FILED
Feb 14 2017, 9:50 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES
Thomas Cmar Curtis T. Hill, Jr.
Oak Park, Illinois Attorney General of Indiana
Matthew Gerhart David Lee Steiner
Denver, Colorado Deputy Attorney General
Indianapolis, Indiana
Jennifer A. Washburn
Indianapolis, Indiana Beth Krogel Roads
Jeremy R. Comeau
Indiana Utility Regulatory
Commission
Indianapolis, Indiana
Robert E. Heidorn
P. Jason Stephenson
Evansville, Indiana
Wayne C. Turner
Patrick A. Ziepolt
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 1 of 22
Citizens Action Coalition of February 14, 2017
Indiana, Inc., Sierra Club, Inc., Court of Appeals Case No.
Valley Watch, Inc., 93A02-1607-EX-1637
Appellants-Intervenors, Appeal from the Indiana Utility
Regulatory Commission
v. The Honorable Jeffery A. Earl,
Administrative Law Judge
Southern Indiana Gas and The Honorable Carol A. Stephan,
Electricity Company d/b/a Commissioner Chair
Vectren Energy Delivery of The Honorable Angela Weber,
Indiana, Inc., Indiana Office of Commissioner
Utility Consumer Counselor,
The Honorable David Ziegner,
Appellees-Petitioners Commissioner
The Honorable James Huston,
Commissioner
Trial Court Cause No.
44446
Altice, Judge.
Case Summary
[1] Over three years ago, Southern Indiana Gas and Electric Company d/b/a
Vectren Energy Delivery of Indiana, Inc. (Vectren) petitioned the Indiana
Utility Regulatory Commission (IURC) for approval of projects to modify four
of Vectren’s coal-powered generating stations to bring them into compliance
with EPA emissions standards. Citizens Action Coalition of Indiana, Inc.,
Sierra Club, Inc., and Valley Watch, Inc. (collectively, Intervenors) intervened
in the action and opposed the petition.
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[2] The IURC ultimately approved the petition, determining that Vectren’s
proposed projects were reasonable and necessary under Ind. Code § 8-1-8.8-11.
Upon Intervenors’ appeal in Citizens Action Coal. of Ind., Inc. v. S. Ind. Gas & Elec.
Co. (Vectren I), 45 N.E.3d 483 (Ind. Ct. App. 2015), another panel of this court
remanded with respect to two of the proposed projects, finding that I.C. § 8-1-
8.7-3 rather than I.C. § 8-1-8.8-11 applied. This court instructed the IURC to
make findings regarding the statutory factors listed in I.C. § 8-1-8.7-3 and then
issue or deny a certificate of public convenience and necessity (CPCN) for the
two projects.
[3] On remand, the IURC refused a request by Intervenors to reopen the record to
consider new evidence. It also issued an order analyzing the nine statutory
factors, concluding that public convenience and necessity will be served by the
proposed clean coal technology projects, and issuing a CPCN to Vectren for the
remaining projects. Intervenors appeal once again. They argue that the
IURC’s findings are not adequately explained, are arbitrary and capricious, and
are not supported by substantial evidence. Additionally, Intervenors argue that
the IURC unlawfully denied the petition to reopen the record.
[4] We affirm.1
1
By separate order issued today, we grant Intervenors’ motion to dismiss the IURC as a party to this appeal.
We agree that because the IURC acted as a fact-finding administrative tribunal and no statute or
administrative provision expressly makes the IURC a party on appeal, it is not a proper party on appeal from
its own decision. See City of Terre Haute v. Terre Haute Water Works Corp., 180 N.E.2d 110, 111 (Ind. Ct. App.
