IPL Industrial Group v. Indianapolis Power and Light Company

• Court: Indiana Court of Appeals
• Decided: November 4, 2020
• Docket: 20A-EX-800
• Status: Published

Opinion

FILED Nov 04 2020, 8:48 am

CLERK Indiana Supreme Court Court of Appeals and Tax Court

ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES Citizens Action Coalition of Indiana, Inc. Indiana Utility Regulatory Commission Jennifer A. Washburn Indianapolis, Indiana Aaron T. Craft City of Indianapolis Jeremy R. Comeau Steven L. Davies Anne E. Becker Beth E. Heline Bette Jean Dodd Indianapolis, Indiana Indianapolis, Indiana Indianapolis Power and Light Indiana Office of Utility Consumer Company Counselor Peter J. Rusthoven Abby R. Gray Teresa E. Morton William I. Fine Jeffrey M. Peabody Randall C. Helmen Indianapolis, Indiana Jeffrey M. Reed Indianapolis, Indiana IPL Industrial Group Todd A. Richardson Joseph P. Rompala Indianapolis, Indiana

IN THE COURT OF APPEALS OF INDIANA

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 1 of 22 IPL Industrial Group, Citizens November 4, 2020 Action Coalition of Indiana, Court of Appeals Case No. Inc., City of Indianapolis, and 20A-EX-800 Indiana Office of Utility Appeal from the Indiana Utility Consumer Counselor, Regulatory Commission Appellants-Intervenors, The Honorable Jennifer L. Schuster, Administrative Law v. Judge The Honorable James F. Huston, Indianapolis Power and Light Chairman Company and Indiana Utility IURC Cause No. 45264 Regulatory Commission, Appellees-Petitioners.

Riley, Judge.

STATEMENT OF THE CASE [1] Appellants-Intervenors and Statutory Party, IPL Industrial Group, Indiana

Office of Utility Consumer Counselor, City of Indianapolis, and Citizens

Action Coalition of Indiana, Inc. (Collectively, Consumer Parties), appeal the

Indiana Utility Regulatory Commission’s (Commission) Order approving

Appellee-Petitioner’s, Indianapolis Power & Light Company (IPL), Proposed

Plan involving $1.2 billion in system investments over a seven-year period.

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 2 of 22 [2] We affirm.

ISSUES [3] The Consumer Parties raise three issues on appeal, which we restate as follows:

1. Whether the Commission’s decision to admit into evidence IPL’s

workpapers was an abuse of discretion, when the admission occurred at

the end of the evidentiary hearing and without a sponsoring witness or

foundation;

2. Whether the Commission erroneously interpreted the statutory

requirement that the incremental benefits yielded by the Proposed Plan

must justify its estimated costs when IPL’s evidence established that its

Proposed Plan was geared towards risk reduction of an already highly

reliable system; and

3. Whether the Commission failed to make specific findings on material

issues and only formulated a conclusory finding in summary fashion on

the statutory cost-justification requirement and the disputed

monetization analysis offered by IPL.

FACTS AND PROCEDURAL HISTORY [4] The case before us arises under the Transmission, Distribution, and Storage

System Improvement Charge (TDSIC) statute, as enacted in Indiana Code Ch.

8-1-39. Unlike a traditional rate case which involves a comprehensive review of

a utility’s operations and financial status, the TDSIC mechanism allows utilities

to request increases in their rates—outside of a rate case—to fund certain

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 3 of 22 upgrades and improvements to an energy utility’s transmission, distribution, or

storage system in Indiana. The TDSIC statute institutes two distinct types of

proceedings. First, pursuant to Section 10, the utility must secure the

Commission’s preapproval of a plan to complete identified improvement

projects at a defined budget over a specified time period. See I.C. § 8-1-39-10.

