a cost savings to customers. (5) Requires the
IURC to issue an order: (A) approving; (B) approving with conditions;
or (C) denying; an application to retire a unit not later than 180 days
after receiving the application. (6) Provides that there is a rebuttable
presumption against the retirement of a unit. (7) Prohibits the IURC
from: (A) approving the retirement of unit; (B) authorizing a surcharge
in connection with the retirement of a unit; or (C) authorizing or
allowing for the recovery of costs in connection with the retirement of
a unit; unless the IURC makes certain findings. Requires the IURC to
(Continued next page)
Effective: July 1, 2024.
Ledbetter
January 11, 2024, read first time and referred to Committee on Utilities, Energy and
Telecommunications.
2024 IN 1382—LS 7049/DI 101 Digest Continued
include in its annual report certain information about the retirement of
electric generating units with respect to the state fiscal year covered by
the report. Authorizes the IURC to: (1) issue a general administrative
order; or (2) adopt administrative rules; to implement the bill's
provisions. Makes corresponding changes to the Indiana Code section
concerning public utilities' depreciation rates.
2024 IN 1382—LS 7049/DI 1012024 IN 1382—LS 7049/DI 101 Introduced
Second Regular Session of the 123rd General Assembly (2024)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
Constitution) is being amended, the text of the existing provision will appear in this style type,
additions will appear in this style type, and deletions will appear in this style type.
Additions: Whenever a new statutory provision is being enacted (or a new constitutional
provision adopted), the text of the new provision will appear in this style type. Also, the
word NEW will appear in that style type in the introductory clause of each SECTION that adds
a new provision to the Indiana Code or the Indiana Constitution.
Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2023 Regular Session of the General Assembly.
HOUSE BILL No. 1382
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 8-1-2-0.6, AS ADDED BY P.L.55-2023, SECTION
2 1, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1,
3 2024]: Sec. 0.6. The general assembly declares that it is the continuing
4 policy of the state that decisions concerning Indiana's electric
5 generation resource mix, energy infrastructure, and electric service
6 ratemaking constructs must consider each of the following attributes of
7 electric utility service:
8 (1) Reliability, including
9 (A) the adequacy of electric utility service, including the
10 ability of the electric system to supply the aggregate electrical
11 demand and energy requirements of end use customers at all
12 times, taking into account:
13 (i) scheduled; and
14 (ii) reasonably expected unscheduled;
15 outages of system elements; and
2024 IN 1382—LS 7049/DI 101 2
1 (B) the operating reliability of the electric system, including
2 the ability of the electric system to withstand sudden
3 disturbances such as electric short circuits or unanticipated
4 loss of system components. having adequate electric
5 generation capacity to safely deliver electric energy in the
6 quantity, with the quality, and at a time that customers
7 demand.
8 (2) Affordability, including ratemaking constructs that result in
9 retail electric utility service that is affordable and competitive
10 across residential, commercial, and industrial customer classes.
11 (3) Resiliency, including the ability of the electric system or its
12 components to
13 (A) adapt to changing conditions; and
14 (B) withstand and rapidly recover from disruptions or
15 off-nominal events. quickly and effectively respond to and
16 recover from events that compromise grid reliability.
17 (4) Stability, including the ability of the electric system to:
18 (A) maintain a state of equilibrium during:
19 (i) normal and abnormal conditions; or
20 (ii) disturbances; and
21 (B) deliver a stable source of electricity, in which frequency
22 and voltage are maintained within defined parameters,
23 consistent with industry standards.
24 (5) Environmental sustainability, including:
25 (A) the impact of environmental regulations on the cost of
26 providing electric utility service; and
27 (B) demand from consumers for environmentally sustainable
28 sources of electric generation.
29 SECTION 2. IC 8-1-2-19, AS AMENDED BY P.L.170-2023,
30 SECTION 4, IS AMENDED TO READ AS FOLLOWS [EFFECTIVE
31 JULY 1, 2024]: Sec. 19. (a) Every public utility shall carry a separate,
32 proper and adequate depreciation account whenever the commission,
33 after investigation, shall determine that such depreciation account
34 reasonably can be required.
35 (b) The commission, from time to time, shall ascertain and
36 determine the proper and adequate rates of depreciation of the several
37 classes of property of each public utility. Subject to the required
38 findings by the commission under IC 8-1-8.5-2.2(g), depreciation
39 rates under this subsection shall be calculated to recover a reasonable
40 estimate of the future cost of removing retired assets of the public
41 utility.
