Pursuant to Ind.Appellate Rule 65(D),
this Memorandum Decision shall not be
regarded as precedent or cited before
any court except for the purpose of                            Mar 19 2014, 9:21 am
establishing the defense of res judicata,
collateral estoppel, or the law of the case.




ATTORNEYS FOR APPELLANTS:                      ATTORNEYS FOR APPELLEE:
                                               DUKE ENERGY INDIANA, INC.:
J. DAVID AGNEW
Lorch Naville Ward, LLC                        JON LARAMORE
New Albany, Indiana                            JANE DALL WILSON
                                               Faegre Baker Daniels LLP
MICHAEL A. MULLETT                             Indianapolis, Indiana
Mullett & Associates
Columbus, Indiana                              KELLEY A. KARN
                                               ELIZABETH HERRIMAN
JENNIFER A. WASHBURN                           Duke Energy Indiana, INC.
Citizens Action Coalition of Indiana, INC.     Plainfield, Indiana
Indianapolis, Indiana

JEROME POLK                                    ATTORNEYS FOR APPELLEE:
Polk & Associates, LLC                         INDIANA OFFICE OF UTILITY
Davie, Florida                                 CONSUMER COUNSELOR:

                                               A. DAVID STIPPLER
                                               LORRAINE HITZ-BRADLEY
                                               RANDALL C. HELMEN
                                               Indianapolis, Indiana


                                               ATTORNEYS FOR APPELLEE:
                                               DUKE ENERGY INDIANA
                                               INDUSTRIAL GROUP:

                                               TODD A. RICHARDSON
                                               TIMOTHY L. STEWART
                                               JOSEPH P. ROMPALA
                                               TABITHA L. BALZER
                                               Lewis & Kappes, P.C.
                                               Indianapolis, Indiana
    ATTORNEYS FOR APPELLEE:
    INDIANA UTILITY REGULATORY
    COMMISSION:
    DAVID LEE STEINER
    Deputy Attorney General
    Indianapolis, Indiana

    BETH KROGEL ROADS
    Assistant General Counsel
    Indiana Utility Regulatory Commission
    Indianapolis, Indiana


    BRIEF OF AMICI CURIAE:
    ACLU OF INDIANA, COMMON
    CAUSE INDIANA, HOOSIERS
    FIRST, LEAGUE OF WOMEN
    VOTERS OF INDIANA, SAVE
    MAUMEE GRASSROOTS
    ORGANIZATION, INC., AND
    UNITED SENIOR ACTION, INC. IN
    SUPPORT OF APPELLANTS:

    GAVIN M. ROSE
    ACLU of Indiana
    Indianapolis, Indiana


    BRIEF OF PROPOSED AMICI
    CURIAE IN SUPPORT OF
    APPELLANTS:

    ROSEMARY G. SPALDING
    Spalding & Hilmes, PC
    Indianapolis, Indiana

    BRIDGET M. LEE
    Earthjustice
    New York, New York




2
                           IN THE
                 COURT OF APPEALS OF INDIANA

CITIZENS ACTION COALITION OF            )
INDIANA, INC., SAVE THE VALLEY, INC.,   )
SIERRA CLUB, AND VALLEY WATCH, INC.,    )
      Appellants-Respondents,           )
                                        )
           vs.                          )   No. 93A02-1301-EX-76
                                        )
DUKE ENERGY INDIANA, INC.,              )
     Appellee-Petitioner,               )
                                        )
INDIANA OFFICE OF UTILITY CONSUMER      )
COUNSELOR, STEEL DYNAMICS, INC.,        )
NUCOR STEEL—INDIANA, CHRYSLER           )
GROUP, LLC, USG CORPORATION,            )
     Appellees-Respondents              )
                                        )
DUKE ENERGY INDIANA INDUSTRIAL          )
GROUP,                                  )
     Appellee-Intervenor                )
                                        )
INDIANA UTILITY REGULATORY              )
COMMISSION,                             )
     Appellee.                          )


       APPEAL FROM THE INDIANA UTILITY REGULATORY COMMISSION
                        James D. Atterholt, Chairman
                      Kari A.E. Bennett, Commissioner
                       Larry S. Landis, Commissioner
                       Carolene Mays, Commissioner
                      David E. Ziegner, Commissioner
                  David E. Veleta, Administrative Law Judge
                          Cause No. 43114-IGCC-4
                         Cause No. 43114-IGCC-4S1
                          Cause No. 43114-IGCC-5
                          Cause No. 43114-IGCC-6
                          Cause No. 43114-IGCC-7
                          Cause No. 43114-IGCC-8

                                   3
                                              March 19, 2014

                    MEMORANDUM DECISION - NOT FOR PUBLICATION

BAILEY, Judge


                                              Case Summary

          Citizens Action Coalition of Indiana, Inc., Save the Valley, Inc., Sierra Club, Inc., and

Valley Watch, Inc. (collectively, “Interveners”) appeal orders of the Indiana Utility

Regulatory Commission (“the Commission”) related to power plant construction costs

incurred by Duke Energy Indiana, Inc. (“Duke”) and a settlement agreement executed by

Duke, the Duke Energy Indiana Industrial Group,1 Nucor Steel, and the Office of the Utility

Consumer Counselor (the “OUCC”)2 (collectively, “Settling Parties”), adopted as modified

by the Commission (“the Modified Settlement Agreement”). One appealed order approves

the settlement, as modified, and four others implement it. We affirm.

                                                     Issue

          Interveners seek to have the Modified Settlement Agreement vacated. They claim that

the Commission acted contrary to law3 by approving the Modified Settlement Agreement

upon finding it to be reasonable and in the public interest, although:


1
    This entity is comprised of multiple Duke Energy Indiana consumers.

2
 The OUCC is a state agency charged with representing the interests of ratepayers, consumers, and the public
in actions before the Commission, the Department of State Revenue, the Indiana Department of Transportation,
courts, and federal agencies pursuant to Indiana Code chapter 8-1-1.1.

3
 To a significant degree, the nattering of issues fails to include language adhering to the tightly circumscribed
parameters for appellate review of an agency decision. Interveners suggest that we may reverse the

                                                       4
        The Commission did not contemporaneously order Duke to reduce carbon
        emissions from the power plant;

        The Commission denied a request for a subdocket to address allegations of
        ethical impropriety occurring in a pre-settlement phase of the proceedings;

        Interveners were denied periodic reports from an engineering consultant
        overseeing construction of the power plant;

        The Commission denied Interveners’ motions to dismiss the settlement on
        grounds of insufficiency of the evidence as to the reasonableness of attorney’s
        fees payable by Duke shareholders; and

        Interveners had asserted that a more precise division of costs between
        ratepayers and Duke shareholders could be achieved, relieving ratepayers of
        liability for imprudently incurred construction costs4 and requiring Duke to
        account for collection of deferred taxes from ratepayers in calculating an
        allowance for funds used during construction (“AFUDC”).

