CHAPTER 8.8. UTILITY GENERATION AND CLEAN COAL TECHNOLOGY
IC 8-1-8.8
Chapter 8.8. Utility Generation and Clean Coal Technology
IC 8-1-8.8-1
Legislative findings and declaration of purpose
Sec. 1. (a) The general assembly makes the following findings:
(1) Growth of Indiana's population and economic base has
created a need for new energy production or generating
facilities in Indiana.
(2) The development of a robust and diverse portfolio of energy
production or generating capacity, including coal gasification
and the use of renewable energy resources, is needed if Indiana
is to continue to be successful in attracting new businesses and
jobs.
(3) Indiana has considerable natural resources that are currently
underutilized and could support development of new energy
production or generating facilities, including coal gasification
facilities, at an affordable price.
(4) Certain regions of the state, such as southern Indiana, could
benefit greatly from new employment opportunities created by
development of new energy production or generating facilities
utilizing the plentiful supply of coal from the geological
formation known as the Illinois basin.
(5) Technology can be deployed that allows high sulfur coal
from the geological formation known as the Illinois Basin to be
burned or gasified efficiently while meeting strict state and
federal air quality limitations. Specifically, the state should
encourage the use of advanced clean coal technology, such as
coal gasification.
(6) It is in the public interest for the state to encourage the
construction of new energy production or generating facilities
that increase the in-state capacity to provide for current and
anticipated energy demand at a competitive price.
(b) The purpose of this chapter is to enhance Indiana's energy
security and reliability by ensuring all of the following:
(1) Indiana's energy production or generating capacity continues
to be adequate to provide for Indiana's current and future energy
needs, including the support of the state's economic
development efforts.
(2) The vast and underutilized coal resources of the Illinois
Basin are used as a fuel source for new energy production or
generating facilities.
(3) The electric transmission and gas transportation systems
within Indiana are upgraded to distribute additional amounts of
electricity and gas more efficiently.
(4) Jobs are created as new energy production or generating
facilities are built in regions throughout Indiana.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.11.
IC 8-1-8.8-2
"Clean coal and energy projects" defined
Sec. 2. As used in this chapter, "clean coal and energy projects"
means 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.
As added by P.L.159-2002, SEC.6. Amended by P.L.174-2005,
SEC.2; P.L.175-2007, SEC.12.
IC 8-1-8.8-3
"Clean coal technology" defined
Sec. 3. As used in this chapter, "clean coal technology" means a
technology (including precombustion treatment of coal):
(1) that is used in a new or existing energy production or
generating facility and directly or indirectly reduces or avoids
airborne emissions of sulfur, mercury, or nitrogen oxides or
other regulated air emissions associated with the combustion or
use of coal; and
(2) that either:
(A) was not in general commercial use at the same or greater
scale in new or existing facilities in the United States at the
time of enactment of the federal Clean Air Act Amendments
of 1990 (P.L.101-549); or
(B) has been selected by the United States Department of
Energy for funding or loan guaranty under an Innovative
Clean Coal Technology or loan guaranty program under the
Energy Policy Act of 2005, or any successor program, and
is finally approved for such funding or loan guaranty on or
after the date of enactment of the federal Clean Air Act
Amendments of 1990 (P.L.101-549).
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.13.
IC 8-1-8.8-4
"Coal gasification facility" defined
Sec. 4. As used in this chapter, "coal gasification facility" means
a facility in Indiana that uses a manufacturing process that converts
coal into a clean gas that can be used as a fuel to generate energy or
substitute natural gas.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.14.
IC 8-1-8.8-5
"Costs associated with qualified utility system property" defined
Sec. 5. As used in this chapter, "costs associated with qualified
utility system property" means capital, operation, maintenance,
depreciation, tax costs, and financing costs of or for qualified utility
system property.
As added by P.L.159-2002, SEC.6.
IC 8-1-8.8-6
"Eligible business" defined
Sec. 6. As used in this chapter, "eligible business" means an
energy utility (as defined in IC 8-1-2.5-2) or owner of a coal
gasification facility that:
(1) proposes to construct or repower a new energy production
or generating facility;
(2) proposes to construct or repower a project described in
section 2(1) or 2(2) of this chapter;
(3) undertakes a project to develop alternative energy sources,
including renewable energy projects; or
(4) purchases fuels produced by a coal gasification facility.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.15.
IC 8-1-8.8-7
"Group" defined
Sec. 7. As used in this chapter, "group" refers to the forecasting
group established by IC 8-1-8.5-3.5.
