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INDIANA UTILITY REGULATORY COMMISSION

IN THE MATTER OF THE COMPLAINT OF DUKE ENERGY INDIANA, LLC AGAINST THE TOWN OF AVON, INDIANA CONCERNING A DETERMINATION BY THE TOWN OF AVON, INDIANA, AVON TOWN ORDINANCE 2015-03 AND REQUEST FOR RELOCATION OF DUKE'S FACILITIES

) ) CAUSE NO. 44804 ) ) ) APPROVED: JAN 2 3 2019 )

ORDER OF THE COMMISSION ON REMAND

Presiding Officers: David E. Ziegner, Commissioner Loraine L. Seyfried, Chief Administrative Law Judge

During the construction of the White Lick Creek Trail, a multi-use rncreational trail in Avon, Indiana ("Trail"), the Town of Avon ("Avon") demanded that Duke Energy Indiana, LLC ("Duke") relocate a number of its utility poles along County Road 625 East at its own expense. Avon Town Ordinance 2015-03 ("Ordinance"), which created Avon Town Code § 4-122(E) and amended Avon Town Code§ 4-123, vests Avon with the power to direct a utility to relocate its facilities "at a time and place determined by" Avon; requires a utility to bear the cost of relocating its facilities for Avon's road, street, sidewalk, trail, and "other" projects; and imposes a $500 per day penalty on utilities for non-compliance.

On June 24, 2016, Duke filed its Verified Complaint ("Complaint") with the Indiana Utility Regulatory Commission ("Commission"), seeking to have the Commission find the Ordinance unreasonable and void pursuant to Ind. Code § 8-1-2-101. 1 Duke also requested that the Commission order Avon to reimburse Duke for the cost of relocating its poles. The Commission dismissed this Cause without prejudice on March 15, 2017 due to inactivity and the pendency of an earlier-filed case between the parties in a Hendricks County court. The Indiana Court of Appeals subsequently reversed the dismissal and remanded this Cause to the Commission for further proceedings, holding that Ind. Code§§ 8-1-2-lOl(a)(l) and 8-1-2-115 "unambiguously establish exclusive jurisdiction in the IURC to hear Duke's complaint on the validity of the Ordinance." Duke Energy Indiana, LLC v. Town of Avon, Indiana, 82 N.E.3d 319, 325 (Ind. Ct. App. 2017).

Duke prefiled its case-in-chief on April 5 and 6, 2018. On June 5, 2018, Avon filed its case­in-chief and the Indiana Office of Utility Consumer Counselor ("OUCC") filed a Notice of Intent Not to Prefile Testimony. Duke filed its rebuttal testimony and exhibits on July 11, 2018.

1 Most filings in this Cause use the term "the Ordinance" rather than referring to the individual sections of the Avon Town Code at issue. The Commission interprets Duke's request "that the Commission find and Order ... [that the] Ordinance is unreasonable and void" as one to find Avon Town Code§§ 4-122(E) and 4-123 unreasonable and void. To the extent that we use the term "the Ordinance" in this Order, it is intended to refer collectively to Avon Town Code §§ 4-122(E) and4-123.

The Commission held an evidentiary hearing in this Cause on September 12, 2018, at 9:30 a.m., in Room 222 of the PNC Center, 101 West Washington Street, Indianapolis, Indiana. Avon and Duke appeared at the hearing, and the prefiled testimony and exhibits of the parties were admitted into the record without objection. The OUCC also appeared at the hearing, but did not present any evidence.

Based upon the applicable law and the evidence herein, the Commission now finds:

1. Notice and Commission Jurisdiction. Notice of the hearing in this Cause was given and published by the Commission as required by law.

Duke is a limited liability company organized and existing under the laws of the State of Indiana with its principal office in Plainfield, Indiana. Duke is engaged in the business of distributing, furnishing, and selling retail electric service to approximately 810,000 customers in 69 counties in the State of Indiana, including Hendricks County. Duke is a "public utility" as defined by Ind. Code § 8-1-2-1. The Commission has jurisdiction over Duke's Complaint pursuant to Ind. Code§ 8-1-2-lOl(a)(l).

Avon is a municipality located in Hendricks County, Indiana. Avon is subject to the Commission's jurisdiction in this Cause pursuant to Ind. Code§ 8-1-2-lOl(a)(l).

2. Background. The Trail is located upon, along, and across County Road 625 East in Avon. In 2012, Avon requested that Duke move some of its utility poles located along County Road 625 East as part of Phase 3 of the Trail project and refused to agree to reimburse Duke for its. relocation costs.

On February 26, 2015, the Avon Town Council passed the Ordinance, which created Avon Town Code§ 4-122(E) and amended Avon Town Code§ 4-123 as follows:

§4-122(E) Relocation of Public Utilities. If it is necessary for public utilities located on public streets or in the Town's rights-of-way to be relocated because of a town road project, street project, sidewalk project, trail project or other project, or any combination thereof, the owner of the public utility facilities will relocate the facilities at the owner's expense at a time and place determined by the Town. The Town will provide to the owner written notice, at least 60 days prior to the date by which the relocation must be completed, of the new location of the facilities and the time for completion. If the owner fails to relocate the public utility facilities as directed by the Town, the Town will have the right to relocate the public utility facilities. If the Town exercises its right to relocate the facilities, the owner will reimburse the Town forthe cost of the relocation within thirty (30) days of the receipt by the owner of a notice of the cost of relocation. If the owner fails to reimburse the Town for these costs, the Town has the right to collect these costs by exercise any available legal remedy, including but not-limited to a money judgement for the costs incurred by the Town.

