Bill Text: IN SB0560 | 2013 | Regular Session | Amended
Bill Title: Utility transmission.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Passed) 2013-05-13 - Public Law 133 [SB0560 Detail]
Download: Indiana-2013-SB0560-Amended.html
Citations Affected: IC 6-1.1; IC 8-1; IC 8-23.
Synopsis: Utility transmission. Provides for the establishment by
counties of infrastructure development zones in which natural gas
infrastructure is exempt from property taxation. Allows a customer of
an electricity supplier to petition the utility regulatory commission
(commission) for a temporary discount to the demand component of the
customer's rates and charges established in the electricity supplier's
applicable tariff. Requires the utility consumer counselor (counselor)
to investigate a utility's petition for a transmission, distribution, and
storage system improvement charge (TDSIC) and report its activities
to the commission. Authorizes the counselor to request additional
funding from the budget agency. Allows a utility to designate a test
period for the commission to use in determining an increase in the
utility's rates and charges. Provides that a utility may impose a
temporary increase in rates and charges while its rate case is pending
before the commission. Requires a utility to provide a refund to
customers if the temporary rates and charges exceed the rates and
charges approved by the commission. Establishes a framework from
the commission to authorize and resolve disputes concerning electric
transmission facilities constructed or operated by new or incumbent
electric transmission owners. Authorizes a utility that provides electric
or gas service to petition the commission to recover TDSIC costs.
Requires the Indiana department of transportation to develop a program
to coordinate the use of public rights-of-way with utilities when the
department undertakes an infrastructure improvement project.
Effective: Upon passage; July 1, 2013.
January 14, 2013, read first time and referred to Committee on Utilities.
February 4, 2013, amended, reported favorably _ Do Pass.
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
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
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities.
Chapter 12.5. Infrastructure Development Zones
Sec. 1. As used in this chapter, "eligible infrastructure" means storage, compressed natural gas, liquefied natural gas, transmission, and distribution facilities to be used in the delivery of natural gas, or supplemental or substitute forms of gas sources by a natural gas utility.
Sec. 2. As used in this chapter, "natural gas utility" means an investor owned utility engaged in the business of furnishing natural gas service to the public.
Sec. 3. As used in this chapter, "person" means a firm, association, cooperative, corporation, limited liability company, business trust, partnership, or limited liability partnership.
Sec. 4. A county executive, or in Marion County, the county fiscal body, may adopt an ordinance designating a geographic
territory as an infrastructure development zone after:
(1) conducting a public hearing on the proposed ordinance;
(2) publishing notice of the public hearing in the manner
prescribed by IC 5-3-1; and
(3) making the following findings:
(A) Adequate natural gas infrastructure is not available in
the zone.
(B) Providing a property tax exemption to a person for
investing in eligible infrastructure in the zone will provide
opportunities for increased natural gas usage and
economic development benefits in the zone.
Sec. 5. If an infrastructure development zone is established
under this chapter, eligible infrastructure located in the zone is
exempt from property taxation.
(b) The consumer counselor may make use of engineers, experts, and accountants employed by the commission or the Indiana department of transportation and direct them to make appraisals and audits in the performance of the consumer counselor's duties under this chapter and IC 8-1-1 and IC 8-1-2. In so doing, the consumer counselor shall have access to the records and files of the commission or the Indiana department of transportation.
(c) The consumer counselor may employ, with the approval of the governor and the budget agency, additional stenographers, examiners, experts, engineers, assistant counselors, accountants, and consulting firms with expertise in utility, motor carrier, or railroad economics or management or both, at salaries and compensation and for a length of time as the governor and the budget agency may approve for a particular case or investigation. The compensation for the additional personnel together with the cost of transportation, hotel, telegram, and telephone bills while traveling on public business shall be paid from the expert witness fee account, or, with the approval of the governor and the budget agency, from a contingency fund established under
IC 8-1-6-1 on warrants drawn by the auditor of state, sworn to by the
parties who incurred the expenses.
