Citations Affected: IC 8-1-2.
Synopsis: Affiliated interests of regulated utilities. Gives the utility
regulatory commission (IURC) broader access to records of an affiliate
of an electric or a gas utility. Provides that in a case for a fuel or gas
cost charge, the utility consumer counselor or any party or intervenor
may examine the records of an affiliate from which a utility buys fuel
or gas to determine the reasonableness of the cost. Provides that as part
of the regular examination of a utility's records, the utility consumer
counselor may also examine the records of an affiliate from which the
utility buys fuel or gas to determine the reasonableness of the cost of
the fuel or gas. Allows the IURC, in ascribing revenue to a utility
seeking a fuel or gas cost charge, to ignore any corporate distinction
between the utility and an affiliate selling fuel or gas to the utility.
Provides that a contract between a utility and an affiliate is not
effective unless the IURC finds that the contract is in the public interest
and the result of arm's length negotiations. Allows the IURC to adopt
rules concerning certain transactions between utilities and affiliates.
Prohibits certain public utilities from providing certain subsidies to
affiliates or unregulated activities.
Effective: Upon passage; July 1, 2006.
January 5, 2006, read first time and referred to Committee on Utilities and Energy.
A BILL FOR AN ACT to amend the Indiana Code concerning
utilities and transportation.
less often than annually. At the time of a quarterly or an annual
examination under this subsection, the utility consumer counselor
may also examine the books and records of any affiliated interest
from which an electric utility purchases fuel or electricity to
determine the reasonableness of the cost of the fuel or electricity
obtained by the utility. The utility consumer counselor shall provide
the commission with a report as to the examination of said books and
records within a reasonable time following said examination. The
utility consumer counselor may, if appropriate, request of the
commission a reduction or elimination of the fuel cost charge. Upon
such request, the commission shall hold a hearing forthwith in the
manner provided in sections 58, 59, and 60 of this chapter.
(d) An electric generating utility may apply for a change in its fuel
charge not more often than each three (3) months. When such
application is filed, the petitioning utility shall show to the commission
its cost of fuel to generate electricity and the cost of fuel included in the
cost of purchased electricity for the period between its last order from
the commission approving fuel costs in its basic rates and the latest
month for which actual fuel costs are available. The petitioning utility
shall also estimate its average fuel costs for the three (3) calendar
months subsequent to the expiration of the twenty (20) day period
allowed the commission in subsection (b). The commission shall
conduct a formal hearing solely on the fuel cost charge requested in the
petition subject to the notice requirements of IC 8-1-1-8 and shall grant
the electric utility the requested fuel cost charge if it finds that: the
commission makes the following determinations:
(1) The electric utility has made every reasonable effort to acquire
fuel and generate or purchase power or both so as to provide
electricity to its retail customers at the lowest fuel cost reasonably
possible.
(2) The actual increases in fuel cost through the latest month for
which actual fuel costs are available since the last order of the
commission approving basic rates and charges of the electric
utility have not been offset by any combination of the following:
(A) Actual decreases in the electric utility's other operating
expenses.
(B) Actual increases in the electric utility's revenues. In
ascribing revenue to the electric utility, the commission
may ignore any corporate distinction between the electric
utility and an affiliated interest from which the electric
utility purchases fuel or electricity. Accordingly, the
commission may consider any profits that:
(i) are received by an affiliated interest of the electric
utility from the sale of fuel or electricity to the electric
utility; and
(ii) result in the affiliated interest earning a rate of
return that exceeds the rate of return authorized by the
commission for the electric utility in the last proceeding
in which the basic rates and charges of the electric utility
were approved;
to be revenues of the electric utility.