1962) (“When there are two opposing parties before [the Public Service Commission of Indiana], as here, its
action in making findings and issuing an order deemed detrimental by one of the parties is similar to that of a
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 3 of 22
Facts2 & Procedural History
[5] Vectren is a public utility company that provides electricity to southern Indiana
residents. Eighty-five percent of Vectren’s baseload electricity is generated at
Brown unit 1, Brown unit 2, Culley unit 2, Culley unit 3, and Warrick, all of
which are coal-powered generators. In 2012, the EPA issued a Notice of
Violation (NOV) alleging that Vectren’s emissions control technology at its
Brown units was noncompliant with EPA rules governing sulfuric acid
emissions. The EPA also served Vectren with a Clean Air Act Information
Request that highlighted concerns with the sulfur emissions at Culley unit 3.
Vectren and the EPA eventually reached a settlement in principle to resolve the
outstanding allegations raised in the NOV and the information request.
Vectren also became subject to new federal mandates regarding mercury
emissions standards.
[6] On January 17, 2014, as a result of the compliance issues, Vectren filed a
petition with the IURC for approval of modifications to four of its coal-powered
electricity generating facilities – Brown units 1 and 2, Culley unit 3, and
Warrick. The petition sought approval of several clean energy projects and
court which makes a decision determining a controversy between adverse parties. A court is never a party to
an appeal from its decision.”); Cf. Ind. Code § 22-4-17-12(b) (expressly making the Review Board of the
Indiana Department of Workforce Development a party appellee in every appeal of the review board’s
decision).
2
We rely on many of the facts set out in Vectren I.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 4 of 22
issuance of a CPCN to construct, install, and use clean coal technology (CCT). 3
Among other projects,4 Vectren requested approval for a soda ash injection
system for sulfur trioxide (SO3) mitigation at Brown units 1 and 2 and a
hydrated lime injection system for SO3 mitigation at Culley unit 3.
[7] In April 2014, Intervenors intervened in the IURC proceedings and opposed
Vectren’s petition.5 Intervenors contended that Vectren should replace all or
some of the units with new electricity-generating sources (such as, natural gas,
wind, or solar) instead of retrofitting the existing coal units. According to
Intervenors, this would be more cost-effective for Vectren’s customers over the
long run.
[8] The dispute between Vectren and Intervenors became a battle of experts.
Vectren hired the engineering firm Black & Veatch (B & V) to compare the total
ratepayer cost and relative risk of the proposed modifications versus the cost
and risks associated with retiring and replacing the noncompliant units.
B & V’s report found that the only feasible plans to meet
environmental regulations were (1) replacing one or more of
3
Vectren also requested approval of certain financial incentives and approval to defer project costs, including
depreciation and operations and maintenance expenses, for a period up to December 31, 2020. Approval of
these financial requests is not at issue in this appeal.
4
The other projects addressed mercury emissions. Although the IURC’s approval of these projects was at
issue in Vectren I, it is not here.
5
The Indiana Office of Utility Consumer Counselor (OUCC) initially opposed Vectren’s petition also. After
reviewing additional information provided by Vectren, the OUCC eventually withdrew its opposition. The
OUCC indicated to the IURC that it believed the proposed projects were appropriate and that it would
support approval of all projects if the IURC determined that the modeling assumptions and analyses showed
that the plan was reasonable.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 5 of 22
Vectren’s current units with new natural gas-powered facilities
and retiring the remaining facilities, or (2) upgrading the current
coal-powered facilities. B & V evaluated twenty-one potential
scenarios involving various gas-powered replacement options and
a range of potential market and environmental scenarios. B & V
concluded that of the twenty-one scenarios, only one offered a
small savings over the Mandated Projects proposal. B & V found
that the cost savings under this one scenario were “marginal” and
conditional on a future market scenario with low natural gas
prices and high carbon prices. Accordingly, B & V concluded
that Vectren’s plan to modify the existing facilities was the best
option in terms of cost to ratepayers.
Id. at 487 (record cite omitted).
[9] Intervenors submitted testimony of their expert, Dr. Jeremy I. Fisher, who felt
that the 10-year period used in B & V’s analysis was too short to capture
accurate long-term costs and risks associated with the proposal and that using a
20-year model would be more appropriate. Dr. Fisher maintained that, under a
20-year analysis, natural gas-powered generators would be more cost efficient.