                                   Facts and Procedural History

        On November 20, 2007, the Commission issued Certificates of Public Convenience

and Necessity (“CPCN”), approving the cost estimate of $1.985 billion to build an integrated

coal gasification combined cycle generating facility in Edwardsport, Indiana (“the IGCC

Project”). The construction and operating costs were recoverable from ratepayers. The

relevant facts regarding the issuance of the CPCNs were summarized in Citizens Action

Coalition v. PSI Energy, 894 N.E.2d 1055, 1059-60 (Ind. Ct. App. 2008), reh’g denied:

        On September 7, 2006, Duke and Southern Indiana Gas and Electric Company,
        d/b/a Vectren Energy Delivery of Indiana, Inc. (“Vectren”) filed a petition with
        the Commission seeking approval to build an integrated gasification combined
        cycle (“IGCC”) electric power plant at Duke’s Edwardsport facility in Knox


Commission’s order approving settlement if Interveners establish any irregularity in the proceedings. We
consolidate and restate Interveners’ issues in accordance with Indiana Code section 8-1-3-1.
4
  According to Indiana Code section 8-1-8.5-6.5, actual construction costs may be disallowed upon finding of
fraud, concealment, or gross mismanagement. Subsection (2) provides that recovery of costs from the
ratepayers above a pre-approved level can occur only if the costs were prudent.

                                                     5
          County, Indiana. Duke operated a coal and oil-fired generating station at the
          Edwardsport facility that had a total of 160 megawatt capacity, was placed in
          service between 1944 and 1951, and was nearing the end of its useful
          economic life. The proposed IGCC facility would have a 630 megawatt
          capacity. An IGCC generating facility converts coal into synthesis gas, which
          is used to fuel highly efficient combustion turbines. The IGCC technology is a
          cleaner and more efficient way of producing electricity than conventional coal-
          fired plants.

          Before constructing an electric generating facility in Indiana, public utilities
          must obtain a Certificate of Public Convenience and Necessity under Ind.
          Code §§ 8-1-8.5. Additionally, under Ind. Code §§ 8-1-8.7, a public utility
          may not use clean coal technology, such as IGCC, at a new or existing facility
          without obtaining a Certificate of Public Convenience and Necessity.

          Duke’s petition also sought, in part, to obtain certain financial incentives
          authorized under Ind. Code §§ 8-8-8.8 for a clean coal and energy project,5
          such as “[t]he timely recovery of costs incurred during construction and
          operation” of the project. Ind. Code § 8-1-8.8-11(a)(1).



5
    Ind. Code § 8-1-8.8-2 defines “clean coal and energy projects” as any of the following:
       (1) Any of the following projects:

          (A)       Projects at new energy production or generating facilities that employ the use of clean coal
                technology and that produce energy, including substitute natural gas, primarily from coal or gases,
                derived from coal from the geological formation known as the Illinois Basin.

          (B)       Projects to provide advanced technologies that reduce regulated air emissions from existing
                energy production or generating plants that are fueled primarily by coal or gases from coal from
                the geological formation known as the Illinois Basin, such as flue gas desulfurization and selective
                catalytic reduction equipment.

          (C)      Projects to provide electric transmission facilities to serve a new energy production or
                generating facility.

          (D)       Projects that produce substitute natural gas from Indiana coal by construction and operation of
                a coal gasification facility.

      (2) Projects to develop alternative energy sources, including renewable energy projects and coal
          gasification facilities.

      (3) The purchase of fuels produced by a coal gasification facility.

      (4) Projects described in subdivisions (1) through (3) that use coal bed methane.

                                                          6
          Pursuant to statute, the Indiana Office of Utility Consumer Counselor
          participated in the proceedings before the Commission. See Ind. Code §§ 8-1-
          1.1. Additionally, the Indiana Industrial Group, Nucor Steel, the Citizens
          Action Coalition of Indiana, Inc., Save the Valley, Inc., Valley Watch, Inc., the
          Sierra Club, the Indiana Wildlife Federation, the Clean Air Task Force, and the
          Indiana Coal Council intervened in the action.

          Extensive amounts of evidence were presented to the Commission, and an
          evidentiary hearing was held in June 2007. . . . On November 20, 2007, the
          Commission issued a sixty-three page order granting Duke’s petition for
          Certificates of Public Convenience and Necessity for the Edwardsport IGCC
          facility. The Commission also ordered that Duke was entitled to “timely
          recovery of its construction, operating and maintenance costs incurred in
          connection with the IGCC Project…” [Appellant’s Appendix] at 82.

This Court affirmed the Commission’s CPCN Order approving the cost estimate of $1.985

billion. Id. at 1070.

          On June 3, 2008, the Commission issued an order providing that its review of the

IGCC Project would be conducted first by the introduction and consideration of evidence

presented in semi-annual IGCC Rider proceedings6 and second, through independent

engineering oversight of the Project. The Commission ordered Duke to retain the services of

Black & Veatch Corporation (“Black & Veatch”) “[i]n order to facilitate the Commission’s

continuing oversight of the Edwardsport Project that falls outside the parameters [of the]

IGCC Rider proceedings.” IURC App. 2.

          On January 7, 2009, the Commission issued an order in IURC Cause No. 43114IGCC-

1 (“IGCC-1”) approving an increase in the cost estimate from $1.985 billion to $2.35 billion.7


6
    Indiana Code section 8-1-8.8-11 allows timely recovery of costs, for which “Rider” proceedings are used.

7
  This order was not appealed. The $2.35 billion cost estimate included $2.225 billion in estimated
construction costs and $125 million in estimated Allowance for Funds Used During Construction (“AFUDC”).
AFUDC are financing costs that the utility accrues during construction or until the construction and financing

                                                      7
On November 3, 2008, Duke filed a semi-annual IGCC Rider proceeding for cost recovery,

IURC Cause No. 43114IGCC-2 (“IGCC-2”). On May 13, 2009, the Commission approved

the petition. On May 1, 2009, Duke filed its petition in IURC Cause No. 43114IGCC-3

(“IGCC-3”); this was approved on December 2, 2009.

        On November 24, 2009, Duke filed a petition that included its semi-annual IGCC rider

proceeding for cost recovery, IURC Cause No. 43114IGCC-4 (“IGCC-4”), and, in a

subdocket proceeding, a request to review a revised cost estimate for the IGCC Project,

IURC Cause No. 43114IGCC-4S1 (“IGCC-4S1”). The subdocket was bifurcated: Phase I

was to address Duke’s IGCC-4 progress report, the increased cost estimate for the IGCC

Project, and the continued need and reasonableness of going forward with the IGCC Project;

and Phase II was to address allegations of fraud, concealment, and gross mismanagement

with regard to the IGCC Project.