To gain approval, the plan must satisfy certain enumerated statutory criteria,

including the best estimate of costs, a finding of public convenience and

necessity, a showing of reasonableness, and a determination that “the estimated

costs of the eligible improvements included in the plan are justified by

incremental benefits attributable to the plan.” See I.C. § 8-1-39-10(b). Once a

plan is approved, the utility may then, pursuant to Section 9, seek periodic rate

increases at six-month intervals to recover 80% of the approved costs as the

planned work is completed. See I.C. § 8-1-39-9(a). Up to these authorized

expenditures, rate recovery is automatic. The remaining 20% of the costs is

accumulated in a deferred account for recovery, with carrying charges, in the

utility’s next rate case. See I.C. § 8-1-39-9(c).

[5] On July 24, 2019, IPL filed its petition with the Commission under Section 10

of the TDSIC statute, seeking approval of proposed expenditures of $1.2 billion

over a seven-year period to replace, rebuild, upgrade, redesign, and modernize a

wide range of IPL’s transmission- and distribution-system assets (Proposed

Plan). The Proposed Plan was intended to address grid resiliency, so that the

system could be restored more easily when outages occur. The investments

under the Proposed Plan were prioritized through a Risk Model, which

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 4 of 22 identified assets based on the amount of risk—in terms of likelihood of failure

and consequence of failure—and the cost to buy down risk in order to achieve

the highest risk reduction per dollar invested. IPL projected that the planned

projects would result in a system risk reduction of about 36.6% over the seven-

year period. To justify the enormous cost of the Proposed Plan, IPL relied on a

monetization analysis. Using a Department of Energy calculation tool, IPL

monetized the impact of projected outages over a twenty-year period, which

IPL asserted could be avoided through the planned projects enumerated in the

Proposed Plan. According to IPL, the monetization analysis reflects a net

benefit of $939 million to IPL customers by the end of the twenty-year period.

[6] At the same time IPL filed its petition, it also prefiled, pursuant to Commission

procedure, its case-in-chief evidence consisting of the written testimony and

related exhibits of six witnesses. IPL also submitted voluminous workpapers

consisting of underlying supporting material associated with the witnesses’

testimony.

[7] By statute, the ratepaying public is represented in all utility proceedings by the

Office of Utility Consumer Counselor (OUCC), an independent state agency.

In addition, three other Consumer Parties intervened in this proceeding. The

IPL Industrial Group (Industrial Group) is an ad hoc group comprised of

several large volume consumers served by IPL; the City of Indianapolis

intervened in its capacity as an IPL ratepayer with an interest in the impact of

IPL rates on the local economy and its citizenry; and Citizens Action Coalition

and Environmental Law & Policy Center are advocacy organizations for

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 5 of 22 consumer and environmental interests that were jointly represented below. All

of the Consumer Parties opposed IPL’s petition for approval of the Proposed

Plan and prefiled their written testimony and exhibits in response. On October

23, 2019, IPL filed its rebuttal evidence but did not file any additional

workpapers in connection with the rebuttal evidence.

[8] Over the course of three days—November 14, 21, and 22, 2019—the

Commission conducted a publicly noticed evidentiary hearing. On the third

and final day of the proceeding, after the penultimate IPL witness had testified

and both cross-examination and redirect were completed, IPL’s counsel orally

moved the Commission to take administrative notice of the voluminous

workpapers that had been submitted by IPL at the outset of the proceeding.

The workpapers had not been offered as exhibits in connection with the

testimony of any IPL witness at the hearing. The witness who testified

subsequently addressed accounting issues that were unrelated to nearly all of

the mass of workpapers, and the witness did not identify, authenticate, or

reference the workpapers during his testimony. The Consumer Parties objected

to IPL’s request for administrative notice of the workpapers as being untimely

and not sponsored by any witness. They also asserted that IPL should have

included the workpapers in its prefiled evidence if it wanted them to be part of

the evidentiary record. The Commission took the issue under advisement.