As added by P.L.159-2002, SEC.6.
IC 8-1-8.8-8
"New energy generating facility" defined
Sec. 8. (a) As used in this chapter, "new energy generating
facility" refers to a generation or coal gasification facility that
satisfies all of the following:
(1) The facility produces energy primarily from coal or gases
from coal from the geological formation known as the Illinois
Basin.
(2) The facility is a:
(A) newly constructed or newly repowered energy
generation plant; or
(B) newly constructed generation capacity expansion at an
existing facility;
dedicated primarily to serving Indiana retail customers.
(3) The repowering, construction, or expansion of the facility
was begun by an Indiana utility after July 1, 2002.
(4) Except for a facility that is a clean coal and energy project
under section 2(2) of this chapter, the facility has an aggregate
rated electric generating capacity of at least one hundred (100)
megawatts for all units at one (1) site or a generating capacity
of at least four hundred thousand (400,000) pounds per hour of
steam.
(b) The term includes the transmission lines, gas transportation
facilities, and associated equipment employed specifically to serve
a new energy generating or coal gasification facility.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.16.
IC 8-1-8.8-9
"Qualified utility system property" defined
Sec. 9. As used in this chapter, "qualified utility system property"
means any new energy generating or coal gasification facility used,
or to be used, in whole or in part, by an energy utility to provide
retail energy service (as defined in IC 8-1-2.5-3) regardless of
whether that service is provided under IC 8-1-2.5 or another
provision of this article.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.17.
IC 8-1-8.8-10 Version a
"Renewable energy resources" defined
Note: This version of section effective until 1-1-2011. See also
following version of this section, effective 1-1-2011.
Sec. 10. (a) As used in this chapter, "renewable energy resources"
means alternative sources of renewable energy, including the
following:
(1) Energy from wind.
(2) Solar energy.
(3) Photovoltaic cells and panels.
(4) Dedicated crops grown for energy production.
(5) Organic waste biomass, including any of the following
organic matter that is available on a renewable basis:
(A) Agricultural crops.
(B) Agricultural wastes and residues.
(C) Wood and wood wastes, including the following:
(i) Wood residues.
(ii) Forest thinnings.
(iii) Mill residue wood.
(iv) Waste from clean construction and demolition.
(D) Animal wastes.
(E) Aquatic plants.
(6) Hydropower from existing dams.
(7) Fuel cells.
(8) Energy from waste to energy facilities.
(9) Energy storage systems.
(b) Except for energy described in subsection (a)(8), the term does
not include energy from the incinerations, burning, or heating of any
of the following:
(1) Tires.
(2) General household, institutional, commercial, industrial
lunchroom, office, or landscape waste.
(c) The term excludes treated or painted lumber.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.18; P.L.151-2009, SEC.4.
IC 8-1-8.8-10 Version b
"Renewable energy resources" defined
Note: This version of section effective 1-1-2011. See also
preceding version of this section, effective until 1-1-2011.
Sec. 10. (a) As used in this chapter "renewable energy resources"
means alternative sources of renewable energy, including the
following:
(1) Energy from wind.
(2) Solar energy.
(3) Photovoltaic cells and panels.
(4) Dedicated crops grown for energy production.
(5) Organic waste biomass, including any of the following
organic matter that is available on a renewable basis:
(A) Agricultural crops.
(B) Agricultural wastes and residues.
(C) Wood and wood wastes, including the following:
(i) Wood residues.
(ii) Forest thinnings.
(iii) Mill residue wood.
(D) Animal wastes.
(E) Animal byproducts.
(F) Aquatic plants.
(G) Algae.
(6) Hydropower from existing dams.
(7) Fuel cells.
(8) Energy from waste to energy facilities.
(9) Energy storage systems.
(b) Except for energy described in subsection (a)(8), the term does
not include energy from the incinerations, burning, or heating of any
of the following:
(1) Tires.
(2) General household, institutional, commercial, industrial
lunchroom, office, or landscape waste.
(c) The term excludes treated or painted lumber.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.18; P.L.151-2009, SEC.4; P.L.95-2010, SEC.1.
IC 8-1-8.8-11
Incentives for clean coal and energy projects; application to
commission; commission's time for determining eligibility
Sec. 11. (a) The commission shall encourage clean coal and
energy projects by creating the following financial incentives for
clean coal and energy projects, if the projects are found to be
reasonable and necessary:
(1) The timely recovery of costs incurred during construction
and operation of projects described in section 2(1) or 2(2) of
this chapter.