(d) Expenses incurred by the regular staff of the office and approved
by the consumer counselor, or an expense incurred by the commission
or the Indiana department of transportation under subsection (b), shall
be charged and paid in the manner provided in IC 8-1-2-70 or IC 8-1-6,
whichever is appropriate under the circumstances.
(e) Nothing in this chapter may be construed to prevent a party
interested in a proceeding, suit, or action from appearing in person or
from being represented by counsel.
(f) Persons hired by the consumer counselor as provided by this
section are exempt from the job classifications and compensation
schedules established under IC 4-15.
(g) The consumer counselor may purchase, lease, or otherwise
acquire sufficient technical equipment necessary for the consumer
counselor to carry out the consumer counselor's statutory duties.
(h) The consumer counselor may submit to the budget agency
a request for funds sufficient to carry out any new duties or
responsibilities created under IC 8-1-39-9(b). The consumer
counselor shall include in its annual report to the regulatory
flexibility committee:
(1) a description of its activities under IC 8-1-39-9(b); and
(2) a summary of the costs associated with those activities.
(b) A customer of an electricity supplier (as defined in IC 8-1-2.3-2) may apply to the commission for a temporary discount to the demand component of the rates and charges contained in the electricity supplier's applicable tariff if the customer:
(1) has or will have a maximum demand for electricity of at least ten (10) megawatts;
(2) employs more than fifty (50) full-time employees at one (1) or more facilities located in Indiana;
(3) demonstrates that the temporary discount is necessary and essential for the customer to attract or create additional jobs or retain existing jobs in Indiana; and
(4) demonstrates that the customer's load will increase by at least one (1) megawatt.
(c) Upon receiving an application from a customer of an electricity supplier under subsection (b), the commission may approve a temporary discount to the demand component of the rates and charges contained in the electricity supplier's applicable tariff if the commission finds that the discount is just and reasonable and consistent with the circumstances described by the customer under subsection (b), as follows:
(1) For circumstances not described in subdivision (2) or (3), a discount up to ten percent (10%).
(2) For circumstances involving a redevelopment project in which the customer is involved, a discount up to fifteen percent (15%).
(3) For circumstances involving a brownfield project in which the customer is involved, a discount up to twenty percent (20%).
A temporary discount authorized under this subsection expires three (3) years after the effective date of the discount. The cost of the temporary discount shall be included by the commission in the cost of service for the electricity supplier and may be deferred for ratemaking purposes by the electricity supplier until the electricity supplier's next general rate case.
(1) Testimony, exhibits, and supporting work papers.
(2) Proposed test year and rate base cutoff dates.
(3) Proposed revenue requirements.
(4) Jurisdictional operating revenues and expenses, including taxes and depreciation.
(5) Balance sheet and income statements.
(6) Jurisdictional rate base.
(7) Proposed cost of capital and capital structure.
(8) Jurisdictional class cost of service study.
(9) Proposed rate design and pro forma tariff sheets.
(b) For purposes of this section, "utility" refers to the following:
(1) A public utility.
(2) A municipally owned utility.
(3) A cooperative owned utility.
(c) In a petition filed with the commission to change basic rates and charges, a utility may designate a test period for the commission to use. The commission shall approve a test period that is one (1) of the following:
(1) A forward looking test period determined on the basis of projected data for the twelve (12) month period beginning not later than twenty-four (24) months after the date on which the utility petitions the commission for a change in its basic rates and charges.
(2) A historic test period based on a twelve (12) month period that ends not more than two hundred seventy (270) days before the date on which the utility petitions the commission for a change in its basic rates and charges. The commission may adjust a historic test period for fixed, known, and measurable changes and appropriate normalizations and annualizations.
(3) A hybrid test period based on at least twelve (12) consecutive months of combined historic data and projected data. The commission may adjust the historic data as set forth in subdivision (2).