        On September 17, 2010, the Settling Parties (excluding Nucor Steel) submitted a

settlement agreement to the Commission in IGCC-4S1. The settlement agreement set a hard

cap of $2.975 billion on the construction costs of the IGCC Project. Subsequently, amidst an

ethics scandal, the settlement agreement was withdrawn.

        After the Commission conducted and concluded extensive evidentiary hearings, the

Settling Parties (then expanded to include Nucor Steel) filed a petition to reopen the record

and submit a second settlement agreement. Additional testimony was presented at a four-day




costs are included in rates either through the IGCC Rider or through a rate case.

                                                     8
settlement hearing. On December 27, 2012, the Commission approved the settlement with

some modification.

        The Modified Settlement Agreement included a $2.595 billion hard cap for

construction costs (to be included in rates over a thirty-year period), $380 million less than

that of the first settlement agreement. The total was inclusive of $2.319 billion of “direct

costs” and approximately $276 million “in AFUDC as of June 30, 2012.” (Tr. 34,228.)

After June 30, 2012, AFUDC would “grow at approximately 9 to 10 million per month …

until [construction while in progress financing charges] are put into effect.” (Tr. 34,228.)

Additional terms include:

        Duke may not recover construction costs from ratepayers above the hard cost
        cap, unless a force majeure situation occurs;

        The construction costs up to the hard cap are deemed reasonable and
        necessary;

        The construction costs would not be reduced below the hard cap because of
        issues related to imprudence, fraud, concealment, or gross mismanagement, or
        concerning ex parte communications, improper conduct, undue influence,
        appearances of impropriety, or related issues;

        Duke agreed not to file a retail electric rate case prior to March of 2013, with
        no increase to the base rates implemented prior to April 1, 2014;

        Duke’s depreciation rates8 for non-IGCC plant and equipment were to be
        updated to result in savings to retail customers of $35 million annually;

        Duke was to prospectively include deferred taxes in the capital structure used
        in its IGCC Rider;9

8
 Wes Blakley of the OUCC testified that depreciation expenses are often referred to as “return of” investment.
(Tr. 35,222.) New depreciation rates are “normally” instituted only at the time of a rate case. (Tr. 5,223.)

9
 This represents a return to “traditional ratemaking.” (Tr. 34,695.) As summarized by Duke’s accountant,
Danny Wiles: “Standard ratemaking practice in Indiana is for deferred tax liabilities to be included as a zero-

                                                      9
        Ratepayers were to receive 100% of the retail jurisdictional share of any IGCC
        Project-specific funding received as incentive tax credits and property tax
        credits; and

        Duke was to pay from shareholder funds: $13.5 million to Settling Parties for
        attorney’s fees and litigation expenses, $2 million to the Indiana Utility
        Ratepayer Trust, $3.5 million to the Indiana Low Income Home Energy
        Assistance Program, and $1 million to establish a fund to develop a clean
        energy initiative.

(App. 246 – 251.)

        With Duke having continued to make semi-annual IGCC Rider filings pending the

settlement, the Commission determined that IURC Cause No. 43114IGCC-5 (“IGCC-5”) and

IURC Cause No. 43114IGCC-6 (“IGCC-6”) would be considered as part of the

Commission’s review under the subdocket proceedings in IGCC-4S1. Duke subsequently

filed semi-annual IGCC Rider filings in IURC Cause Nos. 43114IGCC-7 (“IGCC-7”) and

43114IGCC-8 (“IGCC-8”). On the same day it issued its Final Order in the IGCC-4S1

subdocket, the Commission issued orders in IGCC-5, IGCC-6, IGCC-7, and IGCC-8,

implementing the Modified Settlement Agreement approved in the Final Order in IGCC-4S1.

        The Edwardsport plant began commercial operations in 2013. Ultimately, the

approved cost was $2.88 billion.




cost component of the capital structure, which mathematically reduces the equity percentage of the capital
structure when compared to a scenario where deferred income taxes are not included in the capital structure
calculations. However, deferred income tax balances are not included as components of rate base in Indiana.
For the IGCC rider, we were granted an incentive to exclude the Duke Energy Indiana deferred tax liabilities
when calculating the rate of return allowed in the rider. The effect was to increase the amount collected via the
rider, including the equity return component, from what it would have been under Indiana’s customary rate
calculations. As part of the IGCC settlement, we have agreed to forego the deferred tax incentive from future
increases to the IGCC rider.” (Tr. 34,571.)

                                                      10
       The Interveners filed Notices of Appeal to challenge orders in IGCC-4, IGCC-4S1,

IGCC-5, IGCC-6, IGCC-7, and IGCC-8. Duke’s petition to consolidate the appeals was

granted.

                                   Discussion and Decision

                                     Standard of Review

       The Commission was created by the Indiana General Assembly to act “primarily as a

fact-finding body with the technical expertise to administer the regulatory scheme devised by

the legislature.” Northern Ind. Public Serv. v. U.S. Steel, 907 N.E.2d 1012, 1015 (Ind.

2009). The Commission was assigned the responsibility “to insure that public utilities

provide constant, reliable, and efficient service to the citizens of Indiana.” Id.

       Indiana Code section 8-1-3-1 provides for judicial review of the Commission’s

decisions in language almost identical to provisions for judicial review of other

administrative agency actions:

       Any person, firm, association, corporation, limited liability company, city,
       town, or public utility adversely affected by any final decision, ruling, or order
       of the commission may, within thirty (30) days from the date of entry of such
       decision, ruling, or order, appeal to the court of appeals of Indiana for errors of
       law under the same terms and conditions as govern appeals in ordinary civil
       actions, except as otherwise provided in this chapter and with the right in the
       losing party or parties in the court of appeals to apply to the supreme court for
       a petition to transfer the cause to said supreme court as in other cases. An
       assignment of errors that the decision, ruling, or order of the commission is
       contrary to law shall be sufficient to present both the sufficiency of the facts
       found to sustain the decision, ruling, or order, and the sufficiency of the
       evidence to sustain the finding of facts upon which it was rendered.

       Our review is two-tiered:




                                               11
      On the first level, it requires a review of whether there is substantial evidence
      in light of the whole record to support the Commission’s findings of basic fact.
      Citizens Action Coalition of Ind., Inc. v. N. Ind. Pub. Serv. Co., 485 N.E.2d
      610, 612 (Ind. 1985). Such determinations of basic fact are reviewed under a
      substantial evidence standard, meaning the order will stand unless no
      substantial evidence supports it. McClain [v. Review Bd. of Ind. Dept. of
      Workforce Dev., 693 N.E.2d 1314, 1317-18 (Ind. 1998)]. In substantial
      evidence review, “the appellate court neither reweighs the evidence nor
      assesses the credibility of witnesses and considers only the evidence most
      favorable to the Board’s findings.” Id. The Commission’s order is conclusive
      and binding unless (1) the evidence on which the Commission based its
      findings was devoid of probative value; (2) the quantum of legitimate evidence
      was so proportionately meager as to lead to the conviction that the finding does
      not rest upon a rational basis; (3) the result of the hearing before the
      Commission was substantially influenced by improper considerations; (4) there
      was not substantial evidence supporting the findings of the Commission; (5)
      the order of the Commission is fraudulent, unreasonable, or arbitrary. Id. at
      1317 n. 2. This list of exceptions is not exclusive. Id.

