Indiana Utility Regulators Reach Deal With Duke Energy That Screws Ratepayers, No Surprise

Duke Energy carried on construction of its coal gasification plant at Edwardsport with the same reckless abandon that its predecessor, PSI, carried on its construction of the Marble Hill Nuclear Power plant in Madison back in the 1970s. Who gives a shit how much it costs to pay when we've got the regulators in our back pocket who will agree to pass on any cost overruns to consumers. When the company first obtained the IURC's approval for the project a few years ago, it claimed it would cost $1.985 billion. The costs have now soared to at least $3.3 billion. The IURC thinks consumers should be happy with a deal that only requires them to pay about half of the cost overruns, while the other half is to be absorbed by Duke Energy's shareholders. Utility rates will be hiked 14.5% over two years instead of the 22% rate increase Duke was seeking and for which it had initially received thumbs up from the IURC's former general counsel and administrative law judge, Scott Storms, shortly before he was hired by the utility and later fired after e-mails obtained by the Star revealed a too cozy relationship that existed between IURC officials and Duke executives. The IBJ has this reaction from Kerwin Olson, a consumer watchdog:

Kerwin Olson, executive director of the Citizen Action Coalition, said the settlement came as a shock to him. He said the power plant should never have been approved.

"The settlement on the surface appears to give Duke Energy far too much. The terms appear to be completely unacceptable to CAC," he said.

The deal has been signed off on by the Office of Utility Consumer Counselor, which never really seems to represent the interest of consumers. Most of the people who hold key positions in the office wind up going to work for the same utilities they're hired to serve as a check on, which should tell you something about the office's credibility in these matters. Duke Energy's Indiana President's reaction was predictable:

Duke Energy Indiana President Doug Esamann says the agreement meets two objectives, reducing what Indiana customers will pay in rates and resolving uncertainty for Duke Energy shareholders.

"We're now in the home stretch of completing a facility that will modernize our electric system and provide Indiana with cleaner power to meet increasingly strict federal environmental regulations," he said.

The operative objective here was to resolve uncertainty for Duke's shareholders. The deal does little to alleviate the higher cost of electricity that the company is being allowed to pass on to consumers under this agreement. Nothing at all has changed at the most corrupt public utility regulator in the country. It's nothing but a glorified auction to line the pockets of the utility industry.

The comparisons between this Edwardsport project and the failed Marble Hill nuclear power plant project are too eerie. Duke's predecessor, PSI, originally told state regulators the plant would cost about $1 billion to build when it obtained approval for it in the 1970s. After the company spent $2.8 billion and construction was about 60% complete, the company abandoned the project in 1984. Under the deal state regulators struck with Duke for the Edwardsport project, construction costs paid by consumers will be capped at $2.6 billion, or about $700 million less than the anticipated $3.3 billion cost. If the past is any indication, there will be a lot more to this story before it finally ends, none of which will likely be good news for the utility's consumers.