Indiana Supreme Court: Duke can't make customers pay $212 million to clean up coal ash

Indiana’s biggest utility can’t make its customers pay more than $200 million in costs related to cleaning up its toxic coal ash, according to a ruling Thursday from the Indiana Supreme Court.

That’s because Duke Energy did not follow the correct process to do so, the Court said.

Much of Duke’s electricity comes from burning coal, which produces coal ash. This ash contains a dangerous mix of heavy metals and toxic chemicals such as arsenic, boron, lead and mercury. Sampling shows these toxins have been leaching into groundwater near sites around Indiana where the ash was dumped.

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In 2019, Duke asked the state’s utility regulators to increase its rates. Part of that hike was to recover roughly $212 million the utility had spent since 2010 to close and remediate some of its coal ash ponds across the state.

The Indiana Utility Regulatory Commission said yes, and it was later backed up by the Indiana Court of Appeals. But a split panel of the state’s highest court reversed that decision with it’s Thursday order.

“The portion of the commission’s June 2020 order relating to coal ash costs … is unlawful,” as written in the ruling.

In a statement to IndyStar, Duke said it is reviewing the Court’s decision.

Indiana has a law that allows utilities to recover costs that are the result of changes in federal regulations. This would apply, as the federal government established a new rule in 2015 to require cleaning up coal ash and the contamination it’s caused.

Indiana’s statute also has been used to recover costs related to complying with rules on mercury emissions and other environmental standards. The law requires utilities to get prior approval for those expenses.

But Duke didn’t do that.

“Had Duke properly sought recourse under Indiana’s federal mandate statute,” the Court order said, “the result may have been different.”

Instead, what Duke did was seen as what’s called retroactive ratemaking — which is against the law.

Utilities are allowed to recover past costs only in very specific and unforeseen circumstances. For example, if a powerline went down or a transformer exploded, the utility could ask to recover the costs of fixing those problems in its next rate case.

“There are certain things utilities can seek to recover retroactively, but this isn’t one of them,” said Kerwin Olson, executive director of the consumer advocacy group Citizens Action Coalition. “If they want to get their money back, there is a process they should have followed to get pre-approval.”

Duke did not comment on why it did not follow the process laid out in Indiana’s code.

With its ruling, the Supreme Court justices are sending this case back to the regulatory commission.

Olson said it’s hard to comment on what will happen from there. Still, he knows what he thinks should happen with the $212 million in question, which customers are already paying in their rates.

“Common sense says this money should come out of rates immediately and any portion already collected should be refunded to customers,” he told IndyStar. “That’s what should happen, but it’s never that simple. So we'll just have to wait and see.”

It’s unclear when these proceedings will begin, but Duke said there is no immediate impact for customers at this time.

Call IndyStar reporter Sarah Bowman at 317-444-6129 or email at sarah.bowman@indystar.com. Follow her on Twitter and Facebook: @IndyStarSarah. Connect with IndyStar’s environmental reporters: Join The Scrub on Facebook.

IndyStar's environmental reporting project is made possible through the generous support of the nonprofit Nina Mason Pulliam Charitable Trust.

This article originally appeared on Indianapolis Star: Court: Duke Energy can't make customers pay $212M to clean up coal ash