CHAPTER 8.5. UTILITY POWERPLANT CONSTRUCTION
IC 8-1-8.5
Chapter 8.5. Utility Powerplant Construction
IC 8-1-8.5-1
Definitions
Sec. 1. (a) As used in this chapter, "public utility" means a:
(1) public, municipally owned, or cooperatively owned utility;or
(2) joint agency created under IC 8-1-2.2.
(b) As used in this chapter, "public utility service" means theservice rendered by a public utility.
As added by P.L.43-1983, SEC.12. Amended by P.L.23-1988,SEC.40; P.L.54-1992, SEC.4.
IC 8-1-8.5-2
Necessity for certification
Sec. 2. Except as provided in section 7 of this chapter, a publicutility may not begin the construction, purchase, or lease of anysteam, water, or other facility for the generation of electricity to bedirectly or indirectly used for the furnishing of public utility service,even though the facility is for furnishing the service already beingrendered, without first obtaining from the commission a certificatethat public convenience and necessity requires, or will require, suchconstruction, purchase, or lease.
As added by P.L.43-1983, SEC.12. Amended by P.L.88-1985, SEC.6;P.L.11-1987, SEC.14.
IC 8-1-8.5-3
Analysis of needs; plans; hearings; report
Sec. 3. (a) The commission shall develop, publicize, and keepcurrent an analysis of the long-range needs for expansion of facilitiesfor the generation of electricity.
(b) This analysis must include an estimate of:
(1) the probable future growth of the use of electricity;
(2) the probable needed generating reserves;
(3) in the judgment of the commission, the optimal extent, size,mix, and general location of generating plants;
(4) in the judgment of the commission, the optimalarrangements for statewide or regional pooling of power andarrangements with other utilities and energy suppliers toachieve maximum efficiencies for the benefit of the people ofIndiana; and
(5) the comparative costs of meeting future growth by othermeans of providing reliable, efficient, and economic electricservice, including purchase of power, joint ownership offacilities, refurbishment of existing facilities, conservation, loadmanagement, and cogeneration.
(c) The commission shall consider the analysis in acting upon anypetition by any utility for construction.
(d) In developing the analysis, the commission: (1) shall confer and consult with:
(A) the public utilities in Indiana;
(B) the utility commissions or comparable agencies ofneighboring states;
(C) the Federal Energy Regulatory Commission; and
(D) other agencies having relevant information; and
(2) may participate as it considers useful in any joint boardsinvestigating generating plant sites or the probable needs forfuture generating facilities.
(e) In addition to such reports as public utilities may be requiredby statute or rule of the commission to file with the commission, autility may submit to the commission its utility specific proposals asto the future needs for electricity to serve the people of the state orthe area served by the utility.
(f) Insofar as practicable, each utility, the utility consumercounselor, and any intervenor may attend or be represented at anyformal conference conducted by the commission in developing a planfor the future requirements of electricity for Indiana or this region.
(g) In the course of making the analysis and developing the planrequired by this section, the commission shall conduct one (1) ormore public hearings.
(h) Each year, the commission shall submit to the governor and tothe appropriate committees of the general assembly a report of itsanalysis and plan, the progress to date in carrying out such plan, andthe program of the commission for the ensuing year in connectionwith such plan.
As added by P.L.43-1983, SEC.12. Amended by P.L.88-1985, SEC.7;P.L.53-1992, SEC.2.
IC 8-1-8.5-3.5
Forecasting group
Sec. 3.5. (a) To arrive at estimates of the probable future growthof the use of electricity required by section 3(b)(1) of this chapter,the commission shall establish a permanent forecasting group to belocated at a state supported college or university within Indiana. Thecommission shall financially support the group, which shall consistof a director and such staff as mutually agreed upon by thecommission and college or university, from funds appropriated to thecommission.
(b) The forecasting group shall develop and keep current amethodology for forecasting the probable future growth of the use ofelectricity within Indiana and within this region of the nation. To dothis, the group shall solicit the input of residential, commercial, andindustrial consumers and the electric industry.
