Chesterton Tribune                                                                                   Adv.

New NIPSCO electric case would cut 16.8 percent residential rate hike in half

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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.

Unpacking the 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.”

Rate Comparisons

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.



Posted 11/22/2010




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