§ 4-123 PENALTY

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Any person or entity violating this Article is subject to a fine in the amount of $500 per day, plus the cost of the required permit. This article may be enforced through the Avon Ordinance Violation Bureau.

On May 23, 2016, Avon sued Duke in the Hendricks Circuit Court, Cause No. 32C01-1605-PL-0059 (the "Hendricks County Case"), seeking a declaratory judgment to determine the rights and obligations of Duke and Avon, including, among other things, whether Avon must reimburse Duke for its pole relocations and whether Avon must execute Duke's Utility Reimbursement Agreement. Avon also sought an injunction to force Duke to move its poles.

On August 9, 2016, the Hendricks Circuit Court accepted an Agreed Order submitted by the parties. In the Agreed Order, among other things, Avon agreed to execute Duke's Utility Reimbursement Agreement; Duke agreed to relocate its poles by December 1, 2016; and Avon agreed to tender the estimated cost of Avon's pole relocations (about $103,500) to the Hendricks County Clerk to hold in escrow "until the Court ... determines whether these funds should be paid ... to Duke ... or returned to Avon[.]" Duke has since relocated its poles, which cost $134,918.62, and Phase 3 of the Trail project is now complete.

3. Duke's Case-in-Chief. Duke presented the testimony of two witnesses in its case-in-chief: Cynthia A. Rowland, Duke's Senior Engineering Technologist, and Jeffrey R. Bailey, Director of Rate Design and Analysis for Duke Energy Business Services LLC.

A. Direct Testimony of Cynthia A. Rowland. Ms. Rowland testified that, on June 1, 2012, Duke received an Initial Utility Notice and project location map from United Consulting, Avon's utility coordination contractor for the Trail project. On September 25, 2012, Duke responded to the Initial Utility Notice and informed Avon that Duke had facilities in the affected area and that it expected Avon to reimburse it for relocating its facilities. Ms. Rowland testified that Duke's request for reimbursement was based on Duke's Facility Relocation Guidelines, its Commission-approved General Terms and Conditions for Electric Service ("Tariff'), and 170 IAC 4-1-28.

According to Ms. Rowland, Avon requested that Duke move its existing overhead 7.2kV primary distribution line along County Road 625 East in Avon, including all service equipment, and overhead 120/240V secondary service lines. In order to move these lines, Duke would need to relocate several utility poles. Ms. Rowland testified that all but one of the affected poles had been in place for at least 20 years. Duke thus believed that it had prescriptive easement rights for all of the affected poles except one. On March 22, 2013 and August 14, 2013, Duke again notified Avon that it believed Avon should reimburse it for relocating its poles. See Petitioner's Exhibits 1-F and 1-G. Also on August 14, 2013, Duke submitted its Relocation Work Plan ("Work Plan") for the project to Avon for approval and signature. Ms. Rowland testified that Duke revised its Work Plan several times, but Avon refused to agree to a Work Plan containing terms requiring it to reimburse Duke for pole relocation. Avon ultimately signed Duke's Work Plan and Utility Reimbursement Agreement on August 1 7, 2016, following entry of the Agreed Order in the Hendricks County Case.

Ms. Rowland testified that Duke follows the Indiana Department of Transportation ("INDOT") process outlined in 105 IAC 13 for all facility relocation projects, even if a city or municipality funds the project. 105 IAC 13 establishes a formal procedure for relocating utility

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facilities and provides for coordination between INDOT, affected utilities, and contractors. She said that she believes that 105 IAC 13 provides a realistic timeline for planning a utility relocation project.

Ms. Rowland testified that, in order to relocate its facilities, Duke would need to draft engineering plans and develop processes that comply with the National Electrical Safety Code; determine the appropriate location and design for its relocated facilities; obtain the necessary materials, resources, and permits'; schedule crews; obtain the necessary rights-of-way, easements, and property rights; and determine if any vegetation clearing is needed. Based on these considerations, she testified that she believes it is unrealistic to expect a utility to relocate its facilities within 60 days of a demand by a municipality.

According to Ms. Rowland, on June 19, 2014, Tom Klein, Avon's town manager, told Duke that Avon's attorney had advised it that Duke was required to relocate its facilities at its own expense "because [Avon's] project involves improvements to a highway, street or road, [its] project qualifies under the statute even though it is a trail project and not exclusively a road or street project[.]:' Petitioner's Exhibit 1-H. Between July 18, 2014, and January 25, 2015, Avon and Duke continued to discuss whether Avon needed to reimburse Duke. Petitioner's Exhibits 1-1and1-J.

As Duke and Avon continued to dispute whether Duke's pole relocation costs were reimbursable, the Avon Town Council passed the Ordinance on February 26, 2015. Ms. Rowland testified that Avon attempted to use the Ordinance to force Duke to move its facilities for the Trail project without reimbursement. She stated that, on March 31, 2016, Mr. Cannon, Avon's public works director, submitted a Notice to Proceed for Proposed Improvements ("Notice to Proceed") to Duke. In the Notice to Proceed, Mr. Cannon stated:

This letter will also confirm that the Town of Avon will expect Duke to relocate its utility facilities within the 60-day period. The Town of Avon will not pay for the relocation of the utility facilities in the Town's right-of-way. The Town of Avon will not pay for the relocation of the utility facilities outside of the Town right-of-way because public records show no grant of easement to Duke for these facilities. The Town of Avon will not sign your proposed relocation agreement because it requires payment for the relocation and because it requires the Town to waive its right to future relocations without compensation.