(d) This subsection does not apply to a proceeding in which a utility is seeking an increase in basic rates and charges and requesting initial relief under IC 8-1-2.5-5 or IC 8-1-2.5-6. If the commission does not issue an order on a petition filed by a utility under subsection (c) within three hundred (300) days after the utility files its case in chief in support of the proposed increase, the utility may temporarily implement seventy-five percent (75%) of the utility's proposed permanent increase in basic rates and charges, subject to the commission's review and determination under subsection (e). The utility shall submit the proposed temporary rates and charges to the commission at least thirty (30) days before the date on which the utility seeks to implement the temporary rates and charges. The temporary rates and charges may reflect proposed or existing approved customer class allocations and rate designs. However, if the utility uses a forward looking test period described in subsection (c)(1), the utility may not implement the temporary increase before the date on which the projected twelve (12) month period begins.
(e) The commission shall review the temporary rates and charges to determine compliance with this section. The temporary rates and charges take effect on the latest of the following dates unless the commission determines that the temporary rates and charges are not properly designed in compliance with this section:
(1) The date proposed by the utility.
(2) Three hundred (300) days after the date on which the utility files its case in chief.
(3) The termination of any extension of the three hundred (300) day deadline authorized under subsection (f) or (g).
If the commission determines that the temporary rates and charges are not properly designed in compliance with this section, the utility may cure the defect and file the corrected temporary rates and charges with the commission within a reasonable period determined by the commission.
(f) If the commission grants a utility an extension of the procedural schedule, the commission may extend the three hundred (300) day deadline set forth in subsection (d) by the length of the extension.
(g) The commission may suspend the three hundred (300) day deadline set forth in subsection (d) one (1) time for good cause. The suspension may not exceed sixty (60) days.
(h) If a utility implements temporary rates and charges that differ from the permanent rates and charges approved by the commission in a final order on the petition filed under subsection (c), the utility shall perform a reconciliation and implement a refund, in the form of a credit rider, or a surcharge, as applicable, on customer bills rendered on or after the date the commission approves the credit or surcharge. The refund or surcharge shall be credited or added in equal amounts each month for six (6) months. The amount of the total refund or surcharge equals the amount by which the temporary rates and charges differ from the permanent rates and charges.
Chapter 38. Transmission Reliability
Sec. 1. As used in this chapter, "electric transmission facility" means a high voltage transmission line with a rating of at least one hundred (100) kilovolts and related transmission facilities and controls.
Sec. 2. As used in this chapter, "incumbent electric transmission
owner" means a public utility that owns, operates, and maintains
an electric transmission facility in whole or in part in Indiana.
Sec. 3. (a) As used in this chapter, "local reliability electric
transmission facility" means an electric transmission facility
located in whole or in part in Indiana that is required by a regional
transmission organization to satisfy the reliability standards of the
North American Electric Reliability Corporation, a regional
reliability organization, or a successor corporation or organization.
If the electricity transmission facility is located in the territory of
the PJM Interconnection regional transmission organization, or its
successor organization, its rating must be:
(1) at least one hundred (100) kilovolts; and
(2) not more than three hundred (300) kilovolts.
(b) The term does not include an electric transmission facility to
the extent the facility is required by a regional transmission
organization primarily to address nonreliability drivers.
Sec. 4. As used in this chapter, "new electric transmission
owner" means a corporation, company, partnership, limited
liability company, or other organization that:
(1) on the date of its incorporation or organization, does not
own, operate, or maintain an electric transmission facility
located in whole or in part in Indiana; and
(2) is incorporated or organized to construct, own, operate,
and maintain an electric transmission facility located in whole
or in part in Indiana.
Sec. 5. As used in this chapter, "public utility" has the meaning
set forth in IC 8-1-8.5-1.
Sec. 6. As used in this chapter, "regional transmission
organization" refers to a regional transmission organization
approved by the Federal Energy Regulatory Commission.