42 (c) A public utility's rates, tolls and charges shall be such as will
2024 IN 1382—LS 7049/DI 101 3
1 provide the amounts required over and above the reasonable and
2 necessary operating expenses, to maintain such property in an
3 operating state of efficiency corresponding to the progress of the
4 industry. Subject to the required findings by the commission under
5 IC 8-1-8.5-2.2(g), in a proceeding in which the costs of a capital asset
6 are being recognized for ratemaking purposes, a public utility may
7 account for any asset retirement obligations and recover, through rates
8 charged to customers, reasonably and prudently incurred costs
9 associated with asset retirement obligations, to the extent the specific
10 asset retirement obligation costs are incremental and have not
11 otherwise been included in depreciation rates. Each public utility shall
12 conform its depreciation accounts to the rates so ascertained and
13 determined by the commission.
14 (d) Subject to IC 8-1-8.5-2.1(d), the required findings by the
15 commission under IC 8-1-8.5-2.2(g), the commission shall make
16 changes in a public utility's rates of depreciation, from time to time, as
17 the commission finds necessary, including as necessary to reflect
18 changes in:
19 (1) the public utility's estimated asset retirement costs, including
20 all reasonable and prudent costs of removing retired assets; and
21 (2) the estimated retirement dates of assets of the public utility.
22 SECTION 3. IC 8-1-8.5-2.1 IS REPEALED [EFFECTIVE JULY 1,
23 2024]. Sec. 2.1. (a) This section does not apply to the retirement, sale,
24 or transfer of:
25 (1) a public utility's electric generation facility if the retirement,
26 sale, or transfer is necessary in order for the public utility to
27 comply with a federal consent decree; or
28 (2) an electric generation facility that generates electricity for sale
29 exclusively to the wholesale market.
30 (b) A public utility shall notify the commission if:
31 (1) the public utility intends or decides to retire, sell, or transfer
32 an electric generation facility with a capacity of at least eighty
33 (80) megawatts; and
34 (2) the retirement, sale, or transfer:
35 (A) was not set forth in; or
36 (B) is to take place on a date earlier than the date specified in;
37 the public utility's short term action plan in the public utility's
38 most recently filed integrated resource plan.
39 (c) Upon receiving notice from a public utility under subsection (b),
40 the commission shall consider and may investigate, under IC 8-1-2-58
41 through IC 8-1-2-60, the public utility's intention or decision to retire,
42 sell, or transfer the electric generation facility. In considering the public
2024 IN 1382—LS 7049/DI 101 4
1 utility's intention or decision under this subsection, the commission
2 shall examine the impact the retirement, sale, or transfer would have on
3 the public utility's ability to meet:
4 (1) the public utility's planning reserve margin requirements or
5 other federal reliability requirements that the public utility is
6 obligated to meet, as described in section 13(i)(4) of this chapter;
7 and
8 (2) the reliability adequacy metrics set forth in section 13(e) of
9 this chapter.
10 (d) Before July 1, 2026, if:
11 (1) a public utility intends or decides to retire, sell, or transfer an
12 electric generation facility with a capacity of at least eighty (80)
13 megawatts; and
14 (2) the retirement, sale, or transfer:
15 (A) was not set forth in; or
16 (B) is to take place on a date earlier than the date specified in;
17 the public utility's short term action plan in the public utility's
18 most recently filed integrated resource plan;
19 the commission shall not permit the public utility's depreciation rates,
20 as established under IC 8-1-2-19, to be amended to reflect the
21 accelerated date for the retirement, sale, or transfer of the electric
22 generation asset unless the commission finds that such an adjustment
23 is necessary to ensure the ability of the public utility to provide reliable
24 service to its customers, and that the unamended depreciation rates
25 would cause an unjust and unreasonable impact on the public utility
26 and its ratepayers.
27 (e) The commission may issue a general administrative order to
28 implement this section.
29 (f) This section expires July 1, 2026.
30 SECTION 4. IC 8-1-8.5-2.2 IS ADDED TO THE INDIANA CODE
31 AS A NEW SECTION TO READ AS FOLLOWS [EFFECTIVE JULY
32 1, 2024]: Sec. 2.2. (a) As used in this section, "electric generating
33 unit" means one (1) or more fossil fuel fired:
34 (1) combustion; or
35 (2) steam;
36 generating sources that are used for generating electricity and that
37 deliver all or part of the electricity generated to the electric grid
38 for sale.
39 (b) As used in this section, "reliability" has the meaning set
40 forth in IC 8-1-2-0.6(1).
41 (c) As used in this section, "resiliency" has the meaning set forth
42 in IC 8-1-2-0.6(3).