Petitioner's Exhibit 1-0. Ms. Rowland testified that Avon's demands in the Notice to Proceed mirror the provisions of the Ordinance.

Ms. Rowland stated that, if Avon's Ordinance is upheld, she believes that other municipalities will likely follow Avon's lead and enact ordinances that unilaterally shift relocation expenses to utilities and their customers. The City of Carmel enacted an ordinance similar to § 4-l 22(E) on June 19, 2017 (Ordinance D-2368-17). Petitioner's Exhibit 1-R. Carmel has already attempted to use its ordinance to force Duke to relocate facilities without reimbursement. Petitioner's Exhibit 1-Q (March 15, 2018 e-mail from Ashley M. Ulbricht, Carmel City Attorney, to Duke representatives). The Town of Brownsburg is also considering a similar ordinance (5.94 RS-01 Right of Way Standards Section D). Petitioner's Exhibit 1-S.

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Ms. Rowland testified that she believes the Ordinance is overbroad, unduly burdensome, and inconsistent with the Commission's rules and Duke's Tariff. She said that she believes a utility should have some say in the location and timing of the relocation of its facilities. She testified that it is unreasonable for Duke and its customers, located in 69 counties statewide, to bear the cost of relocating Duke's facilities for the Trail project and any future Avon projects that are subject to the Ordinance. Ms. Rowland stated that Avon residents, who will benefit from the Trail, should pay for relocating Duke's poles.

B. Testimony of Jeffrey R. Bailey. Mr. Bailey testified that, because the costs imposed by the Ordinance are required by Avon, a municipality served by Duke, they would be valid costs of service under prevailing ratemaking principles. Thus, if Duke were forced to pay for the cost of relocating its poles following Avon's demand, Duke would seek to include these costs in its rates as part of its costs of service. He stated that he believes that this would result in poor ratemaking policy-. if municipalities can unilaterally shift the costs of relocation to utilities via ordinance, utility customers statewide will be forced to subsidize the economic development, improved aesthetics, and other community improvement efforts of those municipalities, regardless of where they live. He testified that Duke does not oppose economic development projects such as the Trail, but Duke believes that the communities seeking the improvements, not utilities and their customers, should pay for relocating utility facilities.

Mr. Bailey stated that, even with the relatively small amount of money at issue in this matter (under $150,000), local ordinances such as the Ordinance essentially constitute a license for a municipality to impose all costs of relocation on a utility and its customers, regardless of whether those costs are reasonable. He stated that the Ordinance does not account for considerations such as land acquisition, engineering, vegetation management, or resource expenses. He also stated that, if the Ordinance is upheld, he would expect other municipalities to pass similar ordinances, resulting in Duke's customers paying millions of dollars in additional relocation costs each year.

4. Avon's Case-in-Chief. As Avon's public works director, Mr. Cannon testified that he was involved in planning the construction of the Trail. He testified that the Trail project was subject to INDOT oversight and management because it received federal funding through the Indianapolis Metropolitan Planning Organization.

Mr. Cannon testified that Avon's contractor, United Consulting, concluded that County Road 625 East was the best location for the Trail and determined that some changes to the road and surrounding land would be needed for engineering and safety reasons. United Consulting determined that it was necessary to improve the sight distances on County Road 625 East by raising a dip in the road and lowering the elevation of small hills on either side of the dip. United Consulting also determined that a drainage culvert located under the road should be replaced to facilitate widening the road to create space for the Trail.

According to Mr. Cannon, Duke argued that it should be reimbursed for moving its poles because it deemed this to be a "trail project," not a road project. He said that United Consulting continued to request documentation from Duke that it possessed easement rights and communicated to Duke that, if it did not have easement rights, Avon believed it did not need to reimburse Duke for moving its poles. He testified that Duke informed Avon in 2013 that it believed that it had

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prescriptive easement rights because the poles at issue had been in place for an extended period of time.

Mr. Cannon stated that INDOT advised Avon that Duke needed court orders proving prescriptive easement rights in order to qualify for reimbursement for relocating its poles. He testified that Avon requested documentation of Duke's claimed easement rights, but Duke never provided Avon with any court orders establishing those rights. He stated that he had reviewed Ms. Rowland's direct testimony and noted that she never testified that a court had issued orders substantiating Duke's claimed easement rights.

According to Mr. Cannon, the disagreement between Avon and Duke about reimbursement delayed Phase 3 of the Trail project for several years. He testified that Avon believed that his March 2016 Notice to Proceed was necessary to force Duke to relocate its poles to avoid the risk oflosing federal funding for the Trail due to delays. Mr. Cannon stated that Duke refused to modify its Work Plan to remove terms requiring Avon to reimburse Duke, but the parties' later agreement as part of the Hendricks County Case (the Agreed Order) enabled Phase 3 of the Trail project to move forward.

Mr. Cannon testified that he was involved in the process of developing the Ordinance. He stated that the Ordinance was designed to assist in the maintenance of Avon's public rights-of-way and to give Avon "some additional control over utilities as well as to protect our taxpayers from undue burden on public projects." Avon Exhibit 1. He also stated that "it is not the goal of the ordinance to regulate utilities." Id. Mr. Cannon said that Avon purchases rights-of-way on behalf of the public and views the management of rights-of-way as important to protecting its infrastructure and maximizing the investment of its taxpayers. He testified that he believes it is unfair for Avon's taxpayers to bear the burden of acquiring the rights-of-way that utility companies are allowed to use at no cost and also ask them to reimburse utilities to relocate from those same rights-of-way.