He also noted other errors he believed B & V committed in its economic
modeling, including the exclusion of wholesale capacity and energy sales.
[10] Vectren’s President and CEO, Carl L. Chapman, disagreed that Vectren should
retire 85% of its generation facilities and opined that this was a riskier approach.
He testified that capacity constraints, market conditions, and economic growth
would create tremendous risk. He also noted that there would be significant
costs left undepreciated from prior investments in the units (stranded costs). On
the other hand, according to Chapman, Vectren’s proposed projects afforded
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flexibility to respond to changing market conditions, reliable capacity, and full
depreciation of stranded costs.
[11] Wayne D. Games, Vice President of Power Supply at Vectren, testified that a
20-year analysis skews the economic modeling. He also indicated that it would
take 4 years to construct replacement generation and, in the meantime,
customers would be exposed to market and reliability risks.
[12] Despite the criticisms of Dr. Fisher, J. Neil Copeland of B & V continued to
maintain that a 10-year model was prudent. He also disputed Dr. Fisher’s
contentions of analytical errors in B & V’s model and noted problems with Dr.
Fisher’s 20-year analysis. Further, Copeland indicated that the cost differences
between the alternatives were fairly small and opined that decisions about
future generations should not be made solely on these small differences. He
noted the importance of management judgment and consideration of risks of
capacity shortages.
[13] On January 28, 2015, the IURC issued an order (the First Order) approving
Vectren’s petition in total. The order is lengthy but only a portion of it is
relevant to this appeal. After setting out in detail the evidence presented by the
parties, the IURC issued the following relevant discussion and findings:
C. Deferred Recovery under Ind. Code ch. 8-1-8.8. Under Ind.
Code § 8-1-8.8-11(a)(5), the Commission can authorize other
financial incentives that it considers appropriate for clean energy
projects only if the projects are found to be reasonable and
necessary.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 7 of 22
Vectren submitted evidence showing that failure to comply with
the federally mandated requirements would require Vectren to
retire Brown, Culley, and Warrick, which make up
approximately 85% of its baseload generation, in 2015. The
Mandated Projects will enable the continued operation of the
facilities for at least the next ten years and continued service to
Vectren’s customers.
Vectren evaluated several alternative compliance technologies
that would allow the Brown, Culley, and Warrick units to
comply with pollution limits....
Vectren hired Black & Veatch to further evaluate the most
promising technologies and consider alternatives for bringing its
generation fleet in compliance with federal regulations....
***
Vectren also considered whether the continued operation of
Brown units 1 and 2, Culley unit 3, and Warrick unit 4 was the
best option. Vectren submitted production cost modeling
supporting its plan to continue investing in, rather than retire,
Brown, Culley, and Warrick. Specifically, Vectren presented a
ten-year production cost model using PROMOD IV prepared by
Black & Veatch. Vectren also engaged Burns & McDonnell to
conduct an analysis over a 20-year period to respond to concerns
by the Joint Intervenors and OUCC.
The evidence presented by Vectren shows that failure to complete
the Mandated Projects could require the premature retirement of
the related generation facilities, which would result in significant
reliability, market, and regulatory risk. MISO is projecting
capacity shortfalls as early as 2016 and constructing a new gas
generation facility would take at least four years. Without the
ability to obtain voltage support from distant generators to serve
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its territory, Vectren would be forced to purchase capacity in an
already constrained market. All of these factors point to
concerns that retirement of Brown and Culley would expose
Vectren’s customers to significant reliability risks. Based on the
evidence presented, we find that the Mandated Projects are
reasonable and necessary.
Appellants’ Appendix at 20-21.
[14] Intervenors appealed the First Order arguing that the IURC “failed to make
necessary findings on (1) facts material to its determination of the issues and (2)
statutory factors required to be addressed prior to authorizing the use of clean
coal technology.” Vectren I, 45 N.E.3d at 485. Intervenors appealed the
approval of all of Vectren’s proposed projects.