(3) The fuel adjustment charge applied for will not result in the
electric utility earning a return in excess of the return authorized
by the commission in the last proceeding in which the basic rates
and charges of the electric utility were approved. However,
subject to section 42.3 of this chapter, if the fuel charge applied
for will result in the electric utility earning a return in excess of
the return authorized by the commission in the last proceeding in
which basic rates and charges of the electric utility were
approved, the fuel charge applied for will be reduced to the point
where no such excess of return will be earned. and
(4) The utility's estimate of its prospective average fuel costs for
each such three (3) calendar months are reasonable after taking
into consideration:
(A) the actual fuel costs experienced by the utility during the
latest three (3) calendar months for which actual fuel costs are
available; and
(B) the estimated fuel costs for the same latest three (3)
calendar months for which actual fuel costs are available.
(e) Should the commission at any time determine that an emergency
exists that could result in an abnormal change in fuel costs, it may, in
order to protect the public from the adverse effects of such change,
suspend the provisions of subsection (d) as to the utility or utilities
affected by such an emergency and initiate such procedures as may be
necessary to protect both the public and the utility from harm. The
commission shall lift the suspension when it is satisfied the emergency
no longer exists.
(f) Any change in the fuel cost charge granted by the commission
under the provisions of this section shall be reflected in the rates
charged by the utility in the same manner as any other changes in rates
granted by the commission in a case approving the basic rates and
charges of the utility. However, the utility may file the change as a
separate amendment to its rate schedules with a reasonable reference
therein that such charge is applicable to all of its filed rate schedules.
counselor not less often than annually. At the time of an annual
examination under this subdivision, the utility consumer
counselor may also examine the books and records of any
affiliated interest from which a gas utility purchases gas to
determine the reasonableness of the cost of the gas obtained
by the utility. The utility consumer counselor shall provide the
commission with a report as to the examination of said books and
records within a reasonable time following said examination. The
utility consumer counselor may, if appropriate, request of the
commission a reduction or elimination of the gas cost adjustment.
Upon such request, the commission shall hold a hearing forthwith
in the manner provided in sections 58, 59, and 60 of this chapter.
(3) A gas utility may apply for a change in its gas cost charge not
more often than each three (3) months. When such application is
filed, the petitioning utility shall show to the commission its cost
of gas for the period between its last order from the commission
approving gas costs in its basic rates and the latest month for
which actual gas costs are available. The petitioning utility shall
also estimate its average gas costs for a recovery period of not less
than the three (3) calendar months subsequent to the expiration of
the thirty (30) day period allowed the commission in subdivision
(1). The commission shall conduct a summary hearing solely on
the gas cost adjustment requested in the petition subject to the
notice requirements of IC 8-1-1-8 and may grant the gas utility the
requested gas cost charge if it finds that: the commission makes
the following determinations:
(A) The gas utility has made every reasonable effort to acquire
long term gas supplies so as to provide gas to its retail
customers at the lowest gas cost reasonably possible.
(B) The pipeline supplier or suppliers of the gas utility, has or
any affiliated interests of the gas utility from which the gas
utility purchases gas, have requested or has have filed for a
change in the costs of gas pursuant to the jurisdiction and
procedures of a duly constituted regulatory authority.
(C) The actual increases in gas costs (through the latest
month for which actual gas costs are available) since the
last order of the commission approving basic rates and
charges of the gas utility have not been offset by actual
decreases in the gas utility's other operating expenses or
actual increases in the gas utility's revenues, or both. In
ascribing revenue to the gas utility, the commission may
ignore any corporate distinction between the gas utility
and an affiliated interest from which the gas utility
purchases gas. Accordingly, the commission may consider
any profits that:
(i) are received by an affiliated interest of the gas utility
from the sale of gas to the gas utility; and
(ii) result in the affiliated interest earning a rate of
return that exceeds the rate of return authorized by the
commission for the gas utility in the last proceeding in
which the basic rates and charges of the gas utility were
approved;
to be revenues of the gas utility.