Mr. Cannon testified that several other utilities, AT&T, Spectrum, and Hendricks Power, relocated their facilities for the Trail project without reimbursement from Avon.

Mr. Cannon testified that the 60-day minimum notice period established by the Ordinance would not allow Avon to avoid 105 IAC 13 and INDOT procedures for utility relocations. He stated that Avon would only require relocation in 60 days for minor projects or if a utility was refusing to relocate its facilities. He also said that the Ordinance does not allow Avon to dictate a utility's relocation plan.

5. Duke's Rebuttal Testimony. In her rebuttal testimony, Ms. Rowland disputed Mr. Cannon's testimony on the timeline of certain events and communications between Duke and Avon. She also disagreed with Mr. Cannon regarding whether certain improvements to the road would have been necessary if the· Trail were not constructed and disputed his assertion that Duke was responsible for delaying the Trail construction. She reiterated Duke's position that it should have been reimbursed for relocating its facilities as part of the Trail project pursuant to its policy and its interpretation of its Tariff and Indiana law. Ms. Rowland also restated Duke's position that the Ordinance is unreasonable and unfair to Duke's customers.

Ms. Rowland testified~ that the source of funding for a project (federal, state, or local) is irrelevant to Duke's relocation of its utility poles, as Duke is not usually provided with funding

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information. She stated that Duke follows 105 IAC 13 for all INDOT facility relocation projects, even if the project is funded by a city or municipality, so she believed that the fact that the Trail was federally funded was irrelevant since Duke was already following INDOT procedures for the project.

Ms. Rowland generally agreed with Mr. Cannon's description of INDOT utility relocation procedures and his assessment that the length of time for a project's design phase depends on the complexity of the project. However, she disputed Mr. Cannon's assertion that easement rights are required for reimbursement under 105 IAC 13, as the text of the regulation does not explicitly state such a requirement. She testified that, while Duke did not have any recorded easements, it could have provided Avon with copies of its pole cards demonstrating how long the poles had been in place. Ms. Rowland disputed Mr. Cannon's testimony that Duke was not able to produce documentation of its easement rights. She testified that, in the 36 years she has worked for Duke, she has never had to obtain a court order to prove Duke's prescriptive easement rights after demonstrating the age of its facilities.

Ms. Rowland noted Mr. Cannon's contradictory testimony that the Ordinance was both intended to give Avon additional control over utilities and, later, that it was not intended to regulate utilities. She testified that she believes that the Ordinance has little to do with the maintenance and upkeep of Avon's rights-of-way, as claimed by Mr. Cannon, and restated Duke's position that the Ordinance is an impermissible and unreasonable regulation of utilities. She also disputed Mr. Cannon's testimony that Avon would only invoke the Ordinance's 60-day notice provision to prevent delays in projects or for minor projects. According to Ms. Rowland, this interpretation of the Ordinance gives Avon too much discretion regarding when it would invoke the Ordinance and then levy a fine if the utility is unable to comply for any reason, even through no fault of its own. She testified that the Ordinance ignores the unforeseen exigencies that often arise during construction projects and, on its face, applies to all utility relocation projects.

Ms. Rowland also addressed Mr. Cannon's testimony that AT&T, Spectrum, and Hendricks Power did not require reimbursement from Avon for relocating their facilities as part of the Trail project. Ms. Rowland noted that AT&T and Spectrum are not subject to the same Commission regulation of their rates as electric utilities such as Duke. All of Duke's relocation costs incurred pursuant to the Ordinance would be borne by its customers, which would not necessarily be the case for other types of utilities. Ms. Rowland also testified that Hendricks Power is a rural electric cooperative operating primarily in Hendricks County and, therefore, it is feasible that members of Hendricks Power would have access to and use of the Trail, which is not the case for many of Duke's customers in the 69 Indiana counties that it serves.

6. Commission Discussion and Findings. For the reasons explained further below, the Commission finds that Avon Town Code§ 4-122(E) is unreasonable and void. While we recognize a municipality's statutory authority to determine the provisions by which a utility occupies the public rights-of-way within its boundaries, such exercise of authority must be reasonable and not inconsistent with Ind. Code ch. 8-1-2. Ind. Code§ 8-1-2-lOl(a). Not only does Avon Town Code§ 4-122(E) conflict with applicable INDOT regulations and state law permitting reimbursement, it results in charges to the utility and its customers that are inconsistent with Ind. Code ch. 8-1-2. It is overly broad in its application through its failure to consider the impact on the utility's statutory duty to provide reasonably adequate service and facilities at reasonable and just charges to its

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customers. See Ind. Code 8-1-2-4. Avon Town Code § 4-122(E) imposes provisions that fail to consider applicable safety requirements when relocating utility facilities and the reasonableness of imposing all relocation costs on the utility's customers for all projects Avon undertakes that require utility facilities to be relocated.

In addition, because § 4-122(E) is void, we need not reach the issue of whether Avon Town Code § 4-123 is independently unreasonable and void under Ind. Code § 8-1-2-101. The Commission also lacks jurisdiction to order that Duke's pole relocation costs be reimbursed by Avon, INDOT, or any other state actor; we also have no jurisdiction to determine that Duke's relocation costs are not reimbursable.