[9] On March 4, 2020, The Commission issued its Order, in which it addressed the

statutory criteria under Section 10 of the TDSIC Statute, determining that the

estimated costs of the projects in IPL’s Proposed Plan were justified by their

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 6 of 22 incremental benefits, and approved the Plan as proposed by IPL in its entirety.

As part of the Order, the Commission granted IPL’s request for administrative

notice of its workpapers.

[10] The Consumer Parties appealed. Additional facts will be provided if necessary.

DECISION AND DISCUSSION I. Standard of Review

[11] The General Assembly created the Commission primarily as a fact-finding body

with the technical expertise to administer the regulatory scheme devised by the

legislature. Northern Ind. Publ. Service Co. v. United States Steel Co., 907 N.E.2d

1012, 1015 (Ind. 2009). The Commission’s assignment is to ensure that public

utilities provide constant, reliable, and efficient service to the citizens of

Indiana. Ind. Bell Tel. Co. v. Ind. Util. Regulatory Comm’n, 715 N.E.2d 351, 354

n.3 (Ind. 1999). The Commission can only exercise power conferred upon it by

statute. Northern Ind. Publ. Service Co., 907 N.E.2d at 1015. An appeal of the

Commission’s decision amounts to a two-tiered review by the appellate court.

On the first level, it requires a review of whether there is substantial evidence in

light of the whole record to support the Commission’s findings of basic fact.

Citizens Action Coalition of Ind., Inc. v. N. Ind. Pub. Serv. Co., 485 N.E.2d 610, 612

(Ind. 1985). Such determinations of basic fact are reviewed under a substantial

evidence standard, meaning the order will stand unless no substantial evidence

supports it. McClain v. Review Bd. of Ind. Dept. of Workforce Dev., 693 N.E.2d

1314, 1317-18 (Ind. 1998).

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 7 of 22 [12] During its substantial evidence review, “the appellate court neither reweighs the

evidence nor assesses the credibility of witnesses and considers only the

evidence most favorable to the [Commission’s] findings.” Id. The

Commission’s order is conclusive and binding unless (1) the evidence on which

the Commission based its findings was devoid of probative value; (2) the

quantum of legitimate evidence was so proportionately meager as to lead to the

conviction that the finding does not rest upon a rational basis; (3) the result of

the hearing before the Commission was substantially influenced by improper

considerations; (4) there was no substantial evidence supporting the findings of

the Commission; (5) the order of the Commission is fraudulent, unreasonable,

or arbitrary. Id. at 1317 n.2. This list of exceptions is not exclusive. Id. At the

second level, the order must contain specific findings on all the factual

determinations material to its ultimate conclusions. Citizens Action Coalition,

485 N.E.2d at 612. We review the Commission’s conclusions of ultimate facts

for reasonableness, the deference of which is based on the amount of expertise

exercised by the agency. McClain, 693 N.E.2d at 1317-18.

[13] Insofar as the order involves a subject within the Commission’s special

competence, the courts should give greater deference. Id. at 1318. Conversely,

if the subject is outside the Commission’s expertise, the courts should give less

deference. Id. In either case, courts may examine the logic of inferences drawn

and any rule of law that may drive the result. Id. Additionally, an agency

action is always subject to review as contrary to law, but this constitutionally

preserved review is limited to whether the Commission stayed within its

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 8 of 22 jurisdiction and conformed to the statutory standards and legal principles

involved in producing its decision, ruling, or order. Citizens Action Coalition, 485

N.E.2d at 612-13.

[14] “Ratemaking is a legislative, not a judicial function[.]” Pub. Serv. Comm’n v.

City of Indianapolis, 131 N.E.2d 308, 312 (Ind, 1956). Agencies are executive

branch institutions which the General Assembly has empowered with delegated

duties. Northern Ind. Publ. Service Co., 907 N.E.2d at 1018. As such, “basic facts

are reviewed for substantial evidence, legal propositions are reviewed for their

correctness.” McClain, 693 N.E. 2d at 1318. Ultimate facts or “mixed

questions” are evaluated for reasonableness, with the amount of deference

depending on whether the issue falls within the Commission’s expertise. See id.

