Dive Brief:

• Indiana regulators have approved a settlement between Duke Energy and consumer groups, allowing the utility's $1.4 billion modernization plan to move forward.
• As part of the settlement, Duke reduced the capital investments recovered through the plan's customer bill tracker from approximately $1.8 billion, with a portion of the reduction coming from monies earmarked for smart meters.
• The Indiana Utility Regulatory Commission denied Duke's first application last year, directing the utility to provide greater detail and more focus on transmission projects. The settlement with customer groups led to lower costs.

Dive Insight:

Indiana regulators finally approved a settlement reached in March between a broad range of stakeholders, allowing Duke to move ahead with a seven-year modernization plan that relies on a combination of advanced technology and infrastructure upgrades.

"We have an aging energy grid—some equipment that is decades old—and our work will focus on replacing some older infrastructure to reduce power outages," Duke Energy Indiana President Melody Birmingham-Byrd said in a statement. "We'll also be building a smarter energy structure with technology to provide the type of information and services that consumers have come to expect."

State regulators had cited lack of specifics in the initial proposal as key to their decision to reject it last year. In December of last year, the utility filed a revised plan, though customer advocates, who opposed the intial proposal, said there was little improvement in the new one. But finally all sides came to a settlement in March. 

Parties to the settlement included Duke and the Indiana Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group, Companhia Siderurgica Nacional, Steel Dynamics, Wabash Valley Power Association, Indiana Municipal Power Agency, Hoosier Energy Rural Electric Cooperative and the Environmental Defense Fund.

While the settlement lowered overall capital expenditures, in part by reducing spending on smart meters, Duke said that it retains the ability to pursue the meters and defer some of their costs for consideration in a future rate case "rather than through a monthly bill tracker as other items in the plan." 

Duke said that if it decides to pursue smart meters, as part of the settlement, it had committed to exploring energy efficiency pilot programs that are now possible with smart meter technology.

Duke also agreed to reduce its return on equity on plan investments from 10.5% to 10% on investments that flow through the plan's bill tracker. The return does not impact the company's 10.5% allowed return on equity on its other remaining investments.

Customers can expect a 0.75% annual rate increase from 2017 to 2022, the utility said, which is slightly lower than the initial 1% annual rate increase proposed in earlier versions of the plan. 

The plan aims to reduce outage frequency and duration, installing "self-healing" grid systems. Duke is also promising improved information for consumers, as equipment such as line sensors will enable the company more quickly respond to blackouts.

The plan also imagines energy savings from technology that optimizes voltage and reduces overall power consumption by about 1% on upgraded power lines.