Duke Energy Indiana, LLC and AEP Indiana Michigan Transmission Company (IMTCo) – together referred to as the joint petitioners – in a June 14 petition, requested that the Indiana Utility Regulatory Commission approve the transfer of certain assets located at the Greentown substation from Duke Energy Indiana to IMTCo.
As noted in the direct testimony of Edward Kirschner, director, Transmission Planning for Duke Energy Business Services LLC, Duke Energy Indiana plans to sell to IMTCo all of the facilities and equipment within and including the Greentown substation 765-kV switchyard, the 765-kV control building, and various bus ties associated with the equipment.
Discussing why Duke Energy Indiana is transferring the assets to IMTCo, he said that Duke Energy Indiana has relied upon American Electric Power (NYSE:AEP) for many years to operate and maintain the Greentown 765-kV substation equipment, due to the fact that AEP is familiar with equipment of that voltage.
As Duke Energy Indiana and AEP were working through NERC compliance task responsibilities, it became clear that the current division between ownership and operations and maintenance was proving to be an insurmountable challenge due to the complex nature of managing physical and cyber access to the various assets, Kirschner said.
Ultimately, it was decided that selling the assets to IMTCo would more closely align ownership of the assets with operational and maintenance responsibilities, he said, adding that approval of the sale and transfer would also simplify NERC obligations and improve operational efficiencies.
The impact of the proposed asset sale and transfer on Duke Energy Indiana ratemaking is de minimus, Kirschner said, noting that Duke Energy Indiana would appropriately remove the book value of the assets from its accounting books and end further deprecation accruals thereon. The asset values and accumulated depreciation therefore would not be taken into consideration in any subsequent base retail rate case, he said, noting adding that the total net book value of the transferred property is about $16.8m – that number would be reconciled at closing to match the net book value of the property at closing.
Noting that the sale and transfer of the assets are in the public interest, Kirschner said that the assets would be used in the provision of electric service by IMTCo and, as such, their maintenance, operation, and capital investment need not be the responsibility of Duke Energy Indiana. Duke Energy Indiana recommends the commission approve the sale and transfer and associated terms and conditions of the purchase and sale agreement, he said.