The primary issue facing the Commission in this Cause is whether Avon Town Code§§ 4-122(E) and 4-123 are unreasonable and void pursuant to Ind. Code § 8-1-2-101. Much of the parties' testimony and evidence relates to matters including, but not limited to, who contacted whom, when, and about what; whether this was a road or trail project; who was responsible for delaying Phase 3 of the project; whether the route chosen for Phase 3 was the "best" route; and whether road improvements to County Road 625 East were really necessary. These matters are irrelevant to the Commission's analysis of the reasonableness of§§ 4-122(E) and 4-123.

A. Whether the Trail project is classified as a "general road improvement project" or a trail project is irrelevant. The parties both apparently believe that whether the Trail project is considered to be a "general road improvement project" or trail project is relevant to the outcome of this matter. S. Ind. Gas & Elec. Co. v. Dep't of Highways, 533 N.E.2d 1289 (Ind. Ct. App. 1989) ("SIGECO"), which is cited by both parties, never uses the term "general road improvement project," nor does that opinion distinguish between road improvement projects and other construction projects occurring pursuant to state or municipal police power. The Commission is also unaware of any other cases, statutes, or regulations utilizing the term "general road improvement project" in such a context.

In SIGECO, the Court of Appeals noted:

[T]he only question at issue at trial [and thus also on appeal] was whether SIGECO was entitled to compensation of expenses incurred in removing its utility facilities from a public right-of-way. Not at issue was whether SIGECO was entitled to compensation for the relocation of its facilities from real estate it owned or in which it had a private easement. To the extent that SIG ECO incurred expenses of the latter type, the State reimbursed it.

533 N.E.2d at 1291 (emphasis added).

The Court of Appeals in SIGECO cited New Orleans Gaslight Co. v. Drainage Commission of New Orleans, 197 U.S. 453 (1904), in which the Supreme Court held that "an individual required to comply with a regulation enacted for the public health and safety pursuant to the police power must do so at his own expense." SIGECO, 533 N.E.2d at 1292. Similar to the situation in SIG ECO, the utility in New Orleans Gaslight Co. was required to relocate its gas pipes that were located in the public right-of-way due to construction of a drainage system without any reimbursement from the city. The Court of Appeals emphasized that "SIGECO's right to locate its utility facilities in the

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streets is subject to the exercise of the police power by the State in the interest of public health, safety, and convenience." Id Thus, the Court of Appeals held that SIGECO was not entitled to reimbursement for moving its facilities that were located in the public right-of-way as part of the construction of an expressway. Id

While the Commission does not have jurisdiction to determine whether the pole relocations at issue here are reimbursable (see further discussion below in Section 6.E), we note that the exercise of a municipality's police powers is not limited to road projects. "According to settled principles, the police power of a state must be held to embrace, at least, such reasonable regulations established directly by legislative enactment as will protect the public health and the public safety." Jacobson v. Massachusetts, 197 U.S. 11, 25 (1905). "It is unquestioned that the provision of recreation services and their facilities is a proper utilization of a municipality's police powers." Bldg. Indus. Assn. of Cleveland & Suburban Ctys. v. Westlake, 660 N.E.2d 501, 504 (Ohio Ct. App. 1995).

B. Avon is not acting as a "customer" of Duke under 170 IAC 4-1-28, and Duke's Tariff is similarly irrelevant. 170 IAC 4-1-28 provides that a utility may seek reimbursement when a customer, including a municipality, requests "that utility facilities be redesigned, reengineered, relocated, removed, modified or reinstalled." However, this provision is not applicable here, because Avon is not acting in the capacity of a customer of Duke, but is exercising its municipal police power in constructing the Trail. See, e.g., SIGECO, 533 N.E.2d at 1294-95 ("The State did not order SIGECO to relocate its facilities from Division Street under the guise of its rights as an abutting landowner. Rather, it did so in the exercise of its police power in the interest of public safety and convenience in order to construct the Expressway.").

Duke's Tariff§ 9.3 is similar to 170 IAC 4-1-28: "If a customer request [sic] for his convenience, or by his actions, requires that utility facilities be redesigned, reengineered, relocated, removed, modified or reinstalled, the utility may require the customer to make payment to it of the full cost of performing such service." _However, for the same reasons noted above, this section of Duke's Tariff does not apply here since Avon is not acting as a customer of Duke.

C. Avon Town Code§ 4-122(E) is unreasonable and void. Ind. Code§ 8-1-2-101 (a )(1) permits the Commission to address the validity of a municipal or county ordinance or "other determination"2 relating to ''the provisions ... upon which a public utility ... occupies the areas along, under, upon, and across the streets, highways, or other public property within such municipality or county[.]" For the following reasons, the Commission finds Avon Town Code§ 4-122(E) to be unreasonable and void.

. i. Section 4-122(E) conflicts with applicable INDOT regulations relating to the relocation of utility facilities for highway improvement projects. The provisions of Avon Town Code§ 4-122(E) conflict with INDOT regulations in 105 IAC 13, which establish a formal procedure for highway improvement projects that involve the relocation of utility facilities. Because the Trail project received federal funding, it was subject to INDOT oversight and

2 To the extent that Avon's conclusion that it will not reimburse Duke's relocation expenses is considered to be an "other determination" under Ind. Code§ 8-1-2-lOl(a)(l), that determination is unreasonable and void for the same reasons as Avon Town Code§ 4-122(E) is unreasonable and void.