      At the second level, the order must contain specific findings on all the factual
      determinations material to its ultimate conclusions. Citizens Action Coalition,
      485 N.E.2d at 612. McClain described the judicial task on this score as
      reviewing conclusions of ultimate facts for reasonableness, the deference of
      which is based on the amount of expertise exercised by the agency. McClain,
      693 N.E.2d at 1317-18. Insofar as the order involves a subject within the
      Commission’s special competence, courts should give it greater deference. Id.
      At 1318. If the subject is outside the Commission’s expertise, courts give it
      less deference. Id. In either case courts may examine the logic of inferences
      drawn and any rule of law that may drive the result. Id. Additionally, an
      agency action is always subject to review as contrary to law, but this
      constitutionally preserved review is limited to whether the Commission stayed
      within its jurisdiction and conformed to the statutory standard and legal
      principles involved in producing its decision, ruling, or order. Citizens Action
      Coalition, 485 N.E.2d at 612-13.

Northern Ind. Public Serv., 907 N.E.2d at 1016.

      Indiana law strongly favors settlement as a means of resolving contested proceedings.

See e.g., Manns v. State Dep’t of Highways, 541 N.E.2d 929, 932 (Ind. 1989). However, the

Commission “may not accept a settlement merely because the private parties are satisfied;

                                             12
rather [the Commission] must consider whether the public interest will be served by

accepting the settlement.” Citizens Action Coal. v. PSI Energy, 664 N.E.2d 401, 406 (Ind.

Ct. App. 1996).

        A regulatory settlement becomes effective when the Commission acts upon the

agreement. Northern Ind. Public Serv., 907 N.E.2d at 1017. An agreement between private

parties takes on public interest ramifications once the Commission has approved the

agreement. Id. “It is undisputed that the policies favoring settlement agreements are ‘further

enhanced’ when one of the parties proposing the settlement is the OUCC.” Nextel West

Corp. v. Indiana Utility Reg. Comm’n., 831 N.E.2d 134, 156 (Ind. Ct. App. 2005), trans.

denied. “Consumers that do not retain counsel to go before the Commission essentially have

two levels of protection: the Commission’s ‘watchdog role’ as an administrative agency and

the OUCC’s statutory role as a consumer representative in actions before the Commission.”

Id. at 155.

Here, the Commission approved a settlement agreement, with modifications, effectively

making the Modified Settlement Agreement an order of the Commission. Approval of the

settlement that allocated costs between utility investors and ratepayers required the

Commission to exercise its particular expertise.        As the action is “intrinsic to the

Commission’s regulation of utility rates,” we accord “a high level of deference, examining

the logic of the inferences made and the correctness of legal propositions without replacing

our own judgment for that of the Commission.” Northern Ind. Public Serv., 907 N.E.2d at

1018.


                                             13
                                 Carbon Dioxide Emissions

       Interveners requested modification of the CPCNs to include a requirement for

mitigation of carbon emissions. On appeal, Interveners claim that the Commission acted

contrary to law when it “fail[ed] to make any findings of fact or conclusions of law,

whatsoever, regarding mitigation of carbon dioxide emissions.” Appellants’ Brief at 80.

According to Interveners, the Commission accepted the Settling Parties’ “ostrich approach”

to global climate change and the role of carbon emissions, leaving ratepayers at financial risk

in the future. Appellants’ Brief at 81.

       In the prior appeal, this Court addressed the Interveners’ contention that the

Commission could not ascertain the true costs of the Edwardsport facility without estimating

future remediation costs:

       The next issue is whether the Commission adequately considered all known
       costs and estimates of future costs of the Edwardsport IGCC facility.
       Appellants argue that the Commission failed to consider future carbon
       regulations, the “extreme uncertainty of those costs,” and the “absence of a
       cost estimate for carbon capture and storage.” Appellants’ Brief at 27.
       According to Appellants, future carbon regulation will require additional
       investment in the Edwardsport IGCC facility and the carbon compliance costs
       should have been considered in determining whether IGCC was the preferred
       option.

       Extensive evidence was presented to the Commission by Duke, Appellants,
       and other interveners regarding possible future carbon regulations, carbon
       capture abilities of the proposed Edwardsport IGCC facility, possible future
       costs related to the carbon regulations, and options other than IGCC that were
       considered by Duke. Numerous findings and conclusions by the Commission
       address the carbon issues. … In particular, the Commission noted:

                     With respect to our consideration of issues regarding the forecast
              of CO2 emission allowance prices we find that Duke Energy Indiana
              effectively utilized various scenarios that analyzed the impact of

                                              14
             possible future carbon regulation. While there was almost uniform
             agreement in this proceeding that CO2 emissions will be regulated in
             the future, these emissions are not regulated today. Therefore, the
             Commission cannot assume or reasonably speculate in this proceeding
             regarding what, if any action, the U.S. Congress may ultimately take
             with respect to carbon regulation. Therefore, we find that [Duke’s]
             analysis of potential future CO2 emission allowance prices is
             reasonable as it strikes an appropriate balance with respect to
             alternative scenarios that may be applicable to the future regulation of
             carbon emissions.

      [Appellants’ App.] at 50. The Commission recognized that uncertainties exist
      regarding carbon capture and sequestration and ordered Duke to “continue its
      efforts to prepare for a future in which carbon is regulated.” Id. at 67, 83.

      Appellants do not challenge any particular finding or conclusion. Rather,
      Appellants focus on speculation concerning future carbon regulations and on a
      broad policy assessment that the Edwardsport IGCC facility should be delayed
      until future carbon regulations are known. Appellants’ argument is merely a
      request that we substitute our judgment for that of the Commission.

      The Commission recognized that Duke had considered several options in
      providing electricity in the future for its customers and that Duke “reasonably
      concluded that the IGCC project will be a more reliable supply resource than
      wind for addressing baseload capacity need.” Id. at 42. Such complex
      evidentiary issues and policy determinations are better decided by an agency
      with technical expertise than this court. See PSI Energy, Inc. v. Ind. Office of
      Util. Consumer Counsel, 764 N.E.2d 769, 773 (Ind. Ct. App. 2002) (“Basic
      findings of fact are important because they enlighten the reviewing court as to
      the agency’s ‘reasoning process and subtle policy judgments’ and allow for ‘a
      rational and informed basis for review,’ which lessens the likelihood that a
      reviewing court would substitute its ‘judgment on complex evidentiary issues
      and policy determinations’ better decided by an agency with technical
      expertise.”), reh’g denied, trans. denied. The Commission’s findings and
      conclusions on this issue are not clearly erroneous.