II. Admission of Workpapers

[15] The Consumer Parties contend that the admission of nearly 20,000 pages of

workpapers was highly prejudicial and unfair because the documents related to

key elements on which IPL bore the burden of proof and IPL did not introduce

them into evidence until after the Consumer Parties had rested their case.

Although the Commission admitted the workpapers by administrative notice,

the Consumer Parties maintain that administrative notice was improper

because no foundation was laid, there was no sponsoring witness, and the

documents were not verified or self-authenticating.

[16] Formal Commission proceedings are conducted through an adversarial process,

in which “the Commission may be guided generally by relevant provisions of

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 9 of 22 the Indiana Rules of Trial Procedure and the Indiana Rules of Evidence to the

extent they are consistent with this rule,” while some features of the process

utilize agency specific rules and practices. See 170 Admin. Code § 1-1.1-26(a).

When IPL filed its petition with the Commission, it also prefiled its case-in-

chief evidence consisting of the written testimony and exhibits of six witnesses.

Pursuant to the Commission’s prehearing conference order, IPL filed “copies of

the workpapers used to produce that evidence within two business days after

the prefiling of the technical evidence,” with service on the Consumer Parties.

(Appellant’s App. Vol. II, p. 111). As such, the workpapers represent “support

for the technical evidence and calculations included in a party’s case-in-chief.”

(Appellant’s App. Vol. II, p. 35). They provide detailed computational and

comparable backup for the technical evidence in a proceeding and allow the

Commission’s expert staff to review in detail the analyses that further support

IPL’s evidence.

[17] On the third and final day of the proceeding, after the penultimate IPL witness

testified and both cross-examination and redirect were completed, IPL’s

counsel orally moved the Commission to take administrative notice of the

workpapers that had been submitted by IPL at the outset of the proceeding.

The Consumer Parties contend that this request was untimely and made in

violation of Indiana’s Administrative rule, which states that, “[a] request by a

party for administrative notice of a factual matter that should be included in a

party’s prefiled testimony shall be made at the same time the related evidence is

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 10 of 22 prefiled.” 170 I.A.C. 1-1.1-21(j). 1 However, as workpapers merely provide

further underlying support for the calculations and details of the factual matters

addressed by a witness’ prefiled testimony, they do not constitute facts that are

required to be in testimony. 2

[18] Rather, IPL’s administrative notice request was made pursuant to 170 I.A.C. 1-

1.1-21(h), which provides that the “Commission may take administrative

notice, on its own motion or upon a party’s motion, of relevant administrative

rules, commission orders, or other documents previously filed with the

Commission.” As IPL submitted the workpapers on July 24, 2019 to the

Commission, and served them on the Consumer Parties at the same time, they

amount to “other documents previously filed,” of which the Commission may

properly take administrative notice.

[19] We disagree with the Consumer Parties that the workpapers are inadmissible as

they were admitted without a proper foundation or a sponsoring witness, in

violation of Indiana’s rules of evidence. While we agree that Indiana’s rules of

evidence are applicable to the Commission’s proceedings, their application is

limited “to the extent they are consistent with” the rules promulgated in the

Administrative Code. See 170 I.A.C. § 1-1.1-26(a). As specific rules governing

1 The Commission’s procedural rules were amended and became effective June 10, 2020. Here, the Commission applied the rules in effect at the time of the proceeding, prior to the new rules taking effect. 2 Even if we find, which we do not, that the workpapers fall within the premise of 170 I.A.C. 1-1.1-21(j) and comport a factual matter that should be included in a party’s prefiled testimony, we conclude that IPL’s untimely request for administrative notice merely amounted to harmless error as the Consumer Parties had received notice and a copy of the workpapers three months before the hearing.

