Eschewing consumer groups’ concerns, FERC has approved a Singaporean government-owned investment firm to claim a 20% stake in Duke Energy Indiana.
FERC labeled the transaction consistent with public interest in an order issued Tuesday (EC21-56).
Duke Indiana in February filed an application to create a new holding company structure for its utility operations as part of a $2 billion transaction that gives GIC Private Limited a 19.9% indirect minority interest in the utility. Duke Indiana plans to retain and control its remaining 80.1% indirect interest.
The commission determined the sale won’t adversely affect competition because Duke and GIC don’t own generation capacity in the same geographic markets and because MISO has operational control of Duke’s transmission facilities. FERC noted Duke’s wholesale power will continue to be sold at market-based rates after the transaction and its transmission revenue requirement will remain unchanged.
Public Citizen, Citizens Action Coalition of Indiana, and the Sierra Club complained that giving minority control of Duke to a Singapore-controlled wealth fund is inappropriate. They also objected to Duke’s agreement allowing GIC to name two directors to Duke Indiana’s 10-member board of directors. (See Consumer Groups Question Duke Indiana-Singapore Transaction.)
FERC said GIC’s 27.6% indirect minority interest in the Genesee and Wyoming Railroad, which delivers coal to Duke Indiana’s power plants, was not a conflict of interest as the consumer groups asserted. The commission noted that Duke Indiana’s contracts and transactions with G&W will continue to go before the Indiana Utility Regulatory Commission (IURC) for review and approval. It also said that Duke Indiana promised to bar GIC’s handpicked board members from voting on coal-by-rail matters, which are unlikely to come before the board in the first place.
“[R]ailroad transportation costs represent a very small percentage of Duke Indiana’s total fuel costs,” FERC said. “GIC Infra will not exert an influence on any rail service decisions that could potentially benefit G&W and result in cross-subsidization.”
FERC did not address the consumer groups’ claim that GIC was overpaying for the stake in return for “lucrative, above-market dividends.” It said that assumption was beyond the scope of the proceeding.
The commission also batted away consumer groups’ complaints that Duke and GIC were structuring the transaction to deliberately avoid the IURC’s regulatory review. It said it found “no evidence that either state or federal regulation will be impaired” by the sale and pointed out that Indiana’s commission had not raised any concerns.