Citizens Action Coalition, 894 N.E.2d at 1065-66. Having failed to delay the IGCC Project

by asserting the need to ascertain carbon emissions costs, Interveners renewed their

generalized expressions of concern about the risk of future costs to ratepayers. However,



                                            15
their argument is not confined to costs or the impact upon ratemaking. To the extent that

Interveners suggest the Commission should issue a specific order to reduce carbon emissions,

they do not identify the authority by which the Commission – which is not an environmental

regulatory agency – could do so. Amici10 simply ask that we revisit the issue of “actual

project cost” and urge that we order the development of a carbon emission mitigation plan.

Earthjustice Brief at 23. They contend that there is a growing consensus that utilities must

address climate change.

        Douglas Esamann, President of Duke, testified in relevant part:

        [W]e are mindful of the additional costs that would be required to implement
        CCS [carbon capture and sequestration] at this time. Given that there are no
        current regulations or legislation requiring CCS at Edwardsport, there is no
        carbon tax, and there is no mandated participation in a carbon emissions
        allowance market, there is no reason to move forward with CCS
        implementation at this time. In addition, by deferring any potential
        implementation plans, we can preserve the ability to incorporate any
        advancements in technology that may occur in the future (if some form of CO2
        mitigation becomes required by regulation or legislation), which would benefit
        customers. The evidence of record shows that the Project is well-positioned to
        deal with CO2 regulations that might be required in the future … The
        necessary space to install carbon capture is available, we have completed a
        preliminary study concerning carbon capture on the Project, and we have a
        plan pending for the study of various storage options, including enhanced oil
        recovery or carbon sequestration[.]

(Tr. 34,797-98.)

        Interveners readily admit that, at this time, no federal law mandates that the

Commission order carbon mitigation at the Edwardsport facility. Too, they point to no



10
  This group is comprised of Citizens Coal Council, Earth Charter Indiana, Healthy Dubois County, Inc., the
Hoosier Environmental Council, Hoosier Interfaith Power & Light, Indiana Distributed Energy Alliance, and
the Indiana State Conference of the National Association for the Advancement of Colored People.

                                                    16
Indiana statute requiring that an electric utility include carbon emissions costs in its resource

planning analysis or otherwise evaluate risks associated with future carbon regulation.11

Moreover, as we have previously acknowledged, the Commission is the agency with the

requisite technical expertise in the area of ratemaking and its customary components. The

potential economic effect of evolving emissions mitigation regulations is a factor for

consideration if the Commission chooses, but there is no statutory mandate.

        We are not persuaded that the Commission was derelict in its statutory duties when it

declined to revisit the issue of potential future costs of carbon emissions at the Edwardsport

plant. Nor can the settlement be considered contrary to law because it does not incorporate

anticipated changes in the law. To the extent that Interveners or Amici believe that an

immediate change in the law is appropriate, such concerns are more properly directed to the

legislative branch of government.

                                        Ethical Considerations

        Interveners unsuccessfully sought to open an additional subdocket. On appeal, they

argue that the Commission had a duty to independently investigate, and hear evidence upon,

pre-settlement improprieties. Interveners suggest that a proper inquiry by the Commission

would have resulted in severe sanctions and presumably rejection of the Modified Settlement

Agreement.



11
  The OUCC had once advocated that Duke perform studies on carbon capture and sequestration at the IGCC
project. However, “further carbon sequestration analysis revealed that the Edwardsport site itself was not
conducive to carbon storage and that the carbon would need to be transported approximately 50 miles, thus
adding significant costs.” (Tr. 35,079.) In the opinion of Barbara Smith, Director of the Resource Planning
and Communication Division of the OUCC, ratepayers should not be expected to assume such costs.

                                                    17
       Until September of 2010, Scott Storms (“Storms”), the Commission’s Chief

Administrative Law Judge, was the administrative law judge assigned to Duke’s IGCC

Project proceedings. David Lott Hardy (“Hardy”) was the Chairman of the Commission.

       On September 27, 2010, Storms accepted employment with Duke. On October 5,

2010, Governor Mitch Daniels fired Hardy for allowing Storms to remain as the

administrative law judge on proceedings involving Duke at the same time Storms was

negotiating for a position with Duke. See Duke Energy Indiana, Inc. v. Office of Utility

Consumer Counselor, 983 N.E.2d 160, 165 (Ind. Ct. App. 2012). On November 9, 2010,

Duke terminated Storms’ employment, and the employment of Michael Reed, then president

of Duke Energy Indiana and a former Executive Director of the Commission. Jim Turner,

then vice president of Duke’s parent company, resigned due to inappropriate emails between

himself and Hardy.12

       The Inspector General and the State Ethics Commission investigated the allegations of

ethics violations regarding Storms and Hardy. The State Ethics Commission ultimately

found that Storms had violated state ethics law, banned him from state employment, and

assessed a penalty against him in the amount of $12,120. Final Order of Ind. State Ethics

Comm’n, Case No. 2010-09-0233 (May 12, 2011), aff’d, Storms v. Ind. State Ethics

Comm’n, Marion County Superior Court, Cause No. 49D03-1106-PL-022823 (Jan. 25,




12
  Duke executives had meetings and exchanged e-mails with Hardy, some of which discussed the Edwardsport
project.


                                                  18
2012). Felony charges were lodged against Hardy and dismissed. The State appealed the

dismissal, and the appeal is pending.13

          The Commission conducted an audit of each ruling by Storms in each Duke case over

which he presided. The Commission concluded that there were no anomalies in any IGCC

proceeding dating back to 2006.

          The Interveners fault the Commission for refusing to allow the introduction of

evidence of the above-referenced ethical considerations in the IGCC Project rider

proceedings.         Interveners implicitly argue that Hardy’s and Storms’ involvement in

proceedings while Storms sought employment with Duke ultimately impacted upon costs

allocated to ratepayers in the approved settlement.14

          Despite substantiation of improprieties prior to submission of the first settlement,

Hardy and Storms had no involvement in the 2012 Modified Agreed Settlement. As we have

13
     Appellate Cause No. 49A02-1309-CR-756.

Also, on February 3, 2014, the Indiana Supreme Court Disciplinary Commission issued a public reprimand of
Storms for a violation of Indiana Professional Conduct Rule 1.11(d), which provides that a lawyer currently
serving as a public officer or employee shall not negotiate for private employment with a person involved as a
party in a matter in which the lawyer is participating personally and substantially.
14
   Indiana Code section 4-2-6-9(a), regarding conflict of economic interest, provides:
A state officer, an employee, or a special state appointee may not participate in any decision or vote if the state
officer, employee, or special state appointee has knowledge that any of the following has a financial interest in
the outcome of the matter:
     (1) The state officer, employee, or special state appointee.

