Three months ago, in August, the Indiana Utility Regulatory Commission (IURC)
issued an order in the first electric rate case filed by NIPSCO in more than
20 years. At the time the IURC estimated that the order, when implemented,
would increase residential customers’ rate by around 10 percent, but by
NIPSCO’s own subsequent calculation the hike looked to be more of a spike on
the order of 16.8 percent.
Hue and cry all around. The order was challenged by numerous stakeholders,
including the Indiana Office of Utility Consumer Counselor, and NIPSCO
itself asked the IURC to review certain portions of the order.
Now NIPSCO is asking the IURC to “accelerate” its review of a brand-new rate
case which would, if approved, raise the average residential customer’s rate
by only 7.9 percent or $5.94 per month, less than half of the hike
originally calculated by NIPSCO.
“We have listened to our customers and regulatory stakeholders and developed
a new rate plan that eases the burden on residential customers while
allowing NIPSCO to continue investing in service, reliability, and
infrastructure improvements,” NIPSCO CEO Jimmy Staton said in a statement
released on Friday. “We believe this is a positive solution for our
customers, our community partners, and for Northern Indiana’s long-term
economic growth and development.”
“NIPSCO’s new rate filing is more responsive to the current economic climate
and provides a more up-to-date view of the rates required to maintain
reliable energy service for our customers and to support Indiana’s economy,”
Staton added. “By filing this new case, we are able to update our rates and
provide a measure of relief for our residential customers That’s why we are
moving forward with this filing now—even as our prior rate order is still
under review—and will continue working with stakeholders and the IURC to
expedite its review.”
NIPSCO emphasized that the 7.9-percent hike would use the existing
rates as a starting point, not the rates authorized by IURC in
August, and that it wants the second rate case to “be considered and
reviewed under an accelerated review procedure that could result in the new
rates being implemented in 2011.”
Nevertheless, NIPSCO spokesman Nick Meyer told the Chesterton Tribune
today, it’s possible that the IURC could issue a revised order in the
first rate case before it completes its review of the second. And
it’s possible—under one scenario—that the 16.8-percent hike for residential
customers could be implemented “for a short time” until superseded by
an order in the second case, Meyer said.
But it’s also possible that the IURC could issue an order in the second
rate case before it resolves the challenges to the first, Meyer noted, in
which case the rate structure proposed by the second case would take effect
and that proposed by the first would simply be moot.
Second Rate Case
One thing which the second rate case does not do is alter the
revenues authorized by the IURC in August. In other words, while residential
customers would see a smaller increase to their monthly bill than they would
have under the first case, industrial and commercial customers would see a
significantly larger increase of approximately 8 percent, compared to
the 4-percent authorized by the IURC in its original order.
That larger increase of 8 percent is somewhat ironic, given the fact that
NIPSCO had justified its first rate case in part on the ground that
industrial and commercial customers have for years been paying more than
their fair share of the cost of electric service and in fact have been
subsidizing residential customers.
Even so, Meyer said, the second rate case “does move us closer to ‘fully
allocated rates,’ meaning that everyone pays their fare share.” For example,
under an “interruptible credit” program proposed in the second case,
industrial customers could allow NIPSCO, during peak usage periods like the
summer, “essentially to pull back on the electric those customers are
using,” with two effects. First, Meyer said, such a program would reduce the
need for investment in future generation; second, it would reduce the cost
to that class of customer.”
In short, Meyer said, the second rate case “does move forward to fully
allocated rates but it also reduces the impact on residential customers.”
NIPSCO has released these per-kilowatt hour electric rate comparisons:
•For residential customers statewide the average rate is 9.08 cents; for
NIPSCO’s residential customers, 10.81 cents; for Ilinois’ residential
customers, 11.10 cents.
•For commercial customers statewide the average rate is 8.21 cents; for
NIPSCO’s commercial customers, 9.39 cents; for commercial customers
nationwide, 9.97 cents.
•For industrial customers statewide the average rate is 5.87 cents; for
NIPSCO’s industrial customers, 5.89 cents; for industrial customers
nationwide, 6.51 cents.