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management.3 For example, 105 IAC 13-3-3 establishes a general timeline for planning INDOT­managed construction projects such as this one:

• INDOT must send its preliminary project plan to any affected utilities. An affected utility then has 30 or 60 days, depending on whether the project is major or minor, to review INDOT's preliminary project plan and respond to INDOT with any conflicts. 105 IAC 13-3-3(a).

• After the development of the preliminary project plan is complete, INDOT must send its preliminary final project plan to any affected utilities. An affected utility then has either 60 or 120 days, depending on project size, to develop and send to INDOT a detailed work plan for the project. A utility may have more time to develop a work plan if it must coordinate with other utilities, if the work is unusually complex, or if the project involves extensive facility relocations. 105 IAC 13-3-3(b ).

• The utility must include in its work plan, among other things, estimates of the earliest date when the utility could begin work, the number of days needed to complete the work, the time needed to obtain permits and materials, the time needed to schedule work crews, and the time needed to obtain any additional right-of-way needed. 105 IAC 13-3-3(c).

• For any work for which INDOT will compensate the utility, the utility's work plan must include a cost estimate, including documentation of easements and compensable land rights. 105 IAC 13-3-3(d).

• INDOT will work with the utility to ensure its work plan is compatible with INDOT permit requirements, project plans, the construction schedule, and other utilities' work plans. 105 IAC 13-3-3(e).

• lfINDOT has any problems with a utility's work plan, it will notify the utility by mail. The utility will then have 30 days to submit a revised work plan. INDOT may accept the revised work plan or request specific changes. Ultimately, INDOT will adopt a final work plan that considers the interests of the utility, contractor, and the public. The final work plan is a final agency action by INDOT that is subject to appeal. 105 IAC 13-3-3(f).

Ind. Code § 36-1-3-5 provides that a municipality may exercise any power it has to the extent that that power is not denied by the Indiana Constitution or by statute and is not expressly granted to another entity. Among other things, a municipality does not have "[t]he power to regulate conduct that is regulated by a state agency, except as expressly granted by statute." Ind. Code § 36-1-3-8(a)(7).

Under the INDOT regulations, a utility has a minimum of 90 days to review INDOT's construction plans and to develop its work plan, in the case of a minor project, and even more time

3 INDOT's regulations define "highway" as a roadway under the jurisdiction of INDOT or where an improvement project is planned. 105 IAC 13-2-9. An "improvement project" includes, among other things, local projects administered by INDOT. 105 IAC 13-2-10. Thus, under the plain language of these regulations, the Trail project constitutes a highway improvement project. The parties do not dispute that INDOT's regulations in 105 IAC 13 apply to the Trail project.

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to prepare for major or complicated projects. INDOT's regulations also account for the time needed for a utility to obtain permits, schedule work crews, and acquire materials, among other things. INDOT' s regulations do not establish any firm deadline by which a utility has to complete relocating its facilities. Rather, INDOT's goal is to "adopt a final work plan that considers the interests of the utility, contractor, and public, to ensure safety and reliability of the utility facilities and the highway and to avoid the imposition of unnecessary and reasonable costs." 105 IAC 13-3-3(±).

Section 4-122(E), on its face, permits Avon to unilaterally dictate what a utility must do and when and where it must do it in the case of a road, street, sidewalk, trail or "other" project in Avon. If Avon deems it "necessary for public utilities . . . to be relocated . . . , the owner of the public utility facilities will relocate the facilities at the owner's expense at a time and place determined by [Avon,]" with Avon only required to provide a minimum of 60 days' notice to the utility. One could easily envision a circumstance in which a utility and INDOT are still negotiating a work plan under 105 IAC 13-3-3, but 60 days have passed following a demand by Avon to relocate utility facilities, resulting in :qnes and potential legal action by Avon against the utility if the relocation is not complete. This result is clearly unreasonable. Through § 4-122(E), Avon is impermissibly attempting to "regulate conduct that is regulated by a state agency," INDOT. Ind. Code§ 36-l-3-8(a)(7).

While Mr. Cannon testified that Avon intends to only invoke the 60-day notice period of§ 4-122(E) under limited circumstances, it contains no language limiting its application to specific circumstances. Mr. Cannon also claimed that § 4-122(E) does not conflict with INDOT procedures; however, it does not reference INDOT or its procedures and, by its plain language, could easily cause conflict with INDOT' s timeline for a project, as described above.

Avon argues that, even if the Commission finds that§ 4-122(E) is unreasonable and void, that only the section establishing a 60-day minimum notice period should be deemed void. The Commission disagrees. In fact, if§ 4-122(E) were amended to remove the 60-day minimum notice requirement, it would become even more unreasonable, because it would still require a utility to "relocate the facilities at the owner's expense at a time and place determined by [Avon,]" without setting any minimum notice period at all. Avon could demand that a utility relocate its facilities in a month, a week, or even less time.

