Indiana utility seeks return of merchant plants to regulation

PSI Energy petitioned state regulators to bring two merchant peaking plants into rate base and under regulation.

By the OGJ Online Staff

HOUSTON, Dec. 27 -- Bucking the national trend of utilities seeking less regulation for their assets, PSI Energy has asked Indiana state regulators to approve the transfer of two merchant peaking plants into the rate base.

The company is proposing to transfer two gas-fired power plants owned by PSI's parent Cinergy Corp. to PSI's regulated operations. The peakers, located in Henry County, Ind., and Madison County, Ohio, would directly serve PSI's electric utility customers.

Deregulation is not going anywhere in Indiana, said Mike Leppert, spokesman for the Indiana Public Service Commission.

"In the last legislative session there was unwillingness to even talk about it," Leppert said. "Legislators just don't have any comfort level for deregulation."

Indiana has had steady growth in electricity demand but few plants have been built by the utilities, he said. There was too much uncertainty about whether the state would embark on a path of deregulation or not. But the commission has said repeatedly that the state is expected to provide power for itself and not be subject to wild swings in price volatility, he said. Bringing the two plants back under regulation to accomplish that goal makes sense, he said.

PSI Energy, Plainfield, Ind., claims that it had record demand last summer even though the economy slowed and the summer was mild.

"Our forecasts estimate we need more generation to maintain an adequate reserve," said Doug Esamann, PSI president. "The Henry County and Madison plants are available now and are a good fit with the system."

Cinergy had sold power from these facilities on the wholesale power market which added to state and regional power supplies. If the plants are transferred back, they will help diversify the company's fuel base, he said.

PSI's current generation assets are coal-fired and operate round the clock. The peaking plants would operate during times of high demand mostly in the summer.

Henry County Generating Station can produce about 129 Mw. Fifty megawatts are contracted to the Wabash Valley Power Association. The Madison County plant has 576 Mw of capacity.

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