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 11 of 22 administrative notice before the Commission were promulgated, the

administrative rules trump the evidentiary trial rules. Accordingly, the

Commission appropriately took administrative notice of IPL’s workpapers

III. Incremental Benefits

[20] In Indiana, utility rates are traditionally adjusted through general ratemaking

cases, which encompass a “comprehensive” process, requiring the Commission

to “examine every aspect of the utility’s operations and the economic

environment in which the utility functions to ensure that the data [the

Commission] has received is representative of operating conditions that will, or

should, prevail in future years.” United States Gypsum, Inc. v. Ind. Gas Co., 735

N.E.2d 790, 798 (Ind. 2000). However, over the years the legislature has

supplemented traditional ratemaking with various ‘tracker” procedures that

allow utilities to ask the Commission to adjust their rates to reflect various costs

without having to undergo a full ratemaking case. NIPSCO Indus. Grp. v. N. Ind.

Publ. Serv. Co., 100 N.E.3d 234, 238 (Ind. 2018). The TDSIC statute is one such

procedure; it encourages energy utilities to replace their aging infrastructure by

modernizing electric or gas transmission, distribution, and storage projects. Id.

This TDSIC procedure is a process for utilities to assess a distinct charge—a

Transmission, Distribution, and Storage System Improvement Charge—for

completed projects deemed eligible for improvements under the Statute. Id. In

contrast to traditional ratemaking, the TDSIC procedure permits a utility to

seek preapproval of designated capital improvements to the utility’s

infrastructure and then to recover the costs of those improvements every few

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 12 of 22 months as they are completed. Id. at 238-39. Eligible improvements are certain

new or replacement utility projects that: “(1) a public utility undertakes for

purposes of safety, reliability, system modernization, or economic development

. . .; (2) were not included in the public utility’s rate base in its most recent

general rate case; and (3) [were] designated in the public utility’s seven year

plan and approved by the Commission under section 10 of this chapter as

eligible for TDSIC treatment.” I.C. § 8-1-39-2.

[21] The TDSIC statute contemplates two distinct types of proceedings, only one of

which is at the center of this dispute. Specifically, under Section 10, the utility

may seek regulatory approval of a seven-year plan for designated improvements

to transmission, distribution, and storage systems. See I.C. § 8-1-39-10. The

Commission shall then approve the plan and designate the planned

improvements as eligible for TDSIC treatment if it finds the plan is reasonable.

I.C. § 8-1-39-10(b). When determining that a plan is reasonable, the

Commission’s order must include (1) “[a] finding if the best estimate of the cost

of the eligible improvements,” (2) “[a] determination whether public

convenience and necessity require or will require the eligible improvements,”

and (3) “[a] determination whether the estimated costs of the eligible

improvements . . . are justified by the incremental benefits attributable to the

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 13 of 22 plan.” I.C. § 8-1-39-10(b). 3 It is this third determination that takes center stage

in the Consumer Parties’ pivotal argument.

[22] Focusing on the incremental benefits language in the determination of the

reasonableness of the Proposed Plan, the Consumer Parties contend that IPL

did not identify any cost-justified incremental benefits of the suggested

improvements, but instead relied on “a risk reduction rationale, premised on

the theory that a percentage reduction in risk, no matter how small that risk

may be, is sufficient justification for the enormous $1.2 billion investment

proposed.” (Appellants’ Br. p. 25). They argue that IPL’s theory significantly

altered the analysis as the record reflects a highly reliable utility system with a

consistent history of strong performance and a recent approval of its rate

funding plan to target the leading cause of outages. Because IPL has

consistently achieved a high level of reliability as compared to investor-owned

utilities nationwide, the Consumer Parties maintain that a shift from assessing

incremental benefits as required by statute to considering only reductions to an

already low level of risk, does not satisfy the cost-justification of the excessive

costs to achieve a negligible change in system performance.