[15] We issued our opinion in Vectren I on October 29, 2015. After a thorough
review of relevant Indiana utility and CCT statutes, we determined that two of
the proposed projects – those using injection systems designed to mitigate sulfur
emissions – required issuance of a CPCN under I.C. chapter 8-1-8.7.6 In its
First Order, however, the IURC based its decision to approve all of the projects
on I.C. chapters 8-1-8.4 and 8.8.7 In light of this error, we remanded on a
limited basis and instructed:
6
The projects concerning mercury emissions are not considered CCT projects for purposes of Chapter 8.7
because they do not reduce airborne emissions of sulfur or nitrogen based pollutants. Id. at 496.
7
We noted, “a finding that the projects were reasonable and necessary under Chapter 8.8 does not change
the fact that Vectren was required to obtain a CPCN before using new CCT and that the Commission was
required to make findings under Chapter 8.7 before granting a CPCN thereunder.” Vectren I, 45 N.E.3d at
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Vectren may not use CCT (as defined in Chapter 8.7) until the
Commission issues them a CPCN under Indiana Code section 8-
1-8.7-3. On remand, the Commission shall make findings on the
factors listed in Section 8-1-8.7-3(b) regarding the soda ash and
hydrated lime injection systems which qualify as CCT under
Chapter 8.7 and, based on those findings, determine whether
those systems serve public convenience and necessity.
Vectren I, 45 N.E.3d at 498.
[16] On February 12, 2016, Intervenors filed a petition to reopen the evidentiary
record, asserting material changes of fact since the close of the evidentiary
hearing. Vectren objected to this petition.
[17] The IURC issued its order on remand (the Second Order) on June 22, 2016.
After denying Intervenors’ request to reopen the record, the IURC made
findings with respect to I.C. § 8-1-8.7-3(b):
Under Ind. Code § 8-1-8.7-3(b), the Commission shall issue a
CPCN if it finds that a clean coal technology project offers
substantial potential to reduce sulfur or nitrogen based pollutants
in a more efficient manner than conventional technologies in
general use as of January 1, 1989. When determining whether to
grant a CPCN, the Commission must consider specific factors,
which are addressed below.
A. The costs for constructing, implementing, and using CCT
compared to the costs for conventional emission reduction
facilities. Vectren estimated the costs for all projects
495. Additionally, we concluded that “a CPCN granted under Chapter 8.4 would not be sufficient to satisfy
the CPCN requirement of Chapter 8.7.” Id. at 497.
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approved in [this cause] to be in the range of $75-$95 million.
Vectren supplied a breakdown of the estimated costs by
project as a confidential filing, which includes the estimated
costs for the Brown and Culley Projects. No party disputed
the estimated costs.
Ms. Fischer[8] testified that Black and Veatch considered
several alternative technologies, including fuel switching, coal
washing, boiler flue gas temperature control, furnace sorbent
injection, and others. Ms. Fischer further testified that the
Brown and Culley Projects were selected because the
preliminary screening showed them to be the most cost
effective. The evidence presented sufficiently describes the
Mandated Projects Costs and demonstrates that the
components of the Mandated Projects offer substantial
potential to cost-effectively reduce pollutants.
B. Whether a CCT project will extend the useful life of an
existing electric generating facility and the value of that
extension. Mr. Games testified that the Brown and Culley
Units have not reached the end of their useful lives. He said
that the Brown and Culley Projects are necessary to resolve
the [NOV] issued by the [EPA] and to allow the continued
operation of the Brown and Culley Units. Mr. Chapman
testified that the Brown and Culley Projects would extend the
useful lives of Vectren’s plant for another ten years, allowing
Vectren to fully depreciate its prior capital investments in
emission controls and to avoid stranded costs.
C. The potential reduction of sulfur and nitrogen based
pollutants achieved by the proposed CCT system. Mr.
