Rail cars carry coal past the Edwardsport Power Station, one of Duke Energy’s coal-powered plants in Indiana. (Courtesy Duke Energy)
Hoosier utility regulators “impermissibly applied” Indiana law retroactively when they let Duke Energy raise customer rates to recover coal ash compliance costs, the Indiana Court of Appeals ruled Tuesday.
Judge Paul Mathias — writing for the three-member panel — reversed the Indiana Utility Regulatory Commission’s decision and instructed it to reconsider or dismiss Duke’s rate increase application.
Judges Cale Bradford and Dana Kenworthy concurred.
The lawsuit has roots in U.S. Environmental Protection Agency rules, promulgated in 2015, for treating and disposing of toxic coal ash. Duke, which operates several coal-powered electricity generation plants in Indiana, began spending to comply.
Four years later, the company asked regulators to increase rates on Hoosier customers to recover those costs, plus anticipated expenditures. Both requests were granted.
But Indiana’s Supreme Court reversed in 2022. Hikes for the costs incurred between 2015 and 2018 were considered illegal retroactive ratemaking.
The Court of Appeals in 2023 also blocked Duke’s separate attempt to recover costs from 2018 and 2019. A month later, however, the Indiana General Assembly amended the laws dealing with federal mandates — removing a pre-approval requirement. The changes were effective upon passage.
In response, Duke filed to recover about $88 million in costs incurred from 2019 through 2023, along with $238 million in projected spending between 2024 and 2030.
Citizens Action Coalition, a ratepayer advocacy group, intervened. But regulators found that the amended laws applied because the application was filed after the effective date.
The Court of Appeals disagreed in its Tuesday opinion.
The panel argued that a federal mandate triggers the laws, not a utility company’s regulatory filing.
“As our Supreme Court has made clear: ‘a statute operates prospectively when it is applied to the operative event of the statute, and that event occurs after the statute took effect,’” Mathias wrote.
He compared Duke and the IURC’s procedural theory to using the date the state files charging information — instead of when an alleged crime occurred — as the trigger for a criminal statute.
The opinion also noted that laws typically aren’t applied retroactively unless the text explicitly says to, and “there is nothing in this language reflecting a clear intent” to do so.
Remedial statutes are an exception.
Duke has argued that the changes were remedial because they were enacted in response to the court’s earlier opinion, but Mathias called that “an incorrect statement of law … all but expressly rejected by the Indiana Supreme Court.”
Even remedial laws generally apply only prospectively unless there is a “strong and compelling” reason to apply them retroactively. Duke didn’t provide any, Mathias wrote.
The court also affirmed that Citizens Action Coalition has the standing to sue.
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