(C) (D) The gas cost adjustment applied for will not result, in
the case of a public utility, in its earning a return in excess of
the return authorized by the commission in the last proceeding
in which the basic rates and charges of the public utility were
approved. However, subject to section 42.3 of this chapter, if
the gas cost adjustment applied for will result in the public
utility earning a return in excess of the return authorized by the
commission in the last proceeding in which basic rates and
charges of the gas utility were approved, the gas cost
adjustment applied for will be reduced to the point where no
such excess of return will be earned. and
(D) (E) The utility's estimate of its prospective average gas
costs for each such future recovery period is reasonable and
gives effect to:
(i) the actual gas costs experienced by the utility during the
latest recovery period for which actual gas costs are
available; and
(ii) the actual gas costs recovered by the adjustment of the
same recovery period.
(4) Should the commission at any time determine that an
emergency exists that could result in an abnormal change in gas
costs, it may, in order to protect the public or the utility from the
adverse effects of such change, suspend the provisions of
subdivision (3) as to the utility or utilities affected by such an
emergency and initiate such procedures as may be necessary to
protect both the public and the utility from harm. The commission
shall lift the suspension when it is satisfied the emergency no
longer exists.
(5) Any change in the gas cost charge granted by the commission
under the provisions of this section shall be reflected in the rates
charged by the utility in the same manner as any other changes in
rates granted by the commission in a case approving the basic
rates and charges of the utility. However, the utility may file the
change as a separate amendment to its rate schedules with a
reasonable reference therein that such charge is applicable to all
of its filed rate schedules.
(h) As used in this section, "affiliated interest" has the meaning
set forth in section 49(c) of this chapter.
activity the commission finds to be in violation of this section.
(g) Notwithstanding subsection (f), a person who suffers a
pecuniary loss from a violation of this section may file a civil action
in an Indiana court having jurisdiction. If the court finds that the
person has suffered a pecuniary loss, the court may do the
following:
(1) Grant appropriate injunctive relief.
(2) Award appropriate damages.
A person who files a civil action under this subsection is not
required to exhaust administrative remedies.
the affiliated interest; or
(B) any goods, services, or other consideration exchanged
between the electric or gas utility and the affiliated
interest; and
(2) authority to require any reports to be submitted by the
affiliated interest as the commission may prescribe.
(c) For the purpose of this section, only, "affiliated interests" include
the following:
(a) (1) Every corporation and person owning or holding directly
or indirectly ten percent (10%) or more of the voting capital stock
of such utility corporation.
(b) (2) Every corporation and person in any chain of successive
ownership of ten percent (10%) or more of voting capital stock.
(c) (3) Every corporation ten percent (10%) or more of whose
voting capital stock is owned by any person or corporation
owning ten percent (10%) or more of the voting capital stock of
such utility corporation or by any person or corporation in any
such chain of successive ownership of ten percent (10%) or more
of voting capital stock.
(d) (4) Every person who is an officer or a director of such utility
corporation or of any corporation in any chain of successive
ownership of ten percent (10%) or more of voting capital stock.
(e) (5) Every corporation which has one (1) or more officers or
one (1) or more directors in common with such utility corporation.
(f) (6) Every corporation or person which the commission may
determine as a matter of fact after investigation and hearing is
actually exercising any substantial influence over the policies and
actions of such utility corporation even though such influence is
not based upon stockholding, stockholders, directors, or officers
to the extent specified in this section.
(g) (7) Every person or corporation who or which the commission
may determine as a matter of fact after investigation and hearing
is actually exercising such substantial influence over the policies
and actions of such utility corporation in conjunction with one (1)
or more other corporations and/or or persons with which or whom
they are related by ownership and/or or blood relationship or by
action in concert that together they are affiliated with such utility
corporation within the meaning of this section even though no one
of them alone is so affiliated. provided,
However, that no such person or corporation shall be considered as
affiliated within the meaning of this section subsection if such person
or corporation is otherwise subject to the jurisdiction of the
commission or such person or corporation shall has not have had
transactions or dealings other than the holding of stock and the receipt
of dividends thereon with such the utility corporation during the for at
least two (2) year period next preceding. years.