Games testified that under the NOV, Vectren has agreed to
8
Diane Fischer testified as the Air Quality Control Services Leader in the Energy Division at B & V.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 11 of 22
install sodium-based sulfur trioxide (“SO3”) mitigation
systems on both Brown Units. The systems will reduce
sulfuric acid (“H2SO4”) emissions to 0.008 lb/mmbtu (pounds
per million British thermal units) on Brown Unit 1 and 0.010
lb/mmbtu on Brown Unit 2. Vectren has also agreed to
install a SO3 mitigation system on Culley Unit 3, which will
reduce H2SO4 emissions to 0.009 lb/mmbtu.
D. The reduction of sulfur and nitrogen based pollutants that
can be achieved by conventional pollution control
equipment. Mr. Games testified that soda ash injection
(Brown Units) and hydrated lime injection (Culley Unit) are
required for SO3 mitigation. There is no evidence that any
conventional pollution control equipment could achieve the
necessary SO3 reductions. Vectren analyzed several
alternative technologies and fuel sources to achieve the
necessary SO3 reductions, but that analysis focused primarily
on the economic impact of the scenarios.
E. Federal sulfur and nitrogen based pollutant emission
standards. Mrs. Retherford[9] testified that Vectren received
an NOV from the EPA alleging that Vectren failed to acquire
Prevention of Significant Deterioration (“PSD”) construction
permits prior to construction of the SCRs to address small
incremental increases in incidental SO3 emissions caused by
operation of the SCRs, and a CAA §114 Information Request
related to the 2003 Culley Consent Decree. Vectren and the
EPA have reached a settlement in principle to resolve the
outstanding compliance allegations brought by the EPA in the
9
Angela Retherford testified as Vice President of Environmental Affairs and Corporate Sustainability at
Vectren.
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NOV and the CAA §114 Information Request that requires
the Culley and Brown Air Projects.
F. The likelihood of success of the proposed project. Ms.
Fischer described the Phase 1 Technology Demonstration of
the Brown and Culley Projects. At Brown, Black & Veatch
used a temporary soda ash injection system, which treated
100% of the flue gas on Unit 1. The soda ash injection
reagent flow rate, process data, and stack gas outlet
measurements were all collected, and the data obtained
allowed Black & Veatch to determine the optimum amount of
soda ash that should be injected to balance sorbent
consumption, mercury reduction, and NsSO4 mist reduction.
Ms. Fischer testified that at Culley, highly reactive hydrated
lime was injected at the inlet and outlet of the particulate
matter removal device. Black & Veatch performed the test at
different injection rates to evaluate the effect of the amount of
hydrated lime injection on H2SO4 mist removal. As with
Brown, the data obtained allowed Black & Veatch to
determine the necessary sizing of the lime injection system.
G. The cost and feasibility of retirement of an existing electric
generating facility. Mr. Games testified that Vectren hired
Burns & McDonald and Black & Veatch to analyze
alternative generation options to retrofitting Brown Units 1
and 2 and Culley Unit 3. The analysis included both the
variable operating costs of the proposed alternatives and the
annual fixed charge required to recover capital costs and fixed
operating costs under various capacity scenarios. In addition,
the analysis considered that the Brown and Culley Units are
base load units; so any replacement technology must be able
to supply the necessary capacity to meet the MISO-required
Planning Reserve Margin.
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The analysis considered 20 commercial generating
technologies, including seven natural gas options, battery
storage, compressed air, wind, solar, hydro, nuclear, wood,
landfill gas, and coal. Of those options, Black & Veatch
identified two, a 200 MW, Class F natural gas fired
generation facility and a 300 MW natural gas fired combined
cycle generation facility, as the most practical options. The
other options were determined to be infeasible due to cost,
size, or environmental reasons.