Sec. 7. (a) The commission shall grant a new electric
transmission owner authority to operate as a public utility in
Indiana if the commission makes the following findings:
(1) The new electric transmission owner has the financial,
managerial, and technical capability to construct, own,
operate, and maintain an electric transmission facility.
(2) The new electric transmission owner has the ability and
intent to comply with all statutes, rules, and regulations
enforced by the commission.
(3) The new electric transmission owner has the intent to
construct, own, operate, and maintain an electric transmission
facility that is reviewed by an applicable regional
transmission organization.
(4) The new electric transmission owner has provided written
notice of its request for authority under this section to each
incumbent electric transmission owner that may connect its
existing electric transmission facility to the new electric
transmission facility of the new electric transmission owner.
(b) In making findings under subsection (a), the commission
may consider the creditworthiness of the new electric transmission
owner, including:
(1) the new electric transmission owner's investment grade
rating;
(2) guarantees of a parent company of the new electric
transmission owner that has an investment grade rating;
(3) a bank reference letter or bonding commitment on behalf
of the new electric transmission owner;
(4) the authority of the new electric transmission owner to
directly set rates or impose taxes; and
(5) the capability of the new electric transmission owner to
meet its financial obligations if it abandons the new electric
transmission facility after its construction.
Sec. 8. A new electric transmission owner shall notify the
commission in a timely manner of the dates on which construction
of the new electric transmission facility began and was completed.
Sec. 9. (a) An incumbent electric transmission owner has the
right to construct, own, operate, and maintain the following:
(1) A local reliability electric transmission facility that
connects to an electric transmission facility owned by the
incumbent electric transmission owner.
(2) Upgrades to an existing electric transmission facility
owned by the incumbent electric transmission owner.
(b) The right to construct, own, operate, and maintain a local
reliability facility that connects to electric transmission facilities
owned by two (2) or more incumbent electric transmission owners
belongs individually and proportionately to each incumbent
electric transmission owner, unless the incumbent electric
transmission owners otherwise agree in writing.
Sec. 10. (a) An incumbent electric transmission owner may enter
into a contract with a new electric transmission owner that
proposes to connect a new electric transmission facility to the
electric transmission facility of the incumbent electric transmission
owner. The contract may assign responsibility for:
(1) maintenance and upgrades; and
(2) reliability compliance;
with respect to the new electric transmission facility.
(b) The commission has jurisdiction to resolve a dispute arising under a contract described in subsection (a).
Sec. 11. This chapter does not affect an incumbent electric transmission owner's use and control of existing property rights.
Chapter 39. Transmission, Distribution, and Storage System Improvement Charges and Deferrals
Sec. 1. The definitions in IC 8-1-2-1 apply throughout this chapter.
Sec. 2. As used in this chapter, "eligible transmission, distribution, and storage system improvements" means new or replacement electric or gas transmission, distribution, or storage utility projects that:
(1) a public utility undertakes for purposes of safety, reliability, system modernization, or economic development, including the extension of gas service to rural areas;
(2) were not included in the public utility's rate base in its most recent general rate case; and
(3) either were:
(A) designated in the public utility's five (5) year plan and approved by the commission under section 10 of this chapter as eligible for TDSIC treatment; or
(B) approved as a targeted economic development project under section 11 of this chapter.
Sec. 3. As used in this chapter, "pretax return" means the TDSIC revenues necessary to:
(1) produce net operating income equal to the public utility's weighted cost of capital multiplied by investments in eligible transmission, distribution, and storage system improvements;
(2) pay state and federal income taxes imposed on the net operating income calculated under subdivision (1); and
(3) pay state utility receipts taxes associated with TDSIC revenues.
Sec. 4. As used in this chapter, "public utility" means:
(1) an energy utility (as defined in IC 8-1-2.5-2);
(2) a municipally owned utility (as defined in IC 8-1-2-1(h)); or
(3) a department of public utilities created by IC 8-1-11.1.
Sec. 5. As used in this chapter, "targeted economic development project" means a project approved by the commission under section 11 of this chapter.