2024 IN 1382—LS 7049/DI 101 5
1 (d) As used in this section, "retirement", with respect to an
2 electric generating unit, means the closure of, or the complete and
3 permanent cessation of operations at, the electric generating unit.
4 "Retire" has a corresponding meaning.
5 (e) Notwithstanding any other law, the commission has the
6 authority to approve or deny the retirement of an electric
7 generating unit owned or operated by a public utility. Before
8 retiring an electric generating unit, a public utility must apply to
9 the commission for an order approving the retirement. Before
10 submitting an application to the commission under this subsection,
11 the public utility must give the commission thirty (30) days
12 advance notice that the public utility seeks to retire the electric
13 generating unit. In an application submitted under this subsection,
14 a public utility must, at a minimum:
15 (1) provide the commission with evidence of all known direct
16 and indirect costs of retiring the electric generating unit; and
17 (2) demonstrate that the retirement of the electric generating
18 unit will result in a cost savings to customers.
19 (f) Not later than one hundred eighty (180) days after receiving
20 an administratively complete application from a public utility
21 under subsection (e), and subject to subsection (g), the commission
22 shall issue an order:
23 (1) approving;
24 (2) approving with conditions; or
25 (3) denying;
26 the application.
27 (g) There is a rebuttable presumption against the retirement of
28 an electric generating unit. The commission shall not approve the
29 retirement of an electric generating unit, authorize a surcharge in
30 connection with the retirement of an electric generating unit, or
31 take any other action that authorizes or allows for the recovery of
32 costs in connection with the retirement of an electric generating
33 unit, including the recovery of any costs associated with stranded
34 assets, unless the presumption set forth in this subsection is
35 rebutted by evidence sufficient for the commission to find the
36 following:
37 (1) That the public utility will replace the capacity of the
38 electric generating unit to be retired with capacity that:
39 (A) is dispatchable by:
40 (i) the public utility; or
41 (ii) the appropriate regional transmission organization
42 (as defined in section 13(b) of this chapter);
2024 IN 1382—LS 7049/DI 101 6
1 (B) maintains or improves the reliability and resiliency of
2 the electric transmission grid; and
3 (C) allows the public utility to satisfy both:
4 (i) its planning reserve margin requirement established
5 by the appropriate regional transmission organization
6 (as defined in section 13(b) of this chapter); and
7 (ii) the reliability adequacy metrics set forth in section
8 13(g) of this chapter.
9 (2) That the retirement of the electric generating unit will not
10 harm the public utility's ratepayers by causing the public
11 utility to incur any net incremental costs:
12 (A) to be recovered through rates; and
13 (B) that could be avoided by the continued operation of the
14 electric generating unit in compliance with applicable law.
15 (3) That the public utility's decision to retire the electric
16 generating unit is not the result of any financial incentives or
17 benefits offered by any federal agency.
18 (h) The commission shall include in its annual report under
19 IC 8-1-1-14 the following information for the state fiscal year
20 covered by the report:
21 (1) The number of applications received by the commission
22 under subsection (f).
23 (2) The nameplate capacity of each electric generating unit
24 sought to be retired in the applications received.
25 (3) For each electric generating unit sought to be retired in the
26 applications received, whether the commission:
27 (A) approved;
28 (B) approved with conditions; or
29 (C) denied;
30 the retirement.
31 (4) For each retirement approved by the commission,
32 including those retirements approved with conditions,
33 information as to the impact of the retirement on the
34 following, to the extent determinable:
35 (A) Indiana's electric generation resource mix.
36 (B) The ability of the public utility that retired the electric
37 generating unit to satisfy both:
38 (i) the public utility's planning reserve margin
39 requirement established by the appropriate regional
40 transmission organization (as defined in section 13(b) of
41 this chapter); and
42 (ii) the reliability adequacy metrics set forth in section
2024 IN 1382—LS 7049/DI 101 7
1 13(g) of this chapter.
2 (C) The need for capacity additions or expansions at new
3 or existing electric generating sites as a result of the
4 retirement.
5 (D) The need for additional power purchase agreements or
6 capacity reserve arrangements as a result of the
7 retirement.
8 (5) For each retirement approved by the commission,
9 including those retirements approved with conditions,
10 information as to whether the retirement resulted in stranded
11 costs that will be recovered by the public utility from
12 ratepayers through a surcharge or another separate charge
13 on customer bills.
14 (i) The commission may:
15 (1) issue a general administrative order; or
16 (2) adopt rules under IC 4-22-2;
17 to implement this section.
2024 IN 1382—LS 7049/DI 101