Black & Veatch compared the two replacement options to the
retrofitting option on the basis of total customer cost and
relative risk. The analysis was run under three separate
market scenarios and adjusted to those scenarios for variables
including natural gas costs and carbon costs. The analysis
compared 21 different replacement scenarios to the retrofitting
option, and in every scenario except one, the analysis
demonstrated that retrofitting was the lowest cost alternative.
The only scenario that favored replacement, was a low
natural gas and high carbon cost scenario that showed a 2.2%
benefit by replacing Brown Units 1 and 2 with a combined
cycle natural gas facility.
H. The dispatching priority for the facility utilizing CCT,
considering direct fuel costs, revenues, and expenses of the
utility, and environmental factors associated with
byproducts resulting from the utilization of the CCT. Mr.
Games testified that any changes in dispatching priority will
depend on future regulations, fuel costs, and future load
growth. He said that the additional variable production costs
of using additives to reduce SO3 emissions will increase the
cost to generate a MW of electricity, but that Black &
Veatch’s analysis shows that replacing the Brown and Culley
Units would be a more expensive option.
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Mr. Games also testified that the Brown and Culley Projects
will allow for the continued reuse of the fly ash from the
Brown and Culley Units for the production of cement and
gypsum wall board. Mr. Games said that while Vectren is not
paid for the fly ash, the reuse is beneficial to customers
because Vectren avoids disposal costs.
I. Any other factors the Commission considers relevant,
including whether the construction, implementation, and
use of CCT is in the public’s interest. Mr. Games testified
that Vectren cannot continue to operate the Brown and Culley
Units without investing in additional pollution control
equipment to comply with the NOV. Vectren has evaluated
alternative technologies and the possibility of retiring the units
and identified the Brown and Culley Projects as the lowest
cost alternative. Retiring the Brown and Culley Units would
retire 76% of Vectren’s coal-fired base load, which would
require Vectren to construct new generation facilities to
replace the capacity or to purchase capacity on the open
market. Market Purchases would also place a large
percentage of Vectren’s base load energy need outside of its
direct control. Because the Brown and Culley Units have not
reached the end of their useful lives, retiring them early would
result in significant stranded costs. In addition, Vectren
would experience stranded costs related to infrastructure in
place to capture, store, and transport fly ash for reuse. For
these reasons, we find that it is in the public interest for
Vectren to install the Brown and Culley Projects.
J. Conclusion. Based on our analysis of the factors required by
Ind. Code § 8-1-8.7-3(b), we find that public convenience and
necessity will be served by the use of CCT, specifically the
Brown and Culley Projects, on Brown Units 1 and 2 and
Culley Unit 3. In our January 28, 2015 Order in this Cause,
we approved the estimated costs, and found that Brown Units
1 and 2 and Culley Unit 3 will continue to utilize Indiana coal
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as their primary fuel, specifically coal [] sourced from the
Illinois Basin. Therefore, we issue a CPCN to Vectren for the
Brown and Culley Projects.
Id. at 8-11.10 Intervenors appeal from this order.
Discussion & Decision
Standard of Review
[18] The General Assembly created the IURC primarily as a fact-finding body with
the technical expertise to administer the regulatory scheme devised by the
legislature. N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d 1012, 1015 (Ind.
2009). The IURC’s goal is to ensure that public utilities provide constant,
reliable, and efficient service to the citizens of Indiana. Id. An order from the
IURC is presumed valid unless the contrary is clearly apparent. Citizens Action
Coal. of Ind., Inc. v. N. Ind. Pub. Serv. Co., 485 N.E.2d 610, 612 (Ind. 1985).
[19] The standard for our review of decisions of the IURC is governed by I.C. § 8-1-
3-1, which our courts have interpreted as providing a tiered standard of review.
A multiple-tier standard of review is applicable to the IURC’s
orders. A court on review must inquire whether specific findings
exist as to all factual determinations material to the ultimate
conclusions; whether substantial evidence within the record as a
10
Headings A through I directly correspond with the factors listed in I.C. § 8-1-8.7-3(b).
