On January 4, 2023, the Indiana Supreme Court affirmed the Indiana Utility Regulatory Commission’s (“IURC”) approval of Southern Indiana Gas & Electric Company’s (“Vectren”) new instantaneous netting method (“Rider EDG”) of determining the amount of credit Vectren customers receive for their excess distributed generation of electricity, overruling the Indiana Court of Appeals. The central issue before the Court was whether the IURC’s approval of Vectren’s Rider EDG satisfied the requirements of I.C. 8-1-40-5, which defines excess distributed generation as “the difference between: (1) the electricity that is supplied by an electricity supplier to a customer that produces distributed generation; and (2) the electricity that is supplied back the electricity supplier by the customer.” I.C. 8-1-40-5. Once that difference is calculated, utility companies are required to compensate distributed generation customers (“DG customers”) 125% of the wholesale price of the customer’s excess distributed generation. Ind. Office of Utility Consumer Counselor v. Southern Indiana Gas & Electric Co., 22S-EX-00166 at 8 (Ind. 2023) (citing I.C. 8-1-40-17).
Under the Rider EDG, the difference between electricity supplied by DG customers to Vectren and the electricity supplied by Vectren to DG customers is measured almost instantaneously. In reversing the IURC’s approval of the Rider EDG, the Indiana Court of Appeals determined that the Rider EDG “focuses and assigns credit based only on the outflow of electricity from the customer to the utility rather than the specific difference between inflow and outflow proscribed by the statute,” and reasoned that “a longer period to find the difference between inflow and outflow was more beneficial to the DG customers.” Southern Indiana Gas & Electric Co., 22S-EX-00166 at 5 (internal citation omitted). The Indiana Supreme Court disagreed, noting that I.C. 8-1-40-5 neither “direct[s] utilities on how often excess distributed generation must be measured” or “mandate[s] a specific time when the difference between inflow and outflow must be measured.” Id. at 8. Rather, the court found that Vectren’s meters “are perpetually and instantaneously finding the difference between the inflow of power to the customer and outflow of power to the utility company,” which the court found to satisfy the two components of I.C. 8-1-40-5. Id. Therefore, the court held that the IURC’s approval of Vectren’s Rider EDG was proper and not contrary to the requirements of I.C. 8-1-40-5.
Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.
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