Citations Affected: IC 8-1; IC 8-1.7; IC 34-30-2-24.2.
Synopsis: Public power and finance authority. Creates the public
power and finance authority. Allows the authority to sell electricity at
cost to Indiana customers other than investor owned utilities. Requires
the authority to use project labor agreements. Allows the authority to
charge fees to use its transmission lines and use the revenue generated
by the fees to repay bonds. Provides that the utility regulatory
commission (IURC) has jurisdiction over: (1) purchases of clean coal
technology; and (2) certain merchant power plants. Requires a
merchant power plant to give notice of a proposed facility to property
owners within one half mile of the proposed facility, to hold hearings,
and to issue written findings. Establishes the criteria the IURC must
consider when considering a merchant power plant application.
Requires the IURC to obtain a recommendation from the department
of natural resources regarding a merchant power plant's planned use of
and potential effect on a water resource and to have prepared an
assessment of the plant's effect on a water resource and its users.
Requires a merchant power plant that seeks approval from or
alternative regulation by the IURC to establish proof of financial
responsibility in an amount determined by the IURC. Requires the
IURC to issue a decision on a merchant power plant's petition for
approval or for alternative regulation not later than 18 months after the
date of the petition. Lists the duties of the merchant power plant
following approval by the IURC. Provides the circumstances under
which the IURC may revoke its approval of a merchant power plant.
Allows the IURC to decline to exercise jurisdiction over a facility that
has applied to the IURC before March 1, 2003.
Effective: Upon passage; July 1, 2003.
January 8, 2003, read first time and referred to Committee on Commerce and Economic
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities and transportation.
grant or franchise under which it may be acting on May 1, 1913, to
charge for any service, in such grant or franchise contracted, exceeding
the maximum rate or rates therefor, if any, that may be fixed in such
grant or franchise.
(b) Except as provided in subsection (c), a charge made by the public power and finance authority established by IC 8-1.7-1-2 to a customer (as defined in IC 8-1.7-2-7 ) within Indiana may not exceed the cost of service (as defined in IC 8-1.7-2-6 ).
(c) A charge made by the public power and finance authority to:
(1) an investor owned utility; or
(2) a customer outside Indiana;
may exceed the cost of service.
decline to exercise, in whole or in part, its jurisdiction over the
merchant power plant.
Sec. 2. (a) As used in this chapter, "merchant power plant" means a facility within Indiana used for the:
(1) production, transmission, delivery, or furnishing of heat, light, or power; and
(2) sale of electric energy exclusively on the wholesale market;
to other public utilities, energy service providers, or power marketers within or outside Indiana.
(b) The term includes a facility that has made a significant alteration to the labor used to construct or remodel the facility. For purposes of this subsection, a facility makes a significant alteration to the labor used to construct or remodel a facility if the person uses contractors, subcontractors, or work crews that include workers who are not participants in or have not completed a jointly administered labor and management apprenticeship program approved by the United States Department of Labor's Bureau of Apprenticeship Training.
(c) The term does not include a facility that is owned, controlled, or operated by a person that is obligated contractually to provide substantially all the wholesale power requirements of an electricity supplier under a contract extending at least five (5) years.
Sec. 3. Except as provided in section 1 of this chapter, a merchant power plant is subject to the jurisdiction of the commission.
Sec. 4. (a) The commission shall consider the following when acting upon any petition by a merchant power plant under IC 8-1-2.5 or IC 8-1-8.5 :
(4) Reporting requirements.
(5) Impact on electric, water, and natural gas suppliers and customers.
(6) The recommendation of the department of natural resources under section 12 of this chapter.
(b) The commission shall issue a decision either approving or denying a merchant power plant's petition under IC 8-1-2.5 or IC 8-1-8.5 not later than eighteen (18) months after the date of the petition.
Sec. 5. (a) When petitioning the commission under IC 8-1-2.5 or IC 8-1-8.5 , a merchant power plant must establish proof of
financial responsibility by filing one (1) or a combination of the
following with the commission:
(1) A fully funded trust fund agreement.