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1637 | February 14, 2017 Page 16 of 22
whole supports the findings of fact; and whether the decision,
ruling, or order is contrary to law.
Vectren I, 45 N.E.3d at 491. In applying this standard, “[w]e review the
conclusions of ultimate facts, or mixed questions of fact and law, for their
reasonableness, with greater deference to matters within the IURC’s expertise
and jurisdiction.” Citizens Action Coal. of Ind., Inc. v. Duke Energy Ind., Inc., 16
N.E.3d 449, 457 (Ind. Ct. App. 2014). Additionally, “[w]e neither reweigh the
evidence nor assess the credibility of witnesses and consider only the evidence
most favorable to the IURC’s findings.” Ind. Gas Co., Inc. v. Ind. Fin. Auth., 999
N.E.2d 63, 66 (Ind. 2013). On matters within its jurisdiction, the IURC enjoys
wide discretion and its findings and decision will not be lightly overridden
simply because we might reach a different decision on the same evidence.
Vectren I, 45 N.E.3d at 491.
Adequacy of Findings on Remand
[20] Intervenors challenge the adequacy of the IURC’s findings on remand, arguing
that they are not adequately explained, are arbitrary and capricious, and are not
supported by substantial evidence. Their grievance stems from the notion that
the IURC failed to consider any evidence other than Vectren’s pre-filed direct
testimony. Had the IURC considered the other evidence, according to
Intervenors, it would have concluded that the long-term cost of installing
pollution controls on the existing units would be more than the cost of building
new natural gas plants and retiring existing coal-fired units.
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[21] Initially, we observe that the First Order remained intact after Vectren I. This
order contained a detailed summary of the evidence presented by the parties,
which included over 2000 pages of written testimony and exhibits and two days
of live testimony. Although the IURC considered the voluminous evidence on
both sides, it based its ultimate decision and findings in the First Order
primarily on Vectren’s evidence. For example, in finding the proposed projects
to be reasonable and necessary, the IURC expressly relied upon the evidence
presented by Vectren, including Games’s testimony and the B & V 10-year
model. The IURC’s reliance on the B & V model indicates that Vectren won
the battle of the experts in the First Order.
[22] In Vectren I, we did not reverse the First Order. Rather, we did nothing more
than remand for additional findings with regard to two of the proposed projects.
We directed the IURC to make findings on the nine statutory factors listed in
I.C. § 8-1-8.7-3(b) and balance these factors to determine whether to grant a
CPCN. The IURC did just that.
[23] We cannot agree with Intervenors that, on remand, the IURC was required to
consider the expert testimony regarding the cost models anew. Further,
Intervenors’ assertion that Copeland abandoned his original B & V 10-year
analysis for a “corrected analysis” at the hearing is a mischaracterization of the
evidence. Appellants’ Brief at 21. At the hearing, Copeland steadfastly stood by
his opinion that a 10-year analysis was more appropriate than a 20-year
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analysis.11 Further, to the extent he adjusted the assumptions used in his 10-
year model to reflect Dr. Fisher’s assumptions, Copeland testified that he was
“not totally in agreement” with the assumptions.12 Id. at 374. Additionally,
Copeland testified that the revised results should “absolutely not” change
Vectren’s conclusions on the proposed compliance plan. Id. at 373. He noted
that “changes in the variable costs can change the outcome very easily” and
given the “uncertainty in the future, [he] would not think it would be prudent to
make an $800 million fixed cost investment”. Id. at 374.
[24] Intervenors’ arguments amount, essentially, to a claim that the IURC credited
the wrong expert testimony. This is an improper contention on appeal, as it
requires a reweighing of the evidence. There is substantial evidence in the
record to support the IURC’s findings regarding the cost effectiveness of the
proposed projects as compared to retirement of the existing units. Moreover,
the cost analysis was not the sole basis of the IURC’s decision to issue the
CPCN to Vectren. The IURC issued specific findings on all nine statutory
factors as set out above, many of which had nothing to do with the cost
11
Copeland testified in this regard:
[T]he original analysis was done on ten years, and I feel very confident with that given the
uncertainty we could see in the future, and because we don’t know exactly what the future looks
like, we felt like it was prudent to look at a ten-year analysis, and we still stand by that.