3 The second type of proceeding—which is not disputed—is comprised in Section 9 and states that once the Commission has approved a seven-year plan, the utility may petition every few months for periodic rate adjustments to recover “eight percent (80%) of approved capital expenditures and TDSIC costs” for the system improvements designated as eligible and actually completed. I.C. §§ 8-1-39—9(a), (c), (e). The remaining twenty percent can be recovered only “as part of the next general rate case that the public utility files with the Commission.” I.C. § 8-1-39-9(b).

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 14 of 22 [23] In essence, the Consumer Parties’ argument rests on the premise that an

incremental benefit may only be measured by an overall increase in the current

reliability of IPL’s system. Put differently, the Consumer Parties posit that if a

utility’s system is 99% reliable, a TDSIC plan will satisfy the statutory

incremental benefits requirement only if it will further elevate the overall

system’s reliability. Under their reading, the fact a TDSIC plan will preserve

system reliability going forward, when it would otherwise degrade, is

immaterial. Nothing in the TDSIC statute supports the Consumer Parties’

narrow reading of incremental benefits.

[24] The TDSIC statute “encourages energy utilities to replace their aging

infrastructure by modernizing electric or gas transmissions, distributions, and

storage systems.” NIPSCO Indus. Grp. v. N. Ind. Pub. Serv. Co., 125 N.E.3d 617,

624 (Ind. 2019). At its core, the TDSIC statute approves designated capital

improvements to the utility’s infrastructure to replace its aging infrastructure

and modernize its system. A proposed upgrade to the system is thus reasonable

when “the estimated costs of the eligible improvements . . . are justified by the

incremental benefits attributable to the plan.” I.C. § 8-1-39-10(b). Once the

Commission identifies the incremental benefits, it must then exercise its quasi-

legislative function and determine whether these benefits justify the estimated

costs.

[25] Neither ‘benefit’ nor ‘incremental’ is defined by the TDSIC statute. “When

interpreting a statute, we presume the legislature uses undefined terms in their

common and ordinary meaning.” NIPSCO Indus. Grp., 100 N.E.3d at 242. “If

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 15 of 22 the legislature has not defined a word, we give the word its plain, ordinary, and

usual meaning, consulting English language dictionaries when helpful in

determining that meaning.” Moriarty v. Ind. Dep’t of Nat. Res., 113 N.E.3d 614,

621 (Ind. 2019). As such, a “benefit” is defined as “something that guards,

aids, or promotes well-being;” while “incremental” means “something that is

gained or added.” WEBSTER’S THIRD INTERNATIONAL DICTIONARY 204, 1146

(3rd ed. 1993).

[26] The evidence reflects that the Proposed Plan identified seven categories of

benefits: (1) customer experience; (2) reliability and resiliency; (3) safety; (4)

operational efficiency; (5) risk reduction; (6) power quality; and (7)

modernization. Some of these benefits are reduced to a quantifiable monetary

value or monetization and each of the projects in the Proposed Plan are

correlated with several types of associated benefits. Among others, the

Proposed Plan indicates that the rebuilding of circuits, the largest category of

projects in terms of estimated costs, would involve rebuilding more than 400

miles of overhead power lines. It is uncontested that an upgrade to those lines

would make IPL’s system safer to the public and more reliable, while also

improving the ability to restore power promptly in the event of an outage. The

Plan reflects that the circuit rebuilds will lead to a larger capacity for bi-

directional flow, which will allow for more customer-owned generation solar

panels and other alternative energy sources. Based on all these benefits—which

is not solely risk-reduction—the Commission found the record showed a

“sound basis” for the proposed projects and associated costs such that the

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 16 of 22 project cost was “justified by the incremental benefits.” (Appellants’ App. Vol.