(2) A surety bond with a standby trust fund agreement.
(3) A letter of credit with a standby trust fund agreement.
(4) An insurance policy with a standby trust fund agreement.
(5) Proof that the merchant power plant meets a financial test established by the commission and equivalent to one (1) of the items in subdivisions (1) through (4).
(b) The amount of financial responsibility that a merchant power plant must establish under this section shall be determined by the commission. In all cases, the amount must be sufficient to close the merchant power plant in a manner that:
(1) minimizes the need for further maintenance and remediation; and
(2) provides reasonable, foreseeable, and necessary maintenance and remediation after closure for at least twenty (20) years after the merchant power plant ceases operations.
(c) The commission may use:
(1) a trust fund agreement;
(2) a surety bond;
(3) a letter of credit;
(4) an insurance policy; or
(5) other proof of financial responsibility;
filed under this section for the closure or post-closure monitoring, maintenance, or remediation of a merchant power plant approved by the commission, if the merchant power plant does not comply with closure or post-closure standards established by the commission under subsection (d).
(d) The commission shall adopt rules under IC 4-22-2 to establish the following:
(1) Standards for the proper closure and post-closure monitoring, maintenance, and remediation of merchant power plants.
(2) Criteria for how money in a trust fund agreement, a surety bond, a letter of credit, an insurance policy, or other proof of financial responsibility provided by a merchant power plant may be released to the merchant power plant when the merchant power plant meets the closure and post-closure standards established under subdivision (1).
Sec. 6. (a) Not later than seven (7) days after filing a petition under IC 8-1-2.5 or IC 8-1-8.5 , a merchant power plant shall:
testimony received. The commission shall make the record
available for public inspection.
Sec. 10. Not later than forty-five (45) days after a hearing is conducted under section 9 of this chapter, the commission shall issue written findings based on the testimony presented at the hearing. To the extent the commission's findings differ from testimony presented at the hearing, the commission must explain its findings.
Sec. 11. When considering whether to approve a merchant power plant, the commission shall give preference to the following locations for siting:
(1) Brownfield sites that are isolated from populated areas.
(2) Sites of existing or former utilities that can be replaced or repowered.
(3) Other sites identified for power plant or heavy industrial development in local land use plans before the initiation of site selection for the facility.
Sec. 12. (a) For purposes of this section:
(1) "department" refers to the department of natural resources; and
(2) "water resource" has the meaning set forth in IC 14-25-7-8.
(b) When considering whether to approve a merchant power plant, the commission shall obtain a recommendation from the department regarding the merchant power plant's planned use of and its potential effect on the water resource.
(c) To make its recommendation, the department may do the following:
(1) Rely on the merchant power plant's water resource assessment under subsection (d).
(2) Consult with and advise users of the water resource.
(3) Enter upon any land or water in Indiana to evaluate the effect of the merchant power plant on the water resource.
(4) Conduct studies to evaluate the availability and most practical method of withdrawal, development, conservation, and use of the water resource.
(5) Require metering or other reasonable measuring of water withdrawals and reporting of the measurement to the department.
(6) Engage in any other activity necessary to carry out the purposes of this section.
(d) A merchant power plant shall provide an assessment of its
effect on the water resource and its users to the commission and
the department. The assessment shall be prepared by a licensed
professional geologist (as defined in
) or an
engineer licensed under
The assessment must include
the following information:
(1) Sources of water supply.
(2) Total amount of water to be used by the merchant power plant from each source.
(3) Location of wells or points of withdrawal.
(4) Ability of the water resource to meet the needs of the merchant power plant and other users.
(5) Probable effects of the merchant power plant's use and consumption of the water resource on other users.
(6) Alternative sources of water supply.
(7) Conservation measures proposed by the merchant power plant for reducing the plant's effect on the water resource.
(8) Other information required by any other law, rule, or regulation.
