SB 386 – Cost Securitization for Electric Utility Assets
Authored by Sen. Eric Koch (R-Bedford); sponsored by Rep. Ed Soliday (R-Valparaiso)
This bill creates a pilot program for CenterPoint Energy (Vectren). It provides that an electric utility that has certain qualified costs associated with an electric generation facility that will be retired from service within 24 months and are equal to at least 5% of the electric utility’s total electric base rate may file a petition with the Indiana Utility Regulatory Commission (IURC) to issue securitization bonds, collect securitization charges and encumber securitization property with a lien and security interest. If the IURC approves such a petition, the IURC will issue a financing order providing for the amount of qualified costs to be recovered by the electric utility and the period for collecting securitization charges, not to exceed 20 years.
Chamber position: Support
The latest: The bill was heard in the House Utilities, Energy and Telecommunications Committee on March 15. Several witnesses testified in support of the bill with only one witness testifying in opposition. No vote was taken at that meeting. On March 22, the bill was heard again (amend and vote only), with an amendment offered by Rep. Ethan Manning (R-Logansport). The amendment made minor technical corrections and changed the maximum period for collecting securitization charges from 15 years to 20 years. The amended bill passed out of committee 13-0 and is now eligible for further action on the House floor.
Indiana Chamber action/commentary: We testified in support of the bill. Securitization is an alternative method for addressing the stranded cost associated with the shutdown of electric generating plants. The Indiana Chamber Foundation’s energy study (Powering Indiana’s Economic Future) has a section that addresses securitization of stranded assets (pages 188-196). The study notes that other states have promulgated securitization legislation and that securitization is a well-known approach to addressing stranded costs (or other extraordinary costs) in the U.S. It has been used to recover stranded costs associated with the electricity markets, financing environmental control equipment and more recently, paying for storm recovery costs. While lowering the financing cost of a rate base asset by enhancing the credit, securitization can also help lower rates in the present by extending the repayment period. This can be a win-win for ratepayers and utilities. Customers should see lower prices as a result of lower financing costs and utility companies get access to funds to invest in new generation technologies that will provide service into the future.
SB 389 – Repeals State Regulated Wetlands Law
Authored by Sen. Chris Garten(R-Charlestown); sponsored by Rep. Matt Lehman (R-Berne)
This bill eliminates regulation of isolated wetlands (not federally determined) by the Indiana Department of Environmental Management (IDEM). It strikes the section of Indiana Code requiring a permit from IDEM for wetland activity in a state regulated wetland. The repeal of that law will not affect the regulation of federally delineated wetlands. Also provides that the repeal of that law extinguishes any judicial or administrative proceeding concerning an alleged violation of IC 13-18-22, an administrative rule concerning IC 13-18-22, or the terms of a permit issued under IC 13-18-22.
Chamber position: Oppose
The latest: The bill was heard in the House Environmental Affairs Committee on Monday. Many witnesses testified both in support of and in opposition to the bill. However, no vote was taken at that meeting. The bill is expected to be heard again on April 6 (amend and vote only).
Indiana Chamber action/commentary: We testified in opposition to the bill in its current form. While the Chamber opposes additional layers of regulation, the complete elimination of the regulation of state wetlands is a drastic move. It would likely have negative impacts on water quality, flood control and quality of place factors that we are concerned with in attracting the brightest and best workers and businesses to Indiana.
Amendment 12, which many interested parties expected to see and had worked on, never materialized on Monday. It would have expanded exemptions. That was a workable compromise and something we could have supported. Instead, the amendment that was actually presented (Amendment 11) does nothing to alleviate our stated concerns.
This issue needs further study to determine the major impacts before the state takes such a significant step. In addition, this bill runs counter to the drivers of the Chamber’s Indiana Vision 2025 plan, which has identified water resources as an important consideration in economic development. It is also inconsistent with findings of the Chamber’s 2014 water study.
HB 1220 – 21st Century Energy Policy Development Task Force
Authored by Rep. Ed Soliday (R-Valparaiso), Sponsored by Sen. Eric Koch (R-Bedford)
The bill re-establishes the 21st Century Energy Policy Development Task Force, following its expiration on December 2, 2020. The task force will study management of stranded utility assets, methods to ensure fairness across customer classes, appropriate regulation of distributed energy resources, the impact of utility plant or fuel source site closures on communities, the state of energy efficiency efforts in Indiana, local experiences with green zones, methods for the state to encourage electricity storage technology research, the impact of large scale electric vehicle deployment on the electric grid, electric vehicle charging station ownership, and demand response and pricing systems. The bill requires the task force to develop recommendations for the General Assembly and the Governor. The task force must issue a report setting forth the recommendations developed not later than November 1, 2022.
Chamber position: Support
The latest: The bill was heard in the Senate Utilities Committee on March 25 and passed unanimously 11-0; it’s now eligible for further action in the Senate.
Indiana Chamber action/commentary: We testified in support of the bill. The Indiana Chamber Foundation conducted an energy study (Powering Indiana’s Economic Future) that was released in late November 2020. The study has references and findings on the subjects that the task force will be studying. The study notes that Indiana does not need to be a first mover in implementing any policy actions; experience in other jurisdictions can be mined to improve outcomes in Indiana. There is no need to reinvent the wheel. The Chamber Foundation’s study can be used to complement the work of the task force as subjects are studied and recommendations developed.
HB 1287 – Water or Wastewater Service for Underserved Areas
Authored by Rep. Jim Pressel (R-Rolling Prairie); sponsored by Sen. Jon Ford (R-Terre Haute)
The bill allows a water or wastewater utility to extend service to a developed but underserved area without a deposit from customers if the extension of service will result in a positive contribution to the utility’s overall cost of service over a 20-year period. It defines a developed but underserved area as an area in which prospective service would be provided predominantly to existing and occupied structures that receive water from private wells or from which wastewater is disposed of through on-site private systems such as septic tanks. It also provides that if a water or wastewater utility determines that an extension of service to a developed but underserved area will not result in a positive contribution to the utility’s overall cost of service over a 20-year period, the utility may require a deposit or other adequate assurance of performance from the customers to be served by the extension of service.
Chamber position: Support
The latest: The bill was heard in the Senate Utilities Committee on March 25. It passed by a vote of 11-0 and is now eligible for further action in the Senate.
Indiana Chamber action/commentary: We indicated our support of the bill, which is consistent with the Indiana Chamber’s water study. The legislation would allow regulated water and wastewater utilities to extend service to an underserved area (wells and septic systems). It also sets parameters for when a deposit can be collected so that the costs of the extension are not shifted to other ratepayers.
Resource: Greg Ellis at (317) 264-6881 or email: gellis@indianachamber.com