Transcript at 377.
12
Regarding the addition of capacity sales to his model, Copeland testified that he did not believe it is
appropriate to include revenue from excess capacity sales. He was then asked why he included this
assumption in his revised model. Copeland responded, “I was responding to Dr. Fisher’s comments about
capacity sales not being included and wanted to analyze the impact if those were added in there.” Id. at 214.
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analysis. Based on its consideration of all of these factors, the IURC
determined that public convenience and necessity will be served by the use of
CCT at Brown Units 1 and 2 and Culley Unit 3. Intervenors have failed to
establish that the IURC abused the broad discretion granted it.
Petition to Reopen Record
[25] Intervenors argue that the IURC erred by declining to reopen the record on
remand to hear additional evidence. With their petition, Intervenors attached
evidence purporting to show that the existing units would face higher costs than
originally assumed and the cost to run new plants would be lower. Other
evidence submitted indicated that the projections of a capacity deficit in the
region were no longer accurate.
[26] The IURC denied the petition as follows:
170 IAC 1-1.1-22 allows a party to move to reopen the record[13]
“At any time after the record is closed, but before a final order is
issued.” The Commission has already issued a final order based
13
In petitioning to reopen the record, the petitioner
must set forth clearly the facts claimed to constitute grounds requiring reopening of the
proceedings, including the following:
(1) Material changes of fact or law alleged to have occurred since the conclusion of the hearing.
(2) The reason or reasons such changes of fact or law could not have been reasonably foreseen
by the moving party prior to the closing of the record.
(3) A statement of how such changes of fact or law purportedly would affect the outcome of
the proceeding if received into evidence.
(4) A showing that such evidence will not be merely cumulative.
170 Ind. Admin. Code 1-1.1-22(b). While it sets out the requirements of such a petition, 170 I.A.C. 1-
1.1-22 does not establish a standard of review. Accordingly, we conclude that the determination of
whether to grant or deny a petition to reopen the record is within the IURC’s sound discretion.
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on the evidentiary hearing in this Cause. Although the Court of
Appeals remanded the final order for the Commission to
consider the limited issue of whether a CPCN should be issued
for the proposed soda ash and hydrated lime injection systems,
the court did not instruct the Commission to receive additional
evidence; nor did it bar the Commission from receiving
additional evidence if necessary. Therefore, it is within the
Commission’s discretion to determine whether the record should
be reopened to receive additional evidence.
In this case, we find that there is sufficient evidence in the
evidentiary record to make the required findings under Ind. Code
§ 8-1-8.7-3. [Intervenors], in asserting that new evidence might
change the original analysis, amounts to a request that the
Commission engage in hindsight review, which we decline to do.
Therefore, the Motion is denied.
Appellants’ Appendix at 8.
[27] In its First Order, the IURC granted Vectren’s petition for approval of all the
proposed projects. In Vectren I, this court did not reverse the First Order but
simply remanded the case for additional findings with respect to two of the
projects. Given the volatile utility market, the cost analyses and facts on which
the First Order was based were sure to change over time (i.e., while the First
Order was being appealed) but this is no reason to require the IURC to reopen
the evidence and re-litigate the case with respect to the two remaining projects.
[28] Under the circumstances presented here, we conclude that the IURC did not
abuse its discretion by denying the petition to reopen the record. There was
ample evidence in the record from which the IURC could evaluate the statutory
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factors on remand, and thus there was no need for additional evidence. See
Citizens Action Coal. of Ind., Inc. v. Duke Energy Ind., Inc., 44 N.E.3d 98, 110 (Ind.
Ct. App. 2015).
[29] Affirmed.
Riley, J. and Crone, J., concur.
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