Pioneer Transmission on Sept. 19 refuted the Indiana Utility Regulatory Commission (IURC) testimonial staff’s objections to the company’s Aug. 20 settlement proposal with Northern Indiana Public Service Co. (NIPSCO) regarding the 765-kV Reynolds to Greentown transmission project.
In comments filed with FERC (Docket No. EL12-24), Pioneer countered the testimonial staff’s arguments point by point.
On Sept. 6, the IURC staff had argued that a settlement between Pioneer and NIPSCO was moot, given that FERC, by ruling in favor of NIPSCO on July 19, had effectively closed the proceeding; that the agreement attempted to settle a matter that had already been settled; that the settlement agreement excluded a key party, namely Duke Energy (NYSE:DUK), one of Pioneer’s parent companies; and that Pioneer, which has no method for recovering costs, could not meet the condition precedent for its formula rate to become effective.
In response to the IURC staff’s first objection, Pioneer argued that by filing a request for rehearing, the proceeding was effectively kept open. “In fact, on September 17, 2012, the commission issued an order granting rehearing for further consideration, which confirms that this proceeding has not been terminated,” Pioneer said in the filing.
With regard to settling a matter that already had been settled, Pioneer argued that the settlement agreement does not in any way alter FERC’s July 19 order, which found that NIPSCO had the right to build 50% of the project.
“In the settlement, Pioneer and NIPSCO have agreed to split the project on a fifty-fifty basis, giving NIPSCO its 50% just as the July 19 Order holds is required by [the Midwest ISO’s transmission owners agreement (TOA)],” Pioneer said.
The IURC testimonial staff’s claim that Duke Energy was left out of the settlement discussions also is irrelevant, Pioneer said, given that the agreement allows Pioneer to “step into the shoes of Duke Energy,” with the agreement of NIPSCO.
Further, Pioneer argued, because it is half-owned by Duke Energy, it could not have executed the settlement agreement without its knowledge and approval.
“The simple fact is that Duke Energy, as 50% owner of Pioneer, has approved the settlement by voting for its execution, and has also approved the filing of these reply comments,” Pioneer said.
Pioneer attached a document supporting that Duke Energy had delegated its rights to Pioneer.
The company also contended that the IURC staff’s argument concerning cost recovery was irrelevant, given that Pioneer would not be able to file for cost recovery until it becomes a transmission owner under MISO’s TOA, according to FERC’s July 19 order.
“At that time MISO and Pioneer will make the appropriate filings to include the Pioneer formula rate as part of the MISO tariff,” Pioneer said.
According to the settlement, Pioneer will sign the MISO TOA upon completing construction and prior to commercial operation of the project.
“[T]he comments submitted in this proceeding should not delay prompt approval of the settlement by the commission,” Pioneer said. “The IURC staff does not (1) present any objection to the substantive features of the settlement, (2) raise any issue of material fact, (3) contest Pioneer’s or NIPSCO’s ability to construct and own the Reynolds to Greentown transmission line, or (4) identify any harm or injury to any interested party or the public if the settlement is approved.”
Pioneer is a joint venture between Duke Energy and American Electric Power (NYSE:AEP).
NIPSCO is a subsidiary of NiSource (NYSE:NI).