(d) Except as provided in subsection (e), no management,
construction, engineering, or similar contract, made after March 8,
1933, with any affiliated interest, as defined in this section, shall be
effective unless it shall first have been filed with the commission. If it
be found that any such contract is not in the public interest, the
commission, after investigation and a hearing, is hereby authorized to
disapprove such contract.
(e) This subsection applies to an electric utility or a gas utility.
A management contract, a construction contract, an engineering
contract, or a similar contract made by a utility after March 28,
2006, with any affiliated interest is not effective unless it is first
filed with the commission and is found by the commission, after
investigation and a hearing, to be in the public interest and the
result of a good faith transaction, consistent with arm's length
negotiations, between the utility and the affiliated interest.
(3) (f) Every annual report of any utility corporation reporting under
this chapter to the commission shall contain, in addition to any other
information required to be included by or pursuant to law, the
following information:
(a) (1) It shall state the name and address of, and the number of
shares held by, each holder of one percent (1%) or more of the
voting capital stock of the reporting corporation, according to its
records.
(b) (2) Where one percent (1%) or more of the voting capital
stock of the reporting corporation is held by a trustee or trustees,
or other intermediate agency, for the beneficial interest of an
owner or owners, other than the holder of record, or where one
percent (1%) or more of the voting capital stock of the reporting
corporation is held by another corporation, such annual report
shall state, if the information is available from the records of the
reporting corporation, the name and addresses and respective
interests of such beneficial owners, and the names and addresses
of the officers and directors of any such other corporation and the
total number of shares of capital stock thereof held by each,
showing separately the number of shares of the voting capital
stock, and the names and addresses and respective stockholdings
of every stockholder of such other corporation holding one
percent (1%) or more of its voting capital stock. Such report shall
be accompanied by a certified copy of each trust agreement or
other instrument under which any voting capital stock of the
reporting corporation is held.
Where the information specified in subsection (3)(b) subdivision (2)
is not available from the records of the reporting corporation, any such
holder of record of one percent (1%) or more of the voting capital stock
of the reporting corporation, if ordered so to do by the commission,
shall file with the commission a sworn statement, in such form and to
be filed within such time as the commission shall prescribe, setting
forth whether or not any of such stock held by him or it the holder of
record is so held for the beneficial ownership of any person, firm,
limited liability company, or corporation other than the record holder
thereof, and, if stated to be so held, the names, addresses, and
respective interests of such beneficial owners. If such stockholder is a
trustee, he or it the stockholder also shall file with such statement a
certified copy of the trust agreement or other instrument under which
such stock is held. A corporation which is the holder, of record, of one
percent (1%) or more of the voting capital stock of the reporting
corporation, if ordered so to do by the commission, and regardless of
whether the information is or is not available or apparently available
from the records of the reporting corporation, also shall file with the
commission a sworn statement, in such form and to be filed within such
time as the commission shall prescribe, or shall include in the sworn
statement, if any, required to be filed by it pursuant to other provisions
of this chapter, a statement setting forth the names and addresses of its
officers and directors and the total number of shares of its capital stock,
held by each, showing separately the number of shares of the voting
capital stock, and the names and addresses and respective
stockholdings of each stockholder thereof holding one percent (1%) or
more of its voting capital stock.
(4) (g) If the annual report, or the sworn statements provided for in
this section, do not furnish the information desired, because of any
chain of successive ownership or of stockholdings, or because of an
intermediate agency or agencies, or for any other reason, the
commission, by order, may require similar sworn statements from any
person or corporation who or which can give the necessary information,
as the commission may have discovered from its investigations, to the
end that the commission may obtain a complete disclosure of the
natural persons, firms, limited liability companies, or corporations and
their respective interests, who or which own or control directly or
indirectly one percent (1%) or more of the voting capital stock of the
reporting corporation.