(c) The commission shall use the methodology that the forecastinggroup devises as the commission's primary methodology indeveloping and keeping current the commission's:
(1) analysis of the long range needs for expansion of facilitiesfor the generation of electricity required by section 3(a) of thischapter; and (2) plan for meeting the future requirements of electricityrequired by sections 3(e), 3(f), and 3(g) of this chapter.
As added by P.L.88-1985, SEC.8. Amended by P.L.53-1992, SEC.3.
IC 8-1-8.5-4
Consideration of petition
Sec. 4. In acting upon any petition for the construction, purchase,or lease of any facility for the generation of electricity, thecommission shall take into account:
(1) the applicant's current and potential arrangement with otherelectric utilities for:
(A) the interchange of power;
(B) the pooling of facilities;
(C) the purchase of power; and
(D) joint ownership of facilities; and
(2) other methods for providing reliable, efficient, andeconomical electric service, including the refurbishment ofexisting facilities, conservation, load management, cogenerationand renewable energy sources.
As added by P.L.43-1983, SEC.12. Amended by P.L.88-1985, SEC.9.
IC 8-1-8.5-5
Estimate of costs; hearing on application; granting certificate;findings; force and effect of certificate; approval or disapproval ofutility specific proposals
Sec. 5. (a) As a condition for receiving the certificate requiredunder section 2 of this chapter, the applicant shall file an estimate ofconstruction, purchase, or lease costs in such detail as thecommission may require.
(b) The commission shall hold a public hearing on each suchapplication. A certificate shall be granted only if the commission has:
(1) made a finding as to the best estimate of construction,purchase, or lease costs based on the evidence of record;
(2) made a finding that either:
(A) the construction, purchase, or lease will be consistentwith the commission's plan (or such part of the plan as maythen be developed, if any) for expansion of electricgenerating capacity; or
(B) the construction, purchase, or lease is consistent with autility specific proposal submitted under section 3(e) of thischapter and approved under subsection (d). However, if thecommission has developed, in whole or in part, a plan for theexpansion of electric generating capacity and the applicanthas filed and the commission has approved under subsection(d) a utility specific proposal submitted under section 3(e) ofthis chapter, the commission shall make a finding under thisclause that the construction, purchase, or lease is consistentwith the commission's plan, to the extent developed, and thatthe construction, purchase, or lease is consistent with theapplicant's plan under section 3(e) of this chapter, to the
extent the plan was approved by the commission;
(3) made a finding that the public convenience and necessityrequire or will require the construction, purchase, or lease of thefacility; and
(4) made a finding that the facility, if it is a coal-consumingfacility, utilizes Indiana coal or is justified, because ofeconomic considerations or governmental requirements, inusing non-Indiana coal.
(c) If:
(1) the commission grants a certificate under this chapter basedupon a finding under subsection (b)(2) that the construction,purchase, or lease of a generating facility is consistent with thecommission's plan for the expansion of electric generatingcapacity; and
(2) a court finally determines that the commission plan isinvalid;
the certificate shall remain in full force and effect if the certificatewas also based upon a finding under subsection (b)(2) that theconstruction, purchase, or lease of the facility was consistent with autility specific plan submitted under section 3(e) of this chapter andapproved under subsection (d).
(d) The commission shall consider and approve, in whole or inpart, or disapprove a utility specific proposal or an amendmentthereto jointly with an application for a certificate under this chapter.However, such an approval or disapproval shall be solely for thepurpose of acting upon the pending certificate for the construction,purchase, or lease of a facility for the generation of electricity.
As added by P.L.43-1983, SEC.12. Amended by P.L.88-1985,SEC.10; P.L.53-1992, SEC.4.
IC 8-1-8.5-5.5
Review of continuing need; modification or revocation ofcertificate
Sec. 5.5. When, in the opinion of the commission, changes in theestimate of the probable future growth of the use of electricity soindicate, the commission shall commence a review of any certificategranted under this chapter to determine whether the publicconvenience and necessity continues to require the facility underconstruction. If the commission finds that completion of the facilityunder construction is no longer in the public interest, the commissionmay modify or revoke the certificate.
As added by P.L.88-1985, SEC.11. Amended by P.L.53-1992, SEC.5.
IC 8-1-8.5-6
Review of construction; force and effect of certificate approvedunder review; election to defer review
Sec. 6. (a) In addition to the review of the continuing need for thefacility under construction prescribed in section 5.5 of this chapter,the commission shall, at the request of the public utility, maintain anongoing review of such construction as it proceeds. The applicant
shall submit each year during construction, or at such other periodsas the commission and the public utility mutually agree, a progressreport and any revisions in the cost estimates for the construction.
(b) If the commission approves the construction and the cost ofthe portion of the facility under review, the certificate shall remainin full force and effect.
(c) If the commission disapproves of all or part of the constructionor cost of the portion of the facility under review, the commissionmay modify or revoke the certificate.
(d) Alternatively, the public utility may elect to foregocommission review under subsection (a) and defer the review of theconstruction and cost until completion or cancellation of the facility.
As added by P.L.43-1983, SEC.12. Amended by P.L.88-1985,SEC.12; P.L.53-1992, SEC.6.
IC 8-1-8.5-6.5
Rates; recovery of costs
Sec. 6.5. Absent fraud, concealment, or gross mismanagement, autility shall recover through rates the actual costs the utility hasincurred in reliance on a certificate issued under this chapter, and asmodified under sections 5.5 and 6 of this chapter as follows:
(1) If a facility has been found to be completed and the facility'sconstruction has been subject to ongoing review under section6(a) of this chapter, the costs of construction approved by thecommission during the ongoing review shall be included in theutility's rate base without further commission review.
(2) If a facility has been found to be completed and the facility'sconstruction is subject to subsequent review under section 6(d)of this chapter, the costs of construction that do not exceed theestimate found under section 5(b)(1) of this chapter shall beincluded in the utility's rate base, except for costs that areshown to result from inadequate quality controls. However,inclusion of costs in excess of the estimate found by thecommission under section 5(b)(1) of this chapter in the utility'srate base is not permitted unless shown by the utility inconstruction of that facility to be necessary and prudent.
(3) If a facility has been canceled as a result of the modificationor revocation of the certificate under section 5.5 or 6 of thischapter and the facility's construction has been subject toongoing review under section 6(a) of this chapter (includingreviews after cancellation), the costs of construction approvedby the commission during the review shall be recovered by theutility by inclusion in rates and amortization over a reasonabletime to be determined by the commission. The utility shall bepermitted to earn a return, computed using the utility'sauthorized rate of return, on the unamortized balance.
(4) If a facility has been canceled as a result of the modificationor revocation of the certificate under section 5.5 or 6 of thischapter and the facility's construction is subject to subsequentreview under section 6(d) of this chapter, the costs of
construction incurred before cancellation that were included inthe estimate found under section 5(b)(1) of this chapter and thathave not been shown to result from inadequate quality controlsshall be recovered by the utility by inclusion in rates andamortization over a reasonable time to be determined by thecommission. The utility shall be permitted to earn a return,computed using the utility's authorized rate of return, on theunamortized balance. However, costs that were not included inthe estimate found by the commission under section 5(b)(1) ofthis chapter may not be included in rates unless shown by theutility in construction of that facility to be necessary andprudent.
As added by P.L.53-1992, SEC.7.
IC 8-1-8.5-7
Certification requirements; exemptions; report
Sec. 7. The certification requirements of this chapter do not applyto persons who:
(1) construct an electric generating facility primarily for thatperson's own use and not for the primary purpose of producingelectricity, heat, or steam for sale to or for the public forcompensation;
(2) construct an alternate energy production facility,cogeneration facility, or a small hydro facility that complieswith the limitations set forth in IC 8-1-2.4-5; or
(3) are a municipal utility and install an electric generatingfacility that has a capacity of ten thousand (10,000) kilowatts orless.
However, those persons shall, nevertheless, be required to report tothe commission the proposed construction of such a facility beforebeginning construction of the facility.
As added by P.L.43-1983, SEC.12.
IC 8-1-8.5-8
Construction of chapter; valuation of property
Sec. 8. Except as otherwise provided in this chapter, nothing inthis chapter limits the commission's responsibility regardingvaluation of utility property under IC 8-1-2-6.
As added by P.L.5-1988, SEC.47. Amended by P.L.53-1992, SEC.8.