(2) The authorization of up to three (3) percentage points on the
return on shareholder equity that would otherwise be allowed
to be earned on projects described in subdivision (1).
(3) Financial incentives for the purchase of fuels produced by
a coal gasification facility, including cost recovery and the
incentive available under subdivision (2).
(4) Financial incentives for projects to develop alternative
energy sources, including renewable energy projects.
(5) Other financial incentives the commission considers
appropriate.
(b) An eligible business must file an application to the
commission for approval of a clean coal and energy project under
this section. This chapter does not relieve an eligible business of the
duty to obtain any certificate required under IC 8-1-8.5 or IC 8-1-8.7.
An eligible business seeking a certificate under IC 8-1-8.5 or
IC 8-1-8.7 and this chapter for one (1) project may file a single
application for all necessary certificates. If a single application is
filed, the commission shall consider all necessary certificates at the
same time.
(c) The commission shall promptly review an application filed
under this section for completeness. The commission may request
additional information the commission considers necessary to aid in
its review.
(d) The commission shall, after notice and hearing, issue a
determination of a project's eligibility for the financial incentives
described in subsection (a) not later than one hundred twenty (120)
days after the date of the application, unless the commission finds
that the applicant has not cooperated fully in the proceeding.
As added by P.L.159-2002, SEC.6.
IC 8-1-8.8-12
Recovery of costs; rate adjustment mechanisms
Sec. 12. (a) The commission shall provide financial incentives to
eligible businesses for new energy producing and generating
facilities in the form of timely recovery of the costs incurred in
connection with the construction, repowering, expansion, operation,
or maintenance of the facilities.
(b) An eligible business seeking authority to timely recover the
costs described in subsection (a) must apply to the commission for
approval of a rate adjustment mechanism in the manner determined
by the commission.
(c) An application must include the following:
(1) A schedule for the completion of construction, repowering,
or expansion of the new energy generating or coal gasification
facility for which rate relief is sought.
(2) Copies of the most recent integrated resource plan filed with
the commission, if applicable.
(3) The amount of capital investment by the eligible business in
the new energy generating or coal gasification facility.
(4) Other information the commission considers necessary.
(d) The commission shall allow an eligible business to recover the
costs associated with qualified utility system property if the eligible
business provides substantial documentation that the expected costs
associated with qualified utility system property and the schedule for
incurring those costs are reasonable and necessary.
(e) The commission shall allow an eligible business to recover the
costs associated with the purchase of fuels produced by a coal
gasification facility if the eligible business provides substantial
documentation that the costs associated with the purchase are
reasonable and necessary.
(f) A retail rate adjustment mechanism proposed by an eligible
business under this section may be based on actual or forecasted
data. If forecast data is used, the retail rate adjustment mechanism
must contain a reconciliation mechanism to correct for any variance
between the forecasted costs and the actual costs.
As added by P.L.159-2002, SEC.6. Amended by P.L.175-2007,
SEC.19.
IC 8-1-8.8-13
Monthly report to lieutenant governor required
Sec. 13. An eligible business shall file a monthly report with the
lieutenant governor stating the following information:
(1) The amount of Illinois Basin coal, if any, purchased during
the previous month for use in a new energy generating or coal
gasification facility.
(2) The amount of any fuel produced by a coal gasification
facility and purchased by the eligible business during the
previous month.
(3) Any other information the lieutenant governor may
reasonably require.
As added by P.L.159-2002, SEC.6. Amended by P.L.1-2006,
SEC.151; P.L.175-2007, SEC.20.
IC 8-1-8.8-14
Annual study of using renewable energy resources
Sec. 14. The group shall conduct an annual study on the use,
availability, and economics of using renewable energy resources in
Indiana. Each year, the group shall submit a report on the study to the
commission for inclusion in the commission's annual report to the
regulatory flexibility committee described in IC 8-1-2.5-9 and
IC 8-1-2.6-4. The report must include suggestions from the group to
encourage the development and use of renewable energy resources
and technologies appropriate for use in Indiana. In formulating the
suggestions, the group shall evaluate potential renewable energy
generation opportunities from biomass and algae production systems.
As added by P.L.159-2002, SEC.6. Amended by P.L.71-2009, SEC.2.
IC 8-1-8.8-15
Commission's power to review approved projects
Sec. 15. The commission may review any project approved under
this chapter to determine that the project continues to comply with
the commission's order initially approving incentives under this
chapter. The commission may revoke any incentive approved in the
order if the commission finds that the project no longer complies
with the provisions of the order concerning the incentive.
As added by P.L.159-2002, SEC.6.