Duke Energy Indiana LLC can charge ratepayers for the damages stemming from a contract dispute with a wind farm developer, a state court ruled.
The Court of Appeals of Indiana on May 21 affirmed a decision by state regulators that allows the Duke Energy Corp. subsidiary to pass along cost recovery from a $29 million settlement agreement with Benton County Wind Farm LLC.
Benton County Wind in 2013 filed a lawsuit against Duke Energy Indiana for breach of contract in the U.S. District Court for the Southern District of Indiana. The wind farm owner and operator said Duke Energy Indiana refused to bid electricity from the 130.5-MW Benton County Wind Farm into the Midcontinent Independent System Operator Inc. wholesale market at competitive prices, thus curtailing its production and revenue stream.
Benton County Wind said the utility is obligated to pay the company for the wind farm's entire output, "not merely what Duke chooses to accept based on prevailing market prices."
Duke Energy Indiana in February 2014 asked a federal judge in Indiana for permission to terminate its 20-year contract based on new regulations and market concerns.
After various court rulings, Duke Energy Indiana and Benton County Wind reached a settlement agreement, with the utility indicating its intent to recover the costs from ratepayers. The Indiana Utility Regulatory Commission in September 2017 approved cost recovery spread over 12 months.
Two ratepayers appealed the IURC's decision, saying the order is "contrary to law because the damages are 'liquidated' and 'hypothetical' and it amounts to impermissible retroactive ratemaking."
The appeals court, however, ruled that "substantial evidence supports the Commission's order and no other error."
"After reviewing the record, there is no indication that any of the parties or the Commission thought Duke would be forfeiting its right to recover the deferred costs in a future [fuel cost adjustment] proceeding nor is there any evidence that this deferral was improper," the court wrote in its order. "The Commission has the expertise to analyze and weigh the evidence in this case, and, after our review of the record, we conclude that there is substantial evidence (to) support its decision to approve Duke's recovery from ratepayers."