Further, even if the 60 days' notice provision were removed,§ 4-122(E) would still empower Avon to unilaterally determine both the utility facilities to be moved and their new location, without any constraints on the exercise of that authority or consideration of its impact on utility customers. It fails to provide any procedures for considering less costly alternatives to those demanded by Avon. It contains no provisions to ensure that any new location to which Avon demands that a utility move is legal and feasible under the federal and state laws and regulations that public utilities must follow in siting and constructing their facilities. It also permits no consideration of factors that may prevent utilities from complying with Avon's demand to relocate utility facilities, such as weather, design constraints, availability of materials, feasibility, acquisition of legal rights, and the like.

ii. Section 4-122(E) conflicts with state law permitting reimbursement of a utility's relocation costs. Avon Town Code § 4-122(E) also conflicts with established state law that permits reimbursement of a utility's relocation costs under certain circumstances. Under state law, INDOT may reimburse a utility for relocating its facilities in some

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cases, including, but not limited to, "to the extent that a relocation is a taking of property without just compensation." Ind. Code§ 8-23-2-6(a)(15). Chapter 104 ofINDOT's current Design Manual (available at www.in.gov/indot/design manua!L) ("INDOT Design Manual")4 includes detailed information about the requirements for a utility to seek reimbursement from INDOT for the relocation of its facilities, 5 including a requirement that a utility provide INDOT with a court order establishing prescriptive easement rights to be eligible for reimbursement.6

Removing just the 60-day notice provision, as proposed by Avon, does not cure this conflict with state law. Because a utility's relocation expenses may be reimbursable pursuant to state law and § 4-122(E) requires that utilities bear relocation costs in all circumstances, it conflicts with state law and is therefore unreasonable and void.

m. Section 4-122(E) unfairly burdens Duke's customers. Finally, § 4-122(E) shifts onto public utilities all of the costs to relocate utility facilities without considering the broader public interests of their customers. Duke serves approximately 810,000 customers in 69 counties in Indiana, and it seems extremely unlikely that any of Duke's customers outside of the Avon area will ever use or benefit from the Trail. To force Duke's customers statewide to pay for Duke's pole relocations for this project is unfair and unreasonable.

While the relocation at issue "only" cost approximately $134,000, this is irrelevant given that § 4-122(E) applies to any future utility relocations demanded by Avon, which may cost far more than $134,000. In addition, as noted by Ms. Rowland, other municipalities in Indiana have already followed Avon's lead and enacted or discussed enacting similar cost-shifting ordinances. For example, on June 19, 2017, the City of Carmel enacted Carmel City Code § 9-218, entitled "Relocation of Public Utility Facilities." The Carmel ordinance is virtually identical to Avon Town Code§§ 4-122(E) and 4-123:

(a) If it is necessary for a public utility facility located along, under, upon, and/or across a City street, highway, or other public property to be relocated because

4 The Commission takes administrative notice of the INDOT Design Manual to the extent it is necessary. 170 IAC 1-1.1-21. 5 For example, § 104-4.05 of the INDOT Design Manual, entitled "Reimbursement for Property Interests," reads, in part, as follows:

INDOT will reimburse a utility for the expense of relocation of facilities based upon the property interest held by the utility as verified by INDOT. A utility that is directed by INDOT to relocate facilities that are situated within an existing easement or comparable property interest previously acqµired by the utility for such purpose is eligible for reimbursement.

6 Per the INDOT Design Manual,

"[p]rescriptive" easements are typically not sufficient for reimbursement because, as a matter oflaw, prescriptive easements cannot be established agaiJ,lst property rights held by the State and utilities have difficulty satisfying the statutory requirements for a "prescriptive easement" as the utilities [sic] use of the underlying real estate are not typically adverse, open, and notorious to the adjacent property owner. To be eligible for reimbursement, the utility must provide INDOT with a court order establishing prescriptive easement rights in favor of the utility.

Id § 104-4.05 (emphasis added).

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of a City road project, street project, sidewalk project, trail project or other project, or any combination thereof, the owner of the public utility facility shall relocate that facility at the owner's expense at a time, place and manner (including above or underground) as determined by the City. The City shall provide the owner with written notice, at least sixty (60) calendar days prior to the date by which the relocation must be completed, of the new location of the facilities and the time for completion of the relocation.

(b) If a public utility facility owner fails to relocate its facility as directed by the City pursuant to subsection (a) hereinabove, the City shall have the right to relocate that facility. If the City exercises its right to relocate the facility, the owner of the facility shall reimburse the City for the cost of such relocation within thirty (30) calendar days from the date of the owner's receipt of the City's notice of the cost of relocation. If the owner fails to fully and timely reimburse the City for these relocation costs, the City shall have the right to collect these costs by exercising any available legal remedy, including, but not limited to, obtaining a money judgment for the costs incurred by the City in relocating the facility.

( c) Any owner of a public utility facility that fails to relocate that facility in accordance with this section shall be subject to a fine in the amount of$500 for each calendar day, or part thereof, that the failure exists.

Petitioner's Exhibit 1-R. The City of Carmel has already attempted to enforce this ordinance against Duke. See Petitioner's Exhibit 1-Q (March 15, 2018 e-mail from Ashley M. Ulbricht, Carmel City Attorney, to Duke representatives).

Another similar ordinance is currently being considered by the Town of Brownsburg as Unified Development Ordinance§ 5.94-RS-Ol(D)(l)(a):

When utility facilities are within right-of-way under the control of the Town of Brownsburg and their relocation is necessary to allow for the construction of a roadway, sidewalk or trail improvement, their relocation must be effected at the expense of the utility within one hundred eighty (180) days of written notification from the Town of Brownsburg.

Duke's Exhibit 1-S. Cost-shifting ordinances such as these could ultimately force utility customers all over the state to bear the cost for numerous municipal construction projects that are located far from their homes, which is inequitable and unreasonable.

For the foregoing reasons, the Commission finds that Avon Town Code § 4-122(E) is unreasonable and void in its entirety.

