IC 8-1-2.4
    Chapter 2.4. Alternate Energy Production, Cogeneration, andSmall Hydro Facilities

IC 8-1-2.4-1
Development of alternate energy production facilities; policy
    Sec. 1. It is the policy of this state to encourage the developmentof alternate energy production facilities, cogeneration facilities, andsmall hydro facilities in order to conserve our finite and expensiveenergy resources and to provide for their most efficient utilization.
As added by Acts 1982, P.L.72, SEC.1.

IC 8-1-2.4-2
Definitions
    Sec. 2. (a) The definitions in this section apply throughout thischapter.
    (b) "Alternate energy production facility" means:
        (1) a solar, wind turbine, waste management, resource recovery,refuse-derived fuel, or wood burning facility;
        (2) any land, system, building, or improvement that is locatedat the project site and is necessary or convenient to theconstruction, completion, or operation of the facility; and
        (3) the transmission or distribution facilities necessary toconduct the energy produced by the facility to users located ator near the project site.
    (c) "Cogeneration facility" means:
        (1) a facility that:
            (A) simultaneously generates electricity and useful thermalenergy; and
            (B) meets the energy efficiency standards established forcogeneration facilities by the Federal Energy RegulatoryCommission under 16 U.S.C. 824a-3;
        (2) any land, system, building, or improvement that is locatedat the project site and is necessary or convenient to theconstruction, completion, or operation of the facility; and
        (3) the transmission or distribution facilities necessary toconduct the energy produced by the facility to users located ator near the project site.
    (d) "Electric utility" means any public utility or municipallyowned utility that owns, operates, or manages any electric plant.
    (e) "Small hydro facility" means:
        (1) a hydroelectric facility at a dam;
        (2) any land, system, building, or improvement that is locatedat the project site and is necessary or convenient to theconstruction, completion, or operation of the facility; and
        (3) the transmission or distribution facilities necessary toconduct the energy produced by the facility to users located ator near the project site.
    (f) "Steam utility" means any public utility or municipally ownedutility that owns, operates, or manages a steam plant.As added by Acts 1982, P.L.72, SEC.1. Amended by P.L.23-1988,SEC.31.

IC 8-1-2.4-3
Participation of utilities; encouragement
    Sec. 3. The commission shall encourage the participation ofutilities in alternate energy production facilities, cogenerationfacilities, and small hydro facilities.
As added by Acts 1982, P.L.72, SEC.1.

IC 8-1-2.4-4
Contracts by electric and steam utilities required
    Sec. 4. (a) Subject to section 5 of this chapter, the commissionshall require electric utilities and steam utilities to enter into longterm contracts to:
        (1) purchase or wheel electricity or useful thermal energy fromalternate energy production facilities, cogeneration facilities, orsmall hydro facilities located in the utility's service territory,under the terms and conditions that the commission finds:
            (A) are just and economically reasonable to the corporation'sratepayers;
            (B) are nondiscriminatory to alternate energy producers,cogenerators, and small hydro producers; and
            (C) will further the policy stated in section 1 of this chapter;and
        (2) provide for the availability of supplemental or backup powerto alternate energy production facilities, cogeneration facilities,or small hydro facilities, on a nondiscriminatory basis and atjust and reasonable rates.
    (b) Upon application by the owner or operator of any alternateenergy production facility, cogeneration facility, or small hydrofacility, or any interested party, the commission shall establish forthe affected utility just and economically reasonable rates forelectricity purchased under subsection (a)(1). The rates shall beestablished at levels sufficient to stimulate the development ofalternate energy production, cogeneration, and small hydro facilitiesin Indiana, and to encourage the continuation of existing capacityfrom those facilities.
    (c) The commission shall base the rates for new facilities or newcapacity from existing facilities on the following factors:
        (1) The estimated capital cost of the next generating plant,including related transmission facilities, to be placed in serviceby the utility.
        (2) The term of the contract between the utility and the seller.
        (3) A levelized annual carrying charge based upon the term ofthe contract and determined in a manner consistent with boththe methods and the current interest or return requirementsassociated with the utility's new construction program.
        (4) The utility's annual energy costs, including current fuelcosts, related operation and maintenance costs, and any other

energy-related costs considered appropriate by the commission.
Until July 1, 1986, the rate for a new facility may not exceed eightcents ($.08) per kilowatt hour.
    (d) The commission shall base the rates for existing facilities onthe factors listed in subsection (c). However, the commission shallalso consider the original cost less depreciation of existing facilitiesand may establish a rate for existing facilities that is less than the rateestablished for new facilities.
    (e) In the case of a utility that purchases all or substantially all ofits electricity requirements, the rates established under this sectionmust be equal to the current cost to the utility of similar types andquantities of electrical service.
    (f) In lieu of the other procedures provided by this section, autility and an owner or operator of an alternate energy productionfacility, cogeneration facility, or small hydro facility may enter intoa long term contract in accordance with subsection (a) and may agreeto rates for purchase and sale transactions. A contract entered intounder this subsection must be filed with the commission in themanner provided by IC 8-1-2-42.
    (g) This section does not require an electric utility or steam utilityto construct any additional facilities unless those facilities are paidfor by the owner or operator of the affected alternate energyproduction facility, cogeneration facility, or small hydro facility.
As added by Acts 1982, P.L.72, SEC.1.

IC 8-1-2.4-5
Utilities excepted; grounds
    Sec. 5. (a) The commission may not require an electric utility orsteam utility to purchase or wheel electricity or useful thermal energyfrom an alternate energy production facility or cogeneration facilityunless the facility:
        (1) has an electric generating capacity of not more than eighty(80) megawatts;
        (2) produces electricity, gas, or useful thermal energy forindustrial, commercial, or residential purposes; and
        (3) is owned or operated by an individual, firm, copartnership,corporation, company, association, joint stock association, city,town, or county that:
        (A) is not primarily engaged in the business of producing orselling electricity, gas, or useful thermal energy other thanelectricity, gas, or useful thermal energy sold solely fromalternate energy production facilities, cogeneration facilities, orsmall hydro facilities; and
        (B) does not sell electricity, gas, or useful thermal energy toresidential users other than the tenants or the owner or operatorof the facility.
    (b) The commission may not require an electric utility or steamutility to purchase or wheel electricity or useful thermal energy froma small hydro facility unless the facility has an electric generatingcapacity of not more than eighty (80) megawatts.As added by Acts 1982, P.L.72, SEC.1.