Pharos-Tribune

January 16, 2013

KITCHELL: Utility’s loss represents a real outage


— Circuit-breakers trip every day in homes across America because too many appliances, computers, lights and televisions drain off more power than power lines feeding the house can provide.

Unfortunately, there is no circuit-breaker for power companies that hemorrhage debt when power plants in Indiana are built beyond the scope of necessity. When the construction stops and projects are halted or power plants simply become exorbitantly expensive to build, the consumer becomes the circuit-breaker. A case in point is a ruling issued during the deadest news week of the year – that period between Christmas and New Year’s Day. The Indiana Utility Regulatory Commission ruled that Duke Energy is responsible for cost overruns at its new Edwardsport plant. A plant that was to have been built for slightly less than $2 billion is going to cost close to twice that. Although the IURC ruled that Duke, the largest investor-owned utility serving the state, would have to pick up the majority of the tab, its customers across the state will be making a new year’s resolution to start paying the bill beginning this month. Duke has raised its rates, and if you think Duke’s customers won’t be paying part of Duke’s share from its bottom line, I have some property in the middle of the Wabash River to sell you.

The problem with this story goes beyond the fact that the IURC ruled that Duke should have been more vigilant in monitoring cost overruns that jacked up the cost for consumers. There is no argument that more power plants in Indiana are necessary, but there is plenty of argument to be made about why corporations such as Duke should not be allowed to spend beyond its means and then hand the bill to consumers.

It’s almost too American to reel off the phrase “If you don’t understand history, you’re condemned to repeat it.” The Edwardsport plant may be modern in the sense that it is a coal gasification plant, but it is old-fashioned in the sense of living up to the axiom in the previous sentence.

Indiana has been down this road before when it comes to major power plant debacles. The Marble Hill Nuclear plant in Madison and the Bailly Nuclear Plant in northwest Indiana racked up nearly $4 billion in debt for Duke’s predecessor in the state, Public Service Indiana, and the largest natural gas provider in the state, Northern Indiana Public Service Co. That happened back in the 1980s when nuclear plants were closing down left and right after the Three Mile Island accident in Pennsylvania.

Somewhere, the institutional memory of this state lost in the turnstiles of The Indianapolis Star, the former Indianapolis News and dozens of other Indiana media outlets that have churned out quality reporting on this issue, we were destined to repeat the mistake of our past because we didn’t learn from our own history. While line workers are dispatched as a matter of urgency when power lines are down or power is lost in every county in the state, there was no urgency on the part of any state official to say to Duke, “You shouldn’t be doing this unless you’re prepared to pay for it without making the ratepayers suffer for the inadequacy of the bidding or your oversight.”

If Edwardsport had been a municipal power plant, there would have been public bidding, public scrutiny, state oversight and more consumer control. But in Indiana’s current scenario for investor-owned utilities, the utilities have all the control until it’s too late. Meanwhile, businesses will suffer, heads of households will suffer as Duke will make its bottom line for its quarterly report.

If there is a lesson to be learned from this latest episode of the Indiana Utility Follies, it’s that the IURC probably should have been more empowered – no pun intended – to oversee the project. If there is another lesson to be learned, it’s that state government, either through action or inaction, should not allow the power industry in this state to do what BP did to the Gulf of Mexico and the residents and businesses that depend on its water quality. If there is a lesson to be learned, it is that the Duke debacle goes beyond a move by Duke to hire away the IURC’s Scott Storms in a controversial move that led to disciplinary action at Duke and in state government.

It’s time for investor-owned utilities in the state to be required to own up to their own mistakes, and for state government to unplug their power to punish consumers for their own mistakes.

Dave Kitchell is a columnist for the Pharos-Tribune. He can be reached at ptnews@pharostribune.com.