By the Indiana Utility Regulatory Commission’s calculation, the net effect of a 4-percent increase in electric base rates, coupled with the expiration of customer bill credits totaling $55 million per year, will result in an approximate 10-percent hike in residential customers monthly electric bills.

By the Northern Indiana Public Service Company’s calculation, however, residential customers will see something more on the order of a 16.8-percent increase, NIPSCO spokesman Nick Meyer told the Chesterton Tribune on Monday.

The effect of that hike would look like this, Meyer said: currently the average household using 735 kilowatt hours per month—that average a 2007 figure—is paying $79.57 per month, while under the rate hike that household would pay $92.96 per month or an additional $13.39.

Or $160.68 more per year.

When the Indiana Utility Regulatory Commission (IURC) issued its order last month to NIPSCO—among other things, that order decreased NIPSCO’s authorized operating revenue by $49 million, discontinued the $55 million in annual customer credits, and approved a 4-percent increase in base rates—the IURC concluded that the net effect on residential customers would be a 10-percent hike in electric.

The IURC reached that conclusion in this way, Meyer said: it divided NIPSCO’s newly authorized operating revenue of $436 million—based on the approved 4-percent increase in the residential rate in conjunction with the expiration of the $55 million in annual customer credits—by the company’s 400,000 residential customers, yielding an estimated 10-percent rate hike for households.

The IURC’s calculation wasn’t strictly speaking incorrect, Meyer noted, but it did not take into account the widely varying usage rates among residential customers.

Combined commercial and industrial customers, on the other hand, will see only a 4-percent rate hike. “It costs more to serve residential customers than commercial and industrial,” Meyer said, and over the past 20 years or so “commercial and industrial customers have been paying more for the cost of service than what they should have been charged. That cost was more unfairly spread to those classes of customers.”

Meyer does want NIPSCO’s residential customers to know that, while the company’s electric rates are neither the lowest in the state nor the highest, their combined monthly natural-gas and electric bill “is lower and more competitive than most utilities in Indiana.” That’s because NIPSCO’s gas rates are the lowest in the state, he said, though of course what a household pays every month for gas depends on its level of usage.

The new electric rate schedule has not yet taken effect. At the moment the IURC is waiting to close the Sept. 24 deadline for appeals of its August order, while NIPSCO for its part filed for “reconsideration and clarification on a few issues,” Meyer said.

Appeals are possible in the case. Last week State Sen. Karen Tallian, D-Portage, sent the IURC a