Sec. 13. Following the approval of a petition by the commission, the merchant power plant shall:
(1) notify the commission upon becoming an affiliate of any regulated Indiana utility selling electricity at retail to Indiana consumers, at which time the commission may reassert any jurisdiction it had declined under IC 8-1-2.5 ;
(2) obtain prior commission approval with respect to the sale of any electricity to any affiliated regulated Indiana retail utility or any affiliate of a regulated Indiana retail utility; and
(3) obtain prior commission approval of any transfers of ownership of the facility or its assets.
general welfare of the people of Indiana require as a public
purpose the creation of an adequate, reliable, and economical
(4) The public power and finance authority can advance the state policy of providing affordable electric service to all Indiana citizens regardless of their income.
Sec. 2. There is established a body politic and corporate, not a state agency but an independent instrumentality exercising essential public functions, to be known as the public power and finance authority.
Sec. 3. The authority shall exist and operate for the public purposes of:
(1) providing affordable and accessible transmission of electricity;
(2) promoting reusable energy sources;
(3) preventing and remediating environmental pollution; and
(4) increasing energy efficiency.
Sec. 4. (a) Except as provided in subsection (b), all property of the authority is public property devoted to an essential public and governmental function and purpose and is exempt from all taxes and special assessments imposed by the state or a political subdivision, except for the financial institutions tax imposed under IC 6-5.5 or a death tax imposed under IC 6-4.1. However, the authority may elect to make payments in lieu of taxes to the appropriate taxing unit.
(b) Property owned by the authority and leased to a facility is not public property. The property and the facility are subject to all taxes of the appropriate taxing unit in the same manner and subject to the same exemptions as are applicable to all persons.
Sec. 5. Except as provided in this article, the authority is subject to the jurisdiction of the commission.
Sec. 6. This article provides a complete method for the performance of things authorized, supplements and adds to powers conferred by other laws, and is not in derogation of any existing powers. However, to the extent this article is inconsistent with any other law, the provisions of this article control. This article does not authorize the issuance of bonds for the purpose of financing facilities to be owned by any private corporation.
Chapter 2. Definitions
Sec. 1. The definitions in this chapter apply throughout this article.
Sec. 2. "Authority" refers to the public power and finance
authority established by
Sec. 3. "Bonds" means revenue bonds, notes, and other evidence of indebtedness of the authority issued under this chapter.
Sec. 4. "Clean coal technology" has the meaning set forth in IC 8-1-2-6.6.
Sec. 5. "Cost" includes the:
(7) decommissioning; and
of a transmission line.
Sec. 6. "Cost of service" means the total cost of providing service to a customer. The term includes charges that produce revenue sufficient to:
(1) pay all legal and other necessary expenses incident to the operation of its system, including maintenance cost, operating charges, upkeep, depreciation and amortization, repairs, and interest charges on bonds or other obligations;
(2) maintain cash reserves of at least ten percent (10%) from the proceeds of the sale of bonds or from other revenue;
(3) implement and operate authority programs, including clean coal technology; and
(4) provide adequate funds to be used as working capital, as well as funds for making extensions and replacements (to the extent not provided for through depreciation).
Sec. 7. "Customer" means a:
(1) public utility;
(2) local district rural electric membership corporation; or
(3) municipally owned electric utility;
that uses a transmission line for a fee.
Sec. 8. "Department" refers to the Indiana department of administration established by IC 4-13-1-2.
Sec. 9. "Energy" means all electric energy no matter how generated or produced.
Sec. 10. "Indiana coal" means coal from the geological formation known as the Illinois basin.
Sec. 11. "Project" includes any plant, works, system, transmission line, or other property necessary or convenient in the
generation, transmission, transformation, purchase, sale, exchange,
interchange, or other provision of services.
Sec. 12. "Project labor agreement" means a project specific agreement between the authority and at least one (1) labor union.
Sec. 13. "Public utility" has the meaning set forth in IC 8-1-2-1.
Sec. 14. "Service" or "services" means the furnishing of transmission lines or other utility services incidental to development, operation, or maintenance of utility infrastructure and the rendering of related engineering, financial, accounting, or other services and related materials or equipment assisting in the establishment and maintenance of better communication between the authority and its customers.