      (2) A member of the immediate family of the state officer, employee, or special state appointee.

      (3) A business organization in which the state officer, employee, or special state appointee is serving as an
          officer, a director, a trustee, a partner, or an employee.

      (4) Any person or organization with whom the state officer, employee, or special state appointee is
          negotiating or has an arrangement concerning prospective employment.

However, Interveners do not provide authority for the proposition that disallowance of costs of the IGCC
Project or cancellation of the Project are appropriate remedies for an ethical violation by a State employee.

                                                        19
already observed, the 2010 settlement was withdrawn when allegations of improprieties

surfaced. A second settlement was negotiated – without input from either Hardy or Storms –

and that agreed settlement formed the basis for the Modified Agreed Settlement that

determined what costs were to be borne by ratepayers. After submission of the second

settlement agreement, four days of hearings were conducted; these hearings were conducted

nearly two years after Storms’ departure.

        The Interveners have succinctly described the relief they seek as an order that the

Commission “conduct further proceedings required to replace those [tainted] decisions.”

Interveners’ Reply Brief at 21. However, further proceedings were conducted after the ethics

scandal erupted. An internal audit was completed. Negotiations were resumed, and several

days of contested proceedings were conducted by the Commission. Ultimately, these efforts

resulted in the Modified Agreed Settlement approved by the Commission. Interveners

challenge this approval by characterizing the settlement as tainted, in an effort to set aside the

same. In short, Interveners seek nullification of the Modified Agreed Settlement without

establishing that the approval was contrary to law.

        In addition to the internal audit, the allegations of ethical violations and criminal

conduct were dealt with by other entities having responsibilities for such.15 The Commission

did not shirk its statutorily-conferred duty to the ratepayers by refusing the submission of




 See Ghosh v. Ind. State Ethics Comm’n., 930 N.E.2d 23, 28 (Ind. 2010) (recognizing that jurisdiction lies
15

with the Indiana State Ethics Commission to rule on termination of state employees for ethics violations).


                                                   20
evidence relevant to collateral proceedings but irrelevant to the settlement challenged on

appeal.16



                                    Reports from Black & Veatch

        Interveners contend that they were entitled to be provided with monthly reports from

engineering firm Black & Veatch and that ultimately, the Commission’s reliance upon

reports not shared with Interveners denied Interveners due process rights to a neutral fact-

finder and to cross-examine witnesses and inspect documents relied upon by the Commission

in reaching its determination of reasonableness.

        Indiana Code section 8-1-1-5(a) provides:

        The commission shall in all controversial proceedings heard by it be an
        impartial fact-finding body and shall make its orders in such cases upon the
        facts impartially found by it. The commission shall in no such proceeding,
        during the hearing, act in the role either of a proponent or opponent on any
        issue to be decided by it. All evidence given in any such proceeding shall be
        offered on behalf of the respective parties to, or appearing in, the proceeding
        and not in the name or behalf of the commission itself.

        Accordingly, “[t]he Commission cannot act in the role either of a proponent or

opponent on any issue to be decided by it.” Duke Energy, 983 N.E.2d at 164. Moreover, in a

rate proceeding, the Commission is not to act upon its own independent information, “but

16
  We observe that the Commission decision, following an audit, to reopen proceedings in another Duke matter
over which Storms presided, see Duke Energy 983 N.E.2d at 160, does not obligate the Commission to do so
in each instance. There, the Commission had noted that the particular case “was the only proceeding during
2010 in which an appeal to the Court of Appeals was pursued by one of the parties.” Id. at 167. Updated
evidence was presented and the case was re-examined on its merits. Duke, on appeal, claimed that the
Commission had acted arbitrarily and capriciously by looking twice at “materially the same evidentiary record”
and reaching different decisions “without giving any reason for the change.” Id. at 169. This Court affirmed
the order on appeal. Id. at 172. Here, by contrast, there was a new submission in the form of a new settlement
agreement. This second settlement agreement was not a product of Storms’ prior service as an administrative
law judge and was independently reviewed.

                                                     21
must base its findings upon evidence presented in the case, in which opportunity has been

given to cross-examine witnesses, to inspect documents or exhibits, and to offer evidence in

explanation or rebuttal, and nothing which has not been introduced as evidence can be treated

as evidence.” Public Serv. Commission of Ind. v. Indiana Bell Telephone Co., 130 N.E.2d

467, 235 Ind. 1 (1955). Thus, Interveners correctly claim that they are to be accorded an

opportunity to challenge evidence offered by a party in controversial proceedings before the

Commission.

       However, Interveners’ claim of deprivation is premised upon the assumption that the

Commission relied upon the Black & Veatch reports as evidence pertinent to the

Commission’s task of ascertaining whether the proffered settlement was reasonable and in

the public interest. The assumption is not well-founded. The record indicates that Black &

Veatch was contracted to provide Project oversight “that falls outside the parameters [of the]

IGCC[1] Rider proceedings.” (Commission App. at 2.) (emphasis added). This June 3, 2008

order appointing the engineering firm for the purpose of providing construction oversight and

status reports was not appealed. Additionally, Interveners point to no portion of the orders

now on appeal that indicate the Commission made a finding of fact or conclusion based upon

information provided by Black & Veatch.

       In short, Black & Veatch reports were not offered by a respective party in

controversial proceedings regarding the Modified Agreed Settlement, nor is there any

indication that the Commission in any way considered these reports in contravention of its

statutory duties.


                                             22
                                                 Attorney’s Fees

        The Modified Agreed Settlement provided for the payment by Duke of substantial

attorney’s fees.17 Interveners moved to dismiss the settlement on grounds of insufficiency of

the evidence as to reasonableness of the fees. They now complain of the absence of a break-

down of hourly rates and hours expended, and suggest that an absence of scrutiny by the

Commission could foster a risk of collusion and ultimately, a detrimental effect upon

ratepayers.18

        In general, when a settlement under consideration by the Commission includes

attorney’s fees, the Commission will review the agreement for attorney’s fees under a

reasonableness standard. Citizens Action Coalition, 664 N.E.2d at 406. Here, however, the

Commission observed that the fees were not payable by ratepayers, there was no evidence of

bad faith in negotiations, and no credible evidence suggested that the settlement value was

compromised by the obligation to be borne by the shareholders:

        The sums provided for in provision 9 of the Settlement Agreement are to be
        paid by Duke from shareholders’ funds, and therefore represent financial
        commitments to be borne solely by the Company, separate and apart from the
        rate and regulatory provisions in the Settlement Agreement. The Non-Settling
        Parties object to this term of the Settlement Agreement and argue that it is not
        supported by the record evidence in this proceeding. The Non-Settling Parties
        did not provide any evidence that the Settlement Agreement negotiations were
        conducted in bad faith or were corrupted in any way by Duke’s shareholders’
        payment of attorney fees and costs. Furthermore, as we noted above, the

17
   $11.7 million in attorney’s fees and $600,000 in expenses was payable to counsel for the Duke Energy
Indiana Industrial Group; between $800,000 and one million was payable as attorney’s fees and expenses for
Nucor’s counsel; finally, the OUCC was to be paid $300,000 in expenses.
18
   Interveners point to class actions as an example where fee agreements are reviewed to prevent situations in
which counsel settles the merits at an unreasonably low figure in order to obtain an unreasonably high fee
payment. According to Interveners, particular scrutiny of attorney’s fees should be mandatory where there is
any potential for temptation.

