Chrysler seeks $2.5M utility deposit from Duke Energy Indiana

Back to TopCommentsE-mailPrintBookmark and Share

Chrysler Group, the maker of Chrysler, Dodge and Jeep vehicles, appears not to be of sufficient financial caliber for Duke Energy Indiana, which allegedly won’t refund a $2.5 million security deposit it collected after the automaker’s 2009 bankruptcy.

Chrysler on July 5 asked the Indiana Utility Regulatory Commission to be its avenger, requesting an investigation of the dispute and return of the seven-figure deposit—plus interest and “all appropriate penalties.”

In challenging the deposit requirement, the automaker told regulators that Duke Energy “is the only public utility in North America still holding a security deposit from Chrysler.”

Chrysler filed Chapter 11 bankruptcy reorganization in April 2009. It agreed to sell most of its assets, including its Kokomo transmission manufacturing factories, to a new entity partly owned Italy’s Fiat SpA.

As a result, Duke said it would regard Chrysler as a new customer and demanded a security deposit, according to the complaint. Chrysler refused, saying it paid its electric bills consistently and on time.

Charlotte, N.C.-based Duke assessed late penalties, and in September 2009 issued a final disconnection notice for the Kokomo facilities, Chrysler told the commission.

The following month Chrysler wired a $2.5 million deposit to the utility's Plainfield unit.

 “Duke has held and retained those funds, together with accrued interest, through the present time,” the complaint states.

Chrysler said Duke won’t budge despite numerous requests and 32 months of a “clean payment history.” The automaker sought a meeting last March with Duke’s Indiana president, Douglas Esamann, to no avail.

Duke, according to Chrysler, has said it won’t return the deposit until the automaker satisfies three criteria: 12 consecutive months of payments within terms, a Standard & Poor’s long-term credit rating of BB or better and “a determination by Duke of financial position and acceptability of risk following a review of four recent quarters of financial statements.”

Chrysler calls the requirements unreasonable and discriminatory, saying it has “enjoyed substantial success” since reorganization.

Chrysler earned $183 million on $55 billion in sales last year. It had $9.6 billion of cash. In the first quarter of this year, Chrysler posted profit of $473 million on sales of $16.4 billion.

Since 2009, Chrysler announced two new transmission lines in Kokomo to be built for $1.3 billion.

“The economic development benefits of those investments secure some 3,500 jobs at the Kokomo facilities. Nearly 1,000 jobs have been added at the Kokomo plants since the Chapter 11” in 2009, Chrysler attorney Todd Richardson, of Indianapolis law firm Lewis & Kappes, told the commission.

Duke Energy Indiana spokesman Lew Middleton said the utility is reviewing the complaint and will file a response with the IURC.

“The company’s policy for requiring security deposits from large commercial and industrial customers is reasonable and has been applied in a non-discriminatory manner, based on an assessment of risk,” Middleton said.

Duke disagrees with Chrysler’s characterization of the dispute “and [we] look forward to providing more information to the IURC,” he added.

Included in the legal crossfire may be whether the Duke deposit policy lacks objective or ascertainable standards—whether it ultimately amounts to Duke conducting a subjective review of financial information.

Richardson points to commission orders made in 2010 involving Northern Indiana Public Service Co. and Kokomo Gas and Fuel Co. The commission found insufficient objective criteria in the deposit rules proposed by the utilities. The commission called “particularly draconian” a proposal to hold funds until an account was closed.

“The situation in which Chrysler now finds itself is exactly the ‘draconian’ predicament described by the commission in that order,” Richardson argues.

“We value all of our customers and our deposit policies are designed to minimize the overall costs to all customers,” said Duke’s Middleton.


  • Driving Customers Away?
    Somebody will invent a better mousetrap, then Duke will be out of luck. They are creating a lot of ill will which will ultimately hurt their business.
  • Would you co-sign?
    Utilties provide you a service and then ask you to pay later, which is not like most products and services. In essence, the customer is being given credit. Ask yourself, would you co-sign for Chrysler? Would you loan them money?
  • Duke
    Chrysler claim
  • Chrysler v. Duke
    I hope Chrysler can get punitive damages assessed.

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

  4. GOOD DAY to you I am Mr Howell Henry, a Reputable, Legitimate & an accredited money Lender. I loan money out to individuals in need of financial assistance. Do you have a bad credit or are you in need of money to pay bills? i want to use this medium to inform you that i render reliable beneficiary assistance as I'll be glad to offer you a loan at 2% interest rate to reliable individuals. Services Rendered include: *Refinance *Home Improvement *Inventor Loans *Auto Loans *Debt Consolidation *Horse Loans *Line of Credit *Second Mortgage *Business Loans *Personal Loans *International Loans. Please write back if interested. Upon Response, you'll be mailed a Loan application form to fill. (No social security and no credit check, 100% Guaranteed!) I Look forward permitting me to be of service to you. You can contact me via e-mail howellhenryloanfirm@gmail.com Yours Sincerely MR Howell Henry(MD)

  5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.