Duke Energy Indiana, LLC v. Town of Avon, Indiana

In 2015, the town of Avon passed an ordinance which allowed the town to force a utility to relocate facilities on public streets or public rights-of-way at the utilities expense due to municipal projects. Duke Energy subsequently filed a complaint with the IURC, alleging Avon’s ordinance violated Indiana law. Initially, the IURC dismissed the complaint because Avon had already initiated suit in Hendricks County. Duke appealed, and the Indiana Court of Appeals reversed the IURC’s dismissal, finding that the IURC had exclusive jurisdiction to hear the claim. The IURC proceeded to hear the merits of the claim. On January 23, 2019, the IURC issued an Order holding that Avon’s Ordinance is unreasonable and void.

The IURC found Avon’s ordinance unreasonable for four primary reasons. First, the ordinance required that utilities must relocate their facilities within 60 days, which is inconsistent with INDOT relocation procedures. Second, the ordinance required a utility to bear all the costs associated with relocation. This is inconsistent with an Indiana statute requiring a utility to be reimbursed where that utility had property rights for existing facilities. Third, the ordinance unilaterally allows Avon to determine where and how the utility must relocate their facilities without any consideration of feasibility or least costly alternatives. Fourth, the Avon ordinance unreasonably burdens customers outside its limits by forcing them to contribute to Avon’s municipal projects.

The IURC did not decide on whether Avon must actually reimburse Duke, as it found it only had jurisdiction to consider the reasonableness of the statute, not to order any reimbursement. The IURC’s decision serves as a strong policy statement that utility property rights should be respected and an encroachment of such rights must be compensated. However, left unanswered was whether or not the IURC support reimbursement to utilities for relocating facilities without any declared property rights attached (i.e. easements by prescription). Relevant INDOT rules, if applicable, would hold that a relocating utility need not be compensated where they did not have any declared private property rights attached to the facilities.

 

Jeremy Fetty is a partner in the law firm of Parr Richey with offices in Indianapolis and Lebanon. Mr. Fetty is current Chair of the Firm Utility and Business Section and often advises businesses and utilities (for profit, non-profit and cooperative) on regulatory, compliance, and transactional matters.

The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.