II, pp. 29-30). The monetization analysis reflects total benefits over a twenty-

year period of over $2 billion, compared to the total estimated cost of the

Proposed Plan of $1.2 billion. Also monetized in the analysis is the ability of

the new modernized grid to self-heal, without the need for human interaction,

which accounted for a benefit of $429 million,

[27] While the evidence indicates that “IPL’s assets are currently functioning well

but operating at various levels of risk (with an ever increasing number of assets

migrating into the high risk zone),” the Proposed Plan intends to “counter the

continuing trend of more assets moving into the high risk region, which will

lead to more frequent equipment failures, thus affecting large numbers of

customers.” (Exh. Vol. II, p. 140).

[28] In its Order, the Commission found that the Proposed Plan would “reduce risk

of asset failure and maintain service reliability,” thus “provid[ing] incremental

benefits compared to how the future would otherwise unfold.” (Appellant’s

App. Vol. II, p. 30). The Commission specifically pointed to IPL’s

supplemental analysis of the Proposed Plan’s benefits, which “monetized, from

the customer experience perspective, the value of avoiding service outages

associated with asset failure.” (Appellants’ App. Vol. II, p. 30). Based on that

analysis, the Commission determined that the Proposed Plan “will provide a

net benefit that exceeds the cost of the eligible improvements.” (Appellants’

App. Vol. II, p. 30). The Commission concluded that the estimated cost of the

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 17 of 22 Proposed Plan rested on a sound factual and analytical foundation and was

determined to be reasonable.

[29] Accordingly, as the Proposed Plan’s overall goal was “to replace the aging

infrastructure by modernizing its transmission and distribution system,” IPL

identified, besides risk reduction, several other benefits which added to the

system’s well-being. Based on the monetization of these numerous incremental

benefits, IPL supported its burden that “the estimated costs of the eligible

improvements . . . are justified by the incremental benefits” gained by the

customers. See I.C. § 8-1-39-10(b). As we find that the Commission’s

interpretation of its statute is reasonable, we affirm the Order.

IV. Specific Findings

[30] Lastly, the Consumer Parties contend that the Commission’s Order lacks

specific findings on all material issues raised by the parties. They maintain that

the Order misconstrued the cost-justification requirement by adopting IPL’s

position and addressing the “material deficiencies in IPL’s monetization

analysis” without critical scrutiny, despite the Consumer Parties’ arguments

indicating that the analysis greatly overstated the benefits while understating the

costs. (Appellants’ Br. p. 51).

[31] “[A]n Order must contain specific findings on all the factual determinations

material to its ultimate conclusions.” N. Ind. Pub. Serv. Co, 907 N.E.2d at 1016.

Specific findings are not required on particular arguments by the parties.

Citizens Action Coalition of Ind., Inc. v. Indianapolis Power & Light Co., 74 N.E.3d

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 18 of 22 554, 564-65 (Ind. Ct. App. 2017) (specific findings not required on claims that

“one component” of rate order had “deleterious effect on energy conservation

and energy efficiency,” or that “structure disproportionally harms” some

consumers). Findings “need to be only specific enough to permit us to

intelligently review the [agency] decision.” J.M. v. Review Bd. of Ind. Dep’t of

Workforce Dev., 975 N.E.2d 1283, 1287 (Ind. 2012). “Agency findings are

specific enough when they are given with sufficient particularity and specificity

such that the reviewing court can adequately and competently review the

agency’s decision.” Id. “An appeal based on an alleged lack of specific findings

presents a mixed question of law and fact.” NIPSCO Indus. Grp., 125 N.E.3d at

627. “In these situations, we review the Commission’s conclusions for

reasonableness, deferring to the Commission based on the amount of expertise

exercised by [it].” Id.

[32] While the TDSIC statute specifies three material determinations the

Commission must make on a proposed plan, the Consumer Parties only

disputed the third requirement, in which the “estimated costs of the eligible

improvements . . . are justified by [the Proposed Plan’s] incremental benefits.”