Sec. 6. As used in this chapter, "TDSIC" refers to a transmission, distribution, and storage system improvement charge.
Sec. 7. As used in this chapter, "TDSIC costs" means the following costs incurred with respect to eligible transmission, distribution, and storage system improvements incurred both while the improvements are under construction and post in service:
(1) Depreciation expenses.
(2) Operation and maintenance expenses.
(3) Extensions and replacements to the extent not provided for through depreciation, in the manner provided for in IC 8-1.5-3-8.
(4) Property taxes.
(5) Pretax returns.
The term includes costs associated with a targeted economic development project approved under section 11 of this chapter.
Sec. 8. As used in this chapter, "TDSIC revenues" means revenues produced through a TDSIC and excluding revenues from all other rates and charges.
Sec. 9. (a) Subject to subsection (c), a public utility that provides electric or gas utility service may file with the commission rate schedules establishing a TDSIC that will allow the periodic automatic adjustment of the public utility's basic rates and charges to provide for timely recovery of eighty percent (80%) of approved capital expenditures and TDSIC costs. The petition must:
(1) use the customer class revenue allocation approved in the public utility's most recent retail base rate case order;
(2) include the public utility's five (5) year plan for eligible transmission, distribution, and storage system improvements; and
(3) identify projected effects of the plan described in subdivision (2) on retail rates and charges.
The public utility shall provide a copy of the petition to the office of the utility consumer counselor when the petition is filed with the commission. The public utility may, but is not required to, update the public utility's five (5) year plan under subdivision (2) with each petition the public utility files under this section. An update may include a petition for approval of a targeted economic development project under section 11 of this chapter.
(b) A public utility that recovers capital expenditures and TDSIC costs under subsection (a) shall defer the remaining twenty percent (20%) of approved capital expenditures and TDSIC costs, including depreciation, allowance for funds used during construction, and post in service carrying costs, and shall recover those capital expenditures and TDSIC costs as part of the next general rate case that the public utility files with the commission.
(c) Except as provided in section 15 of this chapter, a public utility may not file a petition under subsection (a) within six (6) months after the date on which the commission issues an order changing the public utility's basic rates and charges with respect to the same type of utility service.
(d) The commission may require, at the expiration of a public utility's five (5) year plan, that the public utility submit financial information to the commission to allow the commission to review the adequacy of the public utility's basic rates and charges. If the commission finds good cause, the commission may investigate the public utility's basic rates and charges under IC 8-1-2-58.
(e) A public utility may file a petition under this section not more than one (1) time every six (6) months.
Sec. 10. (a) A public utility shall petition the commission for approval of the public utility's five (5) year plan for eligible transmission, distribution, and storage improvements. A plan submitted under this subsection may include for approval a targeted economic development project described in section 11 of this chapter.
(b) Following notice and hearing, and not more than one hundred eighty (180) days after the public utility petitions the commission under subsection (a), the commission shall issue an order on the petition. If the commission determines that the public utility's five (5) year plan is reasonable, the commission shall approve the plan and designate the eligible transmission, distribution, and storage improvements included in the plan as eligible for TDSIC treatment.
(c) A public utility that provides gas service may petition the commission to approve a targeted economic development project as part of the public utility's five (5) year plan under subsection (a). The commission shall review within sixty (60) days the part of the petition concerning the targeted economic development project and approve the project if the commission determines that the project qualifies as a targeted economic development project.
Sec. 11. (a) The extension, construction, addition, or
improvement of the plant and equipment of a public utility that is
installed to provide gas service to a targeted economic development
project is used and useful in the public service.
(b) Costs associated with a targeted economic development
project shall be treated as TDSIC costs and may be recovered
through a TDSIC under section 12 of this chapter. The TDSIC
revenues associated with a targeted economic development project
shall not be included in a public utility's total retail revenues for
purposes of determining an aggregate increase under section 14 of
this chapter.
