COA upholds approval of IPL’s $1.2 billion plan for system investments

The Indiana Court of Appeals on Wednesday affirmed an Indiana Utility Regulatory Commission order approving Indianapolis Power & Light Company’s proposed plan involving $1.2 billion in system investments over a seven-year period. Approval of the plan was challenged by the city of Indianapolis, consumer groups and others.

In July 2019, IPL filed its petition with the IURC under Section 10 of the Transmission, Distribution, and Storage System Improvement Charge statute, seeking approval to spend $1.2 billion to replace, rebuild, upgrade, redesign, and modernize a wide range of IPL’s transmission- and distribution-system assets.

That proposed plan was intended to address grid resiliency so that the system could be restored more easily when outages occur. IPL projected that the planned projects would result in a system risk reduction of about 36.6% over the seven-year period and asserted that the monetization analysis reflected a net benefit of $939 million to IPL customers by the end of the 20-year period.

At the same time IPL filed its petition, it prefiled its case-in-chief evidence consisting of the written testimony and related exhibits of six witnesses. IPL also submitted voluminous work papers consisting of underlying supporting material associated with the witnesses’ testimony.

However, the consumer parties — IPL Industrial Group, Indiana Office of Utility Consumer Counselor, City of Indianapolis, and Citizens Action Coalition of Indiana, Inc. — opposed IPL’s petition for approval of the proposed plan.

On the third and final day of the commission’s publicly noticed evidentiary hearing, IPL orally moved the commission to take administrative notice of the voluminous work papers that had been submitted by IPL at the outset of the proceeding. But the consumer parities objected, and the commission ultimately took the issue under advisement.

When the commission issued its order, it determined that the estimated costs of the projects in IPL’s Proposed Plan were justified by their incremental benefits, and approved the plan as proposed by IPL in its entirety. It also granted IPL’s request for administrative notice of its work papers.

The Indiana Court of Appeals affirmed in IPL Industrial Group, et al. v. Indianapolis Power and Light Company, et al., 20A-EX-800, https://www.in.gov/judiciary/opinions/pdf/11042001par.pdf first disagreeing with the consumer parties that the work papers are inadmissible because they violate Indiana’s rules of evidence.

“While we agree that Indiana’s rules of evidence are applicable to the Commission’s proceedings, their application is limited ‘to the extent they are consistent with’ the rules promulgated in the Administrative Code. As specific rules governing administrative notice before the Commission were promulgated, the administrative rules trump the evidentiary trial rules,” Judge Patricia Riley wrote for the appellate court.

The COA additionally affirmed the commission’s order, finding that its interpretation of the statute was reasonable and that the commission properly determined that the costs of the eligible improvements included in the proposed plan are justified by their incremental benefits.

Lastly, it disagreed with the consumer parties’ assertion that the commission should have specifically addressed each of its concerns posed by IPL’s monetization analysis and risk-reduction model. Thus, the appellate court concluded that the commission’s findings were sufficiently specific to enable appellate review of its decision.