                                                     23
       outcome of the Settlement Agreement is within the reasonable range of the
       Settling Parties pre-settlement litigation positions. Accordingly, we do not
       find credible evidence to suggest that the value of the Settlement Agreement as
       discussed above has been compromised by the shareholder payments included
       in this term. The Settling Parties agreed to this term, but it does not require
       Commission approval.

(App. 243.) Interveners have not demonstrated that ratepayers were directly or adversely

impacted by Duke’s agreement to pay attorney’s fees acceptable to Duke, such that the

Commission had the obligation or authority to require itemization.

                                         Settlement Amount

       Finally, Interveners attack the Modified Agreed Settlement’s division of costs between

ratepayers and shareholders. They claim that ratepayers ultimately bear the costs of

imprudence by Duke, that the computation of AFUDC failed to account for an “interest-free

loan from customers” in the form of deferred utility taxes, and that the Commission “simply

accepted” a final figure because the Settling Parties had agreed to it. Appellants’ Brief at 86,

88. The Interveners do not specifically assert that the settlement was so deficient that its

acceptance by the Commission was arbitrary or capricious. See PSI Energy, Inc., 764 N.E.2d

at 773 (recognizing that an arbitrary or capricious decision of the Commission may be set

aside on appeal). Rather, they appear to argue that a more perfect division of costs could

have been achieved.

       In contested proceedings prior to the settlement, several of the parties had argued that

Duke should not be able to shift costs of a huge increase in material quantities directly onto

the ratepayers. The Commission had concluded:



                                              24
       The evidence of record in this proceeding does not support that Duke fulfilled
       its responsibility to hold its primary contractors accountable through the terms
       of its contract with them or the management of such terms.

(App. 234.)

       At the settlement hearing, Michael Gorman testified on behalf of the Duke Indiana

Industrial Group (a group having facilities served by Duke). In his estimation, the agreement

provided that Duke would bear “almost 88% of the construction cost increase” while only

12% would be collected from ratepayers. (Tr. 34,832.) He opined that, without settlement,

there was “substantial litigation [and] regulatory risk, and the uncertainty for each party to

this proceeding was material.”       (Tr. 34,831.)    He acknowledged having previously

recommended that the Commission enforce the original $1.985 billion estimate due to

alleged “concealment” by Duke but was persuaded that the settlement “represents an

acceptable resolution to the highly complex technical issues and litigation risk present in this

case.” (Tr. 34,830-31.) Ultimately, he predicted a rate reduction of $1.7 billion.

       The OUCC (the statutory representative of the ratepayers) addressed the impact of the

settlement upon the consumer, presenting testimony from Barbara Smith (“Smith”), the

Director of the OUCC Resource Planning and Communication Division. Smith related the

settlement terms and anticipated financial benefit to customers, including ratepayer annual

savings related to prospective reflection of deferred taxes in Duke’s capital structure ($22

million), depreciation adjustments on non-IGCC property over three years ($35 million), and

accelerated depreciation on pollution control equipment ($32 million), funding of a

collaborative (OUCC and Duke) development of a clean energy initiative, $3.5 million Duke


                                              25
contribution to the Indiana Low Income Home Energy Assistance Program, and a potential

income stream to ratepayers from a 100% share of the applicable retail jurisdictional net

byproduct or co-product revenue from the IGCC Project. (Tr. at 35,066-67.)

        Smith acknowledged that the Commission had found some of the construction costs

imprudent, and that the Settling Parties “did not come to a common conclusion regarding

concealment, fraud, and/or mismanagement.” (Tr. 35,077.) However, Smith explained: “to

the extent such activities occurred, the Settling Parties do agree that the transfer of $700

million in costs from ratepayers onto Duke shareholders is sufficient exculpation.” (Tr.

35,077.) She stated that “non-Duke parties identified a number of items and costs incurred

throughout the life of the Project that they contended were unreasonable” but opined that the

settlement was a reasonable “resolution.” (Tr. 35,075.) According to Smith, after “very

tedious and time-consuming work,” the hard-cap resolution represented a “shareholder hit”

that was “reasonable and in the public interest.” (Tr. 35,075.) In addition to the shifting of

$700 million of costs, imposing the hard cap meant that other project cost overruns would be

shifted to shareholders.19 Smith testified that, absent the settlement, the shareholders “could

bear up to $800 million in construction and financing costs that might have been recovered

from Duke’s ratepayers.” (Tr. 35,077.)

        Indeed, the record indicates that imprudence increased some construction costs.

However, this reality was not ignored by the settlement terms. The Commission’s order



19
  OUCC witness Wes Blakley, a Senior Utility Analyst, testified that the $700,000,000 reduction in IGCC
construction investment results in a reduced revenue requirement saving ratepayers $1.5 to $2 billion over a
thirty-year period.

                                                    26
addressed the propriety of the rate mitigation, the temporary retail rate moratorium, and the

provision for graduated rate increases:

        Duke agreed to a number of measures that will mitigate the rate increases for
        its customers due to the IGCC project, including: (1) a rider restart
        methodology that will result in graduated rate increases, (2) lower depreciation
        rates on the remainder of the [sic] Duke’s Indiana system (excluding qualified
        pollution control projects discussed below), (3) termination of the deferred tax
        incentive previously authorized for the IGCC Project, (4) a rate case
        moratorium, and (5) use of normal, straight-line depreciation for clean coal
        technology qualified pollution control projects that currently are being
        depreciated on an accelerated basis (which will be implemented for ratemaking
        purposes with the Company’s next retail rate case order).

(App. 240.) We agree with Duke that it should not be required to “litigate with particularity

the prudence of each and every expenditure” resulting in “protracted litigation the Settlement

is designed to avoid.” Duke’s Brief at 60. Ultimately, the Commission found – within its

expertise – that the multiple concessions by Duke resulted in a reasonable and publicly

beneficial agreement notwithstanding the earlier conclusion that Duke had failed to prudently

manage some contractors.