(c) Notwithstanding any law or rule governing extension of
service, a public utility that provides gas service may, on a
nondiscriminatory basis, extend service in rural areas without a
deposit or other adequate assurance of performance from the
customer, to the extent that the extension of service results in a
positive contribution to the utility's overall cost of service over a
twenty (20) year period. However, if the public utility determines
that the extension of service to a targeted economic development
project will not result in a positive contribution to the utility's
overall cost of service over a twenty (20) year period, the public
utility may require a deposit or other adequate assurance of
performance from:
(1) the developer of the targeted economic development
project; or
(2) a local, regional, or state economic development
organization.
Sec. 12. (a) Not more than sixty (60) days after a public utility
files a petition under section 9 of this chapter, the commission shall
conduct a hearing and issue an order on the petition.
(b) Not more than thirty (30) days after a public utility files a
petition under section 9 of this chapter, the office of the utility
consumer counselor may:
(1) examine the information of the public utility to confirm
that the proposed transmission, distribution, and storage
system improvements comply with this chapter; and
(2) report its findings to the commission.
(c) If the commission determines that the petition satisfies the
requirements of this chapter and the capital expenditures and
TDSIC costs are reasonable, the commission shall approve the
petition, including:
(1) capital expenditures;
(2) timely recovery of TDSIC costs, including costs associated
with a targeted economic development project, through a
TDSIC; and
(3) if requested, authority to defer TDSIC costs under section
9(b) of this chapter.
Sec. 13. (a) For purposes of calculating the TDSIC costs of a
public utility, the commission shall determine an appropriate
pretax return for the public utility. In determining the appropriate
pretax return, the commission may consider the following factors:
(1) The current state and federal income tax rates.
(2) The public utility's capital structure.
(3) The actual cost rates for the public utility's long term debt
and preferred stock.
(4) The public utility's cost of common equity determined by
the commission in the public utility's most recent general rate
proceeding.
(5) Other information that the commission determines is
necessary.
(b) The commission shall adjust a public utility's authorized
return for purposes of IC 8-1-2-42(d)(3) or IC 8-1-2-42(g)(3) to
reflect incremental earnings from an approved TDSIC.
Sec. 14. (a) The commission may not approve a TDSIC that
would result in an average aggregate increase in a public utility's
total retail revenues of more than three percent (3%) in a twelve
(12) month period. For purposes of this subsection, a public
utility's total retail revenues do not include TDSIC revenues
associated with a targeted economic development project.
(b) If a public utility incurs TDSIC costs under the public
utility's five (5) year capital expenditure plan that exceed the
percentage increase in a TDSIC approved by the commission, the
public utility shall defer recovery of the TDSIC costs as set forth in
section 9(b) of this chapter.
Sec. 15. A public utility that has implemented a TDSIC under
this chapter shall file revised rate schedules resetting the charge if
new basic rates and charges become effective for the public utility
following a commission order authorizing a general increase in
rates and charges that includes in the public utility's rate base
eligible transmission, distribution, and storage system
improvements reflected in the TDSIC.
Sec. 16. (a) For purposes of this chapter, the following are not
a general increase in basic rates and charges under IC 8-1-2-42(a):
(1) The filing of a TDSIC.
(2) A change in a TDSIC.
(3) The deferral of depreciation expenses, operation and maintenance expenses, property taxes, or post in service allowance for funds used during construction under section 9(b) of this chapter.
(b) This chapter does not limit:
(1) a public utility's ability to recover eligible transmission, distribution, and storage system improvements in a general retail rate case; or
(2) the commission's valuation of utility property under IC 8-1-2-6.
Sec. 17. The commission may adopt by rule under IC 4-22-2 or by order other procedures not inconsistent with this chapter that the commission finds reasonable or necessary to administer a TDSIC.
(b) A program developed under subsection (a) may require the department and utilities to share the following information:
(1) Active construction and excavation permits.
(2) Locations of existing utility facilities.
(3) Short and long term project schedules.
(c) The department may adopt rules under IC 4-22-2 to implement this section.