Sec. 15. "State agency" means an authority, a board, a commission, a committee, a department, a district, a division, or other instrumentality of state government. The term does not include a state educational institution (as defined in IC 20-12-0.5-1 ).
Sec. 16. "Transmission line" means a transmission line owned by the authority and used for the transmission or delivery of heat, light, or power to public utilities, energy service providers, or power marketers.
Chapter 3. Public Power and Finance Authority
Sec. 1. All members of the authority must be residents of Indiana.
Sec. 2. A candidate for appointment to the authority shall be evaluated on the following considerations:
(1) Education and academic honors and awards achieved.
(2) Professional experience and reputation.
(3) Financial interests, including any interest that might conflict with the performance of authority responsibilities.
(4) Any other pertinent information that the governor believes is important in selecting the most highly qualified individuals for authority membership.
Sec. 3. The authority consists of eleven (11) members. The governor shall appoint the eleven (11) initial authority members as follows:
(1) One (1) member from each congressional district.
(2) Two (2) members at large.
Not more than six (6) members may be of the same political party.
Sec. 4. (a) Three (3) of the appointments under section 3(1) of this chapter are for one (1) year.
(b) Three (3) of the appointments under section 3(1) of this
chapter are for two (2) years.
(c) Three (3) of the appointments under section 3(1) of this chapter are for three (3) years.
(d) The appointments under section 3(2) of this chapter are for four (4) years.
(e) An appointment to the authority under section 5 of this chapter is for four (4) years.
Sec. 5. (a) A member shall hold office for the term of the member's appointment and shall continue to serve after expiration of the appointment until a successor is appointed and qualified.
(b) Upon the expiration or vacancy of an initial or subsequent term, the members of the authority, with the exception of a member whose term has expired or whose position is otherwise vacant, shall appoint a successor.
(c) Any member is eligible for reappointment.
(d) A member appointed to fill a vacancy created other than by an expiration of a term shall be appointed for the unexpired part of the term.
(e) An individual or member appointed to succeed an individual appointed under section 3(1) of this chapter must reside in the same congressional district as the initial member.
Sec. 6. Any member or employee of the authority who has or later acquires an interest in a transaction with the authority shall immediately disclose in writing the nature and extent of the interest to the authority as soon as the member has knowledge of the interest. The member shall disclose the interest in open meeting, and the disclosure shall be entered upon the minutes of the authority. The member may not participate in any action by the authority authorizing the transaction. However, an interest does not invalidate an action by the authority in which the disclosing member participated before the disclosing member became or should reasonably have become aware of the interest.
Sec. 7. (a) Employees of the authority are not employees of the state.
(b) A state officer or employee may accept membership in or provide services to the authority.
Sec. 8. The powers of the authority are vested in the members. Six (6) members of the authority constitute a quorum for the transaction of business. The affirmative votes of at least six (6) members are necessary for any action to be taken by the authority. Members may vote by written proxy delivered in advance to any other member who is present at the meeting. A vacancy in the
membership of the authority does not impair the right of a quorum
to exercise all rights and perform all duties of the authority.
Sec. 9. The members shall appoint a member as director of the authority.
Sec. 10. Meetings of the members of the authority shall be held at:
(1) the call of the director; or
(2) the request of any three (3) members.
In any event, the members shall meet at least once every three (3) months to attend to the business of the authority.
Sec. 11. Each member of the authority shall file with the secretary of state a bond in the sum of twenty-five thousand dollars ($25,000) for the faithful performance of the member's duties. To the extent a member is already covered by a bond required by Indiana law, the member need not obtain another bond so long as the bond required by Indiana law is in at least the sum of twenty-five thousand dollars ($25,000) and covers the member's activities for the authority. Instead of a bond, the director may execute a blanket surety bond covering each member. Each surety bond shall be conditioned upon the faithful performance of the duties of the office of the member and shall be issued by a surety company authorized to transact business in Indiana as surety. At all times after the issuance of any surety bonds, each member shall maintain the surety bonds in full force and effect. The authority shall bear all costs of the surety bonds.