        Interveners challenge the approval of the portion of the settlement specifying

allowable AFUDC (or financing costs incurred during construction), claiming that it

unreasonably fails to account for Duke’s free use of funds when it collected taxes from

ratepayers and then deferred payments to taxing authorities.20 More specifically, Interveners

observe that deferred taxes were taken into account in calculating financing costs



20
  During the hearings, Interveners had contended that the treatment of deferred taxes was intended to be a
“reward for cost containment” and – dissatisfied with a prospective relinquishment of the incentive – had
requested a refund of deferred taxes already collected. (Tr. 34,795.)


                                                   27
recoverable, monthly, in the form of CWIP (return on construction work in progress)21 but

“ignored the impact of this interest-free loan from customers in calculating Duke’s rate of

return for capitalized financing costs, AFUDC.” Interveners’ Brief at 86. Then, according to

Interveners, “The Commission provided no justification for this disparate treatment of these

two types of financing costs.” Interveners’ Brief at 86.

        Duke, in turn, claims that the agreed treatment of AFUDC was in accordance with the

Commission’s rules and that the Commission’s rules incorporate federal rate-setting

regulations. More specifically, Duke directs our attention to 18 C.F.R. Part 101, Electric

Plant Instruction No. 3(a)(17) (part of the Uniform System of Accounting promulgated by the

Federal Energy Regulatory Commission, reciting a formula and elements for the computation

of AFUDC that does not specify inclusion of deferred taxes).

        According to Duke, the exclusion of deferred tax balances from the calculation of a

utility’s AFUDC is both historical and consistent with the federal uniform accounting

principles.22 Duke asserts that customers benefit from including the utility’s deferred tax



21
  In light of allegations that Duke received a windfall in which the ratepayers did not share, Wes Blakley
addressed the question “Does the Agreement discuss the inclusion of zero cost deferred income taxes in the
capital structure” as follows:

Yes. [Duke] has agreed on a prospective basis to include zero cost deferred taxes in the capital structure,
which effectively reduces the weighted cost of capital. Exclusion of zero cost capital from the capital structure
had been granted in the original CPCN order in Cause No. 43114 as a form of incentive to [Duke] and was
capped at $1.985 billion of IGCC investment. The actual impact that the exclusion of deferred income taxes
has on the capital structure varies with the weighting of deferred income taxes as well as the weighting of other
elements in the capital structure. The incentive provided about a 100 basis point increase in the weighted cost
of capital. This increase in the weighted cost of capital, when applied to the amount of IGCC investment
eligible for the incentive, equates to about $22 million of additional revenue requirement on an annual basis.
By removing this incentive, ratepayers would immediately benefit from the reduced weighted average rate of
return in the initial amount of approximately $22 million annually. (Tr. 35,224.)
22
   In response to questioning on the difference in a rate of return for CWIP and the rate of return for AFUDC,

                                                      28
balance in base rate calculation and its inclusion in the calculation of AFUDC would create

potential for double recovery. Also, Duke observes that projects under construction do not

generate deferred taxes prior to being placed in service.23

        Danny Wiles, Director of Regulated Accounting for Duke, testified that, in general,

Duke “will follow normal accounting guidance for determining whether a specific cost item

should be capitalized to the IGCC construction project, expensed as an operating and

maintenance expense item, or capitalized as an ongoing plant addition” and further testified

that the Settlement Agreement was not inconsistent with normal accounting rules. (Tr.

35,302.) Too, Kent Freeman testified “the deferred tax incentive does not impact the rate of

return calculation or the AFUDC rates[.]” (Tr. 34,693.)

        On appeal, Interveners fail to support their bald assertion of improper calculation with

identification of relevant testimony or generally accepted accounting principles in support of

their position. We cannot, based upon Intervener’s simple assertion, conclude that a

necessary component was excluded that resulted in an improper calculation. We are not

permitted to conduct a trial de novo. Citizens Action Coalition v. N. Ind. Pub. Serv. Co., 804

N.E.2d 289, 294 (Ind. Ct. App. 2004). Moreover, we are mindful that the Commission has

particular expertise in the area of ratemaking and is not obligated to enter a particular finding


Duke Energy Business Services rate strategist Kent Freeman testified: “Traditionally, there always has been.
AFUDC has, to my knowledge, not included the deferred taxes or any – for any of our projects, so that is –
we’re kind of going back to traditional retail ratemaking, which is the deferred taxes in the cap structure for the
rate of return calculation, but we’ve not changed how we’ve done AFUDC for as far back as I’m aware.” (Tr.
34,713-14.)

23
  Kent Freeman explained: “But AFUDC is applied during a construction period, so at that point, there’s no
deferred taxes – at least this is my understanding – so there’s really no deferred taxes that are a rate base
reduction at that point in time.” (Tr. 34,712.)

                                                       29
on each aspect of evidence introduced. See Nextel West, 831 N.E.2d at 156-57 (recognizing

that there is no requirement for substantiation of each component where the ultimate

conclusion of public interest is adequately supported by findings).

        Finally, Interveners take issue with the Commission’s stated acceptance of a sum

“fall[ing] within the proposed ranges that could be supported by the evidentiary record[.]”

(App. 241.) Specifically, they articulate this issue as: “Did the Commission act contrary to

law by approving a settlement allowing Duke to recover $2.595 billion – plus most of Duke’s

capitalized financing costs incurred after July 1, 2012 – through retail rates for the

Edwardsport Project simply because this amount fell ‘within the range of the evidence’

presented, but without making any finding that this amount was actually the correct amount

to charge ratepayers?” Brief of Appellants at 3.

        At first blush, Interveners appear to urge reweighing of the evidence to come to a

modified settlement figure more favorable to ratepayers than the approved “$94 million in

direct construction costs above the previously approved amount of $2.225 billion.”24 (App.

241.) However, while they baldly assert that the Commission summarily adopted a sum

without due consideration, they do not – indeed, cannot – offer authority for the proposition

that the limited appellate review of agency decisions should incorporate a line-item

accounting review. A Commission decision is not to be set aside because “we, as judges,

might reach a contrary opinion on the same evidence.” No. Indiana Public Serv. Co. v.

OUCC, 826 N.E.2d 112, 118 (Ind. Ct. App. 2005).

24
  The Commission also observed that Duke was required “to shoulder at least $700 million in costs.” (App.
241.)

                                                   30
       The Commission, acting within its particular area of expertise, is to reach a well-

reasoned decision supported by factual findings which find a basis in substantial evidence.

The Commission complied with its statutory duty in this regard. See Davies-Martin Cnty.

Rural Telephone Corp. v. PSC, 174 N.E.2d 63, 68 (Ind. Ct. App. 1961) (“If there is

substantial evidence to support the findings, and if the determination, decision and order is

one which the Commission has the power to make, in view of the findings, courts must

uphold it.”)

                                           Conclusion

       Interveners have not demonstrated that the Commission acted contrary to law by

approving the Modified Agreed Settlement.

       Affirmed.

FRIEDLANDER, J., and KIRSCH, J., concur.




                                             31
