Indiana utility customer advocates say protections inadequate in large-load users, nuclear development bill

Legislation setting standards for new, big electricity users — plus, complicating coal-powered closures and benefiting nuclear reactor efforts — drew criticism from utility customer advocates Thursday. Proponents maintained the changes are critical to continued economic growth.

Jonathan Neal, a Lafayette resident, told a Senate committee that the legislation doesn’t protect customers enough. He asserted that regulators have repeatedly “failed” Hoosier customers.

“Like many ratepayers, I don’t have a lot of confidence in the (Indiana Utility Regulatory Commission) to protect the ratepayers,” he said. “… Sometimes it feels like they’re really in the pocket of the utilities and just cover the costs of utility shareholders — and consumers are too busy to complain.”

But Rep. Ed Soliday, the measure’s author, said opponents “want a zero-growth economy.”

“If you don’t want a growth economy, then vote against the bill,” Soliday, R-Valparaiso, said.

His House Bill 1007 would expedite approval processes for large-load customers like data centers and set out cost recovery mechanisms for projects utilities undertake to serve those big customers. It also would require a big prospective grid addition to make “significant and meaningful financial assurances” for such projects— reimbursing at least 80% of costs and protecting other existing and future customers from the expenses.

“We think it’s fair that they accept 80% of the responsibility. Now, if they build and keep their word, then all they’re doing is buying the electricity they said they want,” Soliday. “But we’ve given about 20% latitude in here, that we think is fair.”

Multiple witnesses feared customers would still take the brunt of costs.

“I’m afraid that there’s too many ways to get around that 80-20 split for those large-load customers, that there’s no guarantee that those customers would actually be paying that,” said Robyn Skuya-Boss, leader of the Sierra Club’s Indiana chapter. “(Maybe) if they could pay those costs upfront, if they could be put into long-term obligation contracts — what if the data center operator or the customer goes bankrupt?”

Advocates for residential and existing industrial ratepayers said the expedited processes didn’t offer them or regulators enough time to review materials and assemble responses.

Citizens Action Coalition Executive Director Kerwin Olson noted that some provisions require regulators to approve a utility plan within 90 or 150 days, and afford it just seven business days or less to deem filings complete. That’s although the utility may have spent months constructing the plan, and it may take stakeholders like Olson’s organization 60 days to “to put a case together, to find funding, to find experts.”

“If the commission doesn’t hit that 90-day timeline or that 150-day timeline, guess what? It’s approved (automatically),” Olson continued. “… Why have regulated monopolies when effectively we’ll have unregulated monopolies?

Indiana Industrial Energy Consumers representative Joseph Rompala said that’s a “quick turnaround.” Rompala also litigates on behalf of industrial customers before the IURC.

He said transmission, distribution and storage improvement charges — seven-year plans utilities can bring for those improvements — have a 210-day “clock.”

“While I understand the need for speed to market and … to meet customer demand, we are talking about at least comparably sized investments,” Rompala added. “… Certainly, more time is beneficial.”

But, he said any IURC order — including approval, cost-recovery and any trackers — could be appealed to a higher court.

Koch and Soliday emphasized that they developed the deadlines in collaboration with regulators.

“They said they could do it,” Soliday told the committee.

Scrutinizing transitions from coal

House Bill 1007 also gets tough with utilities planning to close — or convert to natural gas — any coal-fired plants of at least 125 megawatts. Current law — adopted during the 2024 legislative session — mandates utilities that are not generating at least 85% of peak demand to report three-year projections to the IURC.

The legislation would instead require all utilities to annually report the amount of resource generating capacity they plan to take offline. If, after an investigation, the IURC doesn’t think a utility can provide reliable service, it would have to block the utility’s plan or order it to either acquire or build capacity.

“That makes the process very empirical. You … can’t just shut them down willy-nilly,” Soliday said.

Indiana Energy Association President Danielle McGrath said the requirements would complement utilities’ existing integrated resource plans, several other required reports and IURC-hosted reliability forums.

“That’s why, in providing this additional information, we stand by our analysis, and we’ll demonstrate how that planned retirement is going to be able to meet the requirements set forth in this bill,” she told lawmakers.

Going nuclear

Other provisions are intended to boost small modular nuclear reactor (SMR) development as electricity demand rises, including a 20% sales tax credit for SMR manufacturers.

Soliday said one such company — which he’d seen represented in the audience — has Indiana “high on the list” for an SMR.

“That factory will be at least 500 jobs, over $100,000 and I’d like to see them here. So, hence the incentive,” he told the committee.

Rolls Royce, which has a major manufacturing footprint in Indiana, is exploring construction of an SMR with a capacity of up to 470 megawatts.

But numerous witnesses complained SMR technology is “experimental” and “unproven.”

The United States hosts no operational SMRs. Across the globe, only China and Russia have functional ones. Some want Indiana to lead, but nuclear development is pricey.

A large part of the legislation would let public utilities ask regulators for permission to spend money on SMRs — and start recovering costs from customers — before getting certificates of public convenience and necessity. The language is identical to Koch’s Senate Enrolled Act 424.

Included are expenditures for design; engineering; environmental analyses and permitting; federal approvals, licensing and permitting; equipment purchases and more. A utility could recover 80% of approved costs under the resulting rate schedule within three years at most. It would defer the remaining 20% for recovery as part of its next general rate case.

Soliday said the “pay-as-you-go” approach would let utilities take out the debt more cheaply — or avoid bonding at all. He added, “It’s in our favor as consumers to keep that bond rate low or zero.”

Overspending would have to meet additional criteria to get passed onto customers. So would expenditures on canceled or abandoned projects — and a utility wouldn’t earn returns for such failed undertakings unless regulators also find the decision was “prudently made for good cause,” that profit is “appropriate … to avoid harm” to the utility and its customers; and that costs will be offset or reimbursed through other, listed means.

“To have reliability, you can’t have utilities going bankrupt,” Soliday said.

House Bill 1007 advanced on an 8-3 vote. It’s heading to the Senate Tax and Fiscal Policy Committee.

“I’m glad that it’s going to be recommitted … because what we really need to be focused on is the fiscal impact,” said Sen. Andrea Hunley, D-Indianapolis.

Debate, she added, isn’t about nuclear’s merits because Indiana legalized SMRs years ago.

“What this bill is talking about is the funding structure for how we’re going to fund small modular reactors. And that’s what I have an issue with — is that we’re doing it on the backs of ratepayers, that we’re doing it in a way that is not fiscally responsible,” Hunley said.