Chapter 4. Powers and Duties of the Authority
Sec. 1. The authority is granted all powers necessary and appropriate to carry out its public and corporate purposes under this article, including the following:
(1) Execute instruments.
(2) Have perpetual succession as a body politic and corporate and an independent instrumentality exercising essential public functions.
(3) Sue and be sued in its own name.
(4) Have an official seal and alter it at will.
(5) Make and execute contracts and all other instruments necessary or convenient for the performance of its duties and the exercise of its powers and functions under this article.
(6) Employ architects, engineers, attorneys, inspectors, technicians, financial experts, and such other advisers, consultants, and agents as may be necessary in its judgment and fix their compensation.
section 3 of this chapter, make loans to customers for capital
improvements to and repair and rehabilitation of the customers'
plants and other infrastructure incidental to the furnishing of
Chapter 5. Bonds
Sec. 1. The issuance of bonds by the authority does not constitute a debt of the state. Neither the faith and credit nor the taxing power of the state is pledged to payment of principal or interest on the bonds.
Sec. 2. The issuance of bonds shall be authorized by a resolution of the authority. The authority shall issue bonds to pay the cost of a project. The authority may pledge the revenues derived from the ownership and operation of authority facilities to the payment of the principal and interest on bonds authorized and issued by the authority.
Sec. 3. The authority may borrow money and issue bonds to pay all or part of the cost of carrying out its purposes, including:
(1) the funding or refunding of the principal, interest, or other obligation on a bond issued by the authority, whether or not the bond is due;
(2) the establishment or increase of reserves to secure or pay the bonds;
(3) the provision of working capital; and
(4) any expense incurred in or incident to carrying out the provisions of this article.
Sec. 4. The principal and interest on bonds issued by the authority are payable solely from the revenues of bonds issued by the authority.
Sec. 5. A bond issued by the authority must indicate on its face the following:
(1) The maturity date, which may not be later than fifty (50) years after the date of issue.
(2) The interest rate, including whether the rate is fixed, variable, or both.
(3) The denomination of the bond.
(4) Conversion or registration privileges.
(5) The places of payment, at least one (1) of which must be in Indiana.
(6) The conditions and terms under which the bondholder may redeem the bond before maturity.
Sec. 6. (a) Every issue of authority bonds shall be obligations of the authority payable solely out of any specified revenue or money
of the authority, subject to an agreement with a holder of a bond
pledging particular money or revenue.
(b) A bond issued by the authority may be additionally secured by a pledge of any grant, contribution, or guarantee from the federal government, any corporation, limited liability company, association, institution, or person, or a pledge of money, money, or revenue of the authority from any source.
Sec. 7. The authority shall determine the form and manner of execution of the bonds, including the attachment of interest coupons.
Sec. 8. The authority may sell authority bonds at:
(1) a public or private sale; and
(2) a price determined by the authority.
Sec. 9. Subject to agreements with bondholders, the authority may purchase authority bonds out of any funds available. These bonds shall be canceled at a reasonable price. If the bonds are redeemable, the purchase price may not exceed the redemption price plus interest accrued to the next interest payment on the bond.
Sec. 10. Regardless of the form and character, authority bonds are made negotiable instruments, subject only to provisions of the bonds relating to registration.
Sec. 11. An authority bond may be executed by manual or facsimile signature of the director or an authority member designated by the director. If the director or the director's designee ceases to be a member of the authority before the delivery of a bond executed by the director or the director's designee, the signature on the bond is valid as if the director or the director's designee had remained in office until the delivery.
Sec. 12. The members of the authority are not subject to personal liability for an act under this chapter, including the issuance and execution of bonds.
Sec. 13. All money received by the authority shall be deposited as soon as practical in a separate account in a bank or trust company organized under the laws of Indiana or a national banking association. The money in an account shall be paid out on checks signed by the director or by other means authorized by the authority.
Sec. 14. All expenses incurred by the authority in carrying out this article are payable solely from funds provided under this chapter.
Sec. 15. Bonds issued under this chapter and: