Industry group files testimony calling for Indiana Utility Regulatory Commission to end “self-committing” practice that allows utilities to pass extra costs for running uneconomic coal-fired power plants on to consumers
INDIANAPOLIS, August 3, 2020 – Last Friday, national business group Advanced Energy Economy (AEE) filed its initial testimony* before the Indiana Utility Regulatory Commission (IURC) calling for the Commission to no longer allow Duke Energy Indiana to pass along costs of operating uneconomic coal-fired power plants in the state to consumers.
“Hoosiers should not have to pay more so the state’s utilities can continue to run power plants that are dirty and uneconomic,” said Dylan Reed, Director of Advanced Energy Economy. “Because of a regulatory loophole that lets utilities decide when to run their plants, regardless of cost, Duke was able to overcharge consumers by more than $20 million in just three months in 2019. That has to stop.”
AEE submitted additional expert testimony from witnesses Robert Stoddard of Berkeley Research Group and former Chair of the Public Service Commission of Wisconsin Charles Cicchetti. A third expert testimony from Michael Jonagan of Analysis Group has not yet been posted by IURC. The entire IURC docket 38707-FAC 123 S1 can be found here*.
Duke Energy Indiana participates in the Midcontinent Independent System Operator (MISO) grid network, a wholesale energy market across 15 states. As part of this market, MISO prioritizes meeting the energy needs of the region by ordering resources from least to highest cost and dispatching the least cost resources first, subject to transmission and reliability constraints. When Duke designates its coal plants as “must-run,” it instructs MISO to use them even when their costs exceed those of the market price. Duke customers are forced to make up that difference.
“The role of MISO is to provide least-cost and reliable energy to consumers in Duke Energy Indiana’s service territory. By claiming a must-run designation for its uneconomic coal plants Duke is effectively cutting into the lunch line to get its food first,” continued Reed. “The utility readily admits that it uses this tactic.”
In its filing, AEE called on the Commission to move Duke’s operation of these coal units to seasonal operations, which would protect ratepayers by shutting down these units for months at a time, when they are most likely to be uneconomic. AEE also urged Duke to commit to an accelerated schedule for closing the plants. The group is calling for Duke to replace the coal units with advanced energy resources, as these technologies can better meet the needs of Hoosiers with more affordable and reliable power and demand-side resources.
“Indiana utilities know that advanced energy resources like wind, solar, battery storage, demand response, and energy efficiency can meet consumer needs at lower cost than old, inefficient coal plants. Duke should no longer be allowed to overcharge its customers because it fails to bring its resources up to date. We urge the IURC to end this practice in Indiana once and for all,” said Reed.
*AEE offers complimentary access to its PowerSuite online platform tracking all federal and state energy legislation and regulatory filings to credentialed media. Sign up for a free trial and contact Monique Hanis (email@example.com) for permanent access.
When utilities commit their coal plants as “must-run” resources, MISO schedules them to operate regardless of whether they are the lowest cost resources available at the time to serve customers across the Midwest region. This can distort the market clearing price if that resource would otherwise not have been selected in the MISO auction process based on its operating costs. Utilities like Duke can commit their uneconomic resources to MISO in this fashion without fear of economic loss because they are guaranteed to recover the difference between the clearing price and the actual cost to dispatch the plant through various regulatory processes. The Fuel Adjustment Clause allows Duke to recover fuel prices for its uneconomic dispatch.
About Advanced Energy Economy
Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. AEE’s mission is to transform public policy to enable rapid growth of advanced energy businesses. Engaged at the federal level and in more than a dozen states around the country including Indiana, AEE represents more than 100 companies in the $238 billion U.S. advanced energy industry, which employs 3.6 million U.S. workers. Learn more at www.aee.net, track the latest news @AEEnet.