D. Because Avon Town Code§ 4-122(E) is void, the Commission need not address the validity of Avon Town Code§ 4-123 as it relates to§ 4-122(E). Duke also requests that the Commission find that Avon Town Code§ 4-123, which creates a $500 per day penalty for violations of§ 4-122(E) and other sections of the Avon Town Code, is unreasonable and void. However, because we find that § 4-122(E) is unreasonable and void, we need not reach the question of whether the penalty established by § 4-123 for violations of § 4-122(E) itself is unreasonable and

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void. The Commission also does not address whether § 4-123 is unreasonable and void as it applies to other sections of the Avon Town Code that are not at issue here.

Assuming for the purposes of argument that § 4-122(E) were valid, Ind. Code § 8-l-2-101(a)(3) permits a municipality "[t]o provide for a penalty for noncompliance with the provisions of any ordinance or resolution adopted pursuant to the provisions of this section." The penalty established by§ 4-123 does not fall under Ind. Code§ 8-1-2-lOl(b), which permits a municipality to seek "fair and reasonable compensation" for the "direct, actual, and reasonably incurred costs of managing the public right-of-way[.]" The $500 per day penalty is unconnected with any direct, actual, and reasonably incurred costs of managing the public right-of-way, but that does not necessarily matter, given that penalties for violations of municipal ordinances are generally authorized by Ind. Code§ 8-l-2-101(a)(3).

However,§ 4-123 is unreasonable as applied to§ 4-122(E) and would be void for the same reasons as § 4-122(E)-it is unfair to shift the costs of a $500 per day municipal penalty onto utility customers statewide, and imposing such a penalty conflicts with existing laws and regulations. Further, Avon's argument that the penalty established by § 4-123 is not unreasonable because Avon has discretion in seeking the "neither mandatory nor automatic" monetary penalty is irrelevant to the issue of whether it is unreasonable and void.

E. The Commission lacks jurisdiction to order the reimbursement of Duke's pole relocation costs or to determine that those costs are not reimbursable. Finally, Duke requests that the Commission order Avon to reimburse it for its pole relocation costs. However, the Commission lacks jurisdiction to determine if these expenses are reimbursable under state law or to order Avon or any other state actor (such as INDOT) to reimburse Duke.

The Commission has jurisdiction to "inquire into any ... violation of the statutes of this state or the ordinances of any city or town by any public utility doing business therein" and the power and duty to enforce laws relating to public utilities. Ind. Code § 8-1-2-115. In reversing the Commission's prior dismissal of this Cause, the Court of Appeals held that Ind. Code §§ 8-1-2-lOl(a)(l) and 8-1-2-115 "unambiguously establish exclusive jurisdiction in the IURC to hear Duke's complaint on the validity of the Ordinance." Duke Energy Indiana, LLC, 82 N.E.3d at 325 (emphasis added). ·

The Commission, an administrative body of the state, derives its authority solely from the Indiana General Assembly and possesses only the powers conferred on it by statute. Unless the General Assembly has granted the Commission a certain power by statute, we must conclude that the Commission does not have that power. Any doubt about the existence of the Commission's authority to decide a particular issue must be resolved against a finding of authority. Micronet, Inc. v. Ind. Util. Regulatory Comm 'n, 866 N.E.2d 278, 293-94 (Ind. Ct. App. 2007).

The Commission is primarily a fact-finding body, and its assignment is to ensure that public utilities provide constant, reliable, and efficient service to the citizens of Indiana. N Ind. Pub. Serv. Co. v. US. Steel Corp., 907 N.E.2d 1012, 1015 (Ind. 2009). "Moreover, the functions vested in the Commission by the General Assembly are not judicial in nature but rather are of an administrative character." Ky.-Ind. Mun. Power Ass'n v. Pub. Serv. Co. of Ind., 393 N.E.2d 776, 779 (Ind. Ct. App. 1979). Nothing in the Commission's enabling act authorizes it to issue declaratory relief. US. Steel

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Corp. v. N Ind. Pub. Serv. Co., 482 N.E.2d 501, 506 (Ind. Ct. App. 1985). Yet, here, Duke requests that the Commission order Avon to pay for the relocation of its poles, essentially seeking a declaration of the parties' rights and duties under state law. Neither party has cited, nor has the Commission found, any authority in the Indiana Code or other applicable state law establishing jurisdiction for the Commission to decide such an issue.

To the contrary, the General Assembly has vested INDOT, not the Commission, with the power to order a utility to relocate its facilities in a highway, street, or road as part of a construction project funded by INDOT, Ind. Code§ 8-23-2-6(a)(14), and to reimburse a utility for relocating its facilities under certain circumstances. Ind. Code § 8-23-2-6(a)(15). INDOT has established requirements for a utility to seek reimbursement as part of an INDOT-managed project. See, e.g., 105 IAC 13-3-3(d) (requesting that a utility submit documentation of easements and compensable land rights if it is seeking reimbursement from INDOT); INDOT Design Manual § 104-4.05. The Commission has no jurisdiction to order IND OT, Avon, or any other state actor to reimburse Duke for its pole relocation expenses; nor does it have jurisdiction to declare that Duke is not entitled to reimbursement.

IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORY COMMISSION that:

1. Avon Town Code§ 4-122(E) is unreasonable and void.

2. This Order shall be effective on and after the date of its approval.

HUSTON, FREEMAN, KREVDA, OBER, AND ZIEGNER CONCUR:

APPROVED: ._JAN 2 3 2019

I hereby certify that the above is a true and correct copy of the Order as approved.

MaryM~rra Secretary of the Commission

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