I.C. § 8-1-39-10(b). In reviewing the Order, the Commission’s detailed findings

and scrutiny span three pages. “Based on the evidence presented,” the

Commission found that “the record demonstrates that the estimated cost of

IPL’s TDSIC Plan . . . rests on a sound factual and analytical foundation and is

reasonable,” and that IPL’s estimate was “the best estimate of the cost of the

[Plan’s] eligible improvements.” (Appellants’ App. Vol. II, p. 29). The

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 19 of 22 Commission’s findings on the incremental benefits are equally clear and

evidence based: “[a]s shown in Table 3.3 of the [Proposed Plan], IPL

monetized” the customer value “of avoiding service outages associated with

asset failure.” (Appellants’ App. Vol. II, p, 30). IPL’s analysis—which “did

not attempt to quantify all project benefits,” but “focused on projects that lend

themselves to monetization”—showed the projects “provide a net benefit that

exceeds the cost of the eligible improvements.” (Appellants’ App. Vol. II, p.

30). The Order found that “record evidence demonstrates” that the Proposed

Plan seeks “to reduce risk of asset failure and maintain service reliability;” that

it “provides incremental benefits compared to how the future would otherwise

unfold;” and that IPL has “optimized the incremental benefits” and shown “a

sound basis for the proposed projects and associated costs.” (Appellants’ App.

Vol. II, p. 30). Thus, the Order “determin[ed] that the estimated costs of the

[Proposed Plan] improvements are justified by incremental benefits attributable

to the [Proposed Plan].” (Appellants’ App. Vol. II, p. 30).

[33] All these specific findings are prefaced by the Order’s detailed summary of

evidence on this topic in IPL’s case-in-chief, in the Consumer Parties’

opposition case, and in IPL’s rebuttal. See NIPSCO Indus. Grp., 125 N.E.3d at

625 (“Despite the Industrial Group’s arguments to the contrary, the

Commission supported its conclusion to approve the TDSIC-2 petition with

specific findings,” prefaced “by summarizing the conflicting testimony

presented to it [] by NIPSCO and the Industrial Group”). Accordingly, the

Commission’s specific findings are sufficiently particular that we can

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 20 of 22 “adequately and competently review” the Commission’s decision. J.M., 975

N.E.2d at 1287.

[34] We disagree with the Consumer Parties that the Commission should have

specifically addressed each one of its concerns posed by IPL’s monetization

analysis and risk-reduction model. The Commission’s findings credited and

gave weight to IPL’s monetization analysis and risk-reduction model. It

accepted IPL’s methodology of calculation of benefits and estimated costs.

While both the Consumer Parties’ and IPL’s methodology were evidenced in

the record with expert witnesses on both sides, the Commission rejected the

Consumer Parties’ proposed evaluation and gave no weight to its witnesses

Although “reasonable people may disagree” with the Commission’s findings,

“that is immaterial to our review of the [Commission’s] decision, which

contains sufficient findings and is supported by substantial evidence.” Citizens

Action Coalition of Ind., Inc. v. N. Ind. Publ. Serv. Co, 76 N.E. 3d 144, 155 (Ind.

2017).

[35] As we noted before, specific findings are not required on particular arguments

by parties. See Citizens Action Coalition of Ind., Inc., 74 N.E.3d at 564-65. Here,

the Commission’s Order contained specific findings on all the factual

determinations material to its ultimate conclusions and was prefaced by an

extensive review of the evidence presented by the parties. Although the

Commission did not explicitly refute each and every argument made by the

Consumer Parties, its findings are sufficiently detailed to allow us an intelligent

and adequate review of the Order.

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 21 of 22 CONCLUSION [36] Based on the foregoing, we hold that the Commission properly admitted IPL’s

workpapers by administrative notice; the Commission properly determined that

the costs of the eligible improvements included in the Proposed Plan are

justified by their incremental benefits; and the Commission’s findings are

sufficiently specific to enable appellate review of its decision.

[37] Affirmed.

[38] May, J. and Altice, J. concur

Court of Appeals of Indiana | Opinion 20A-EX-800 | November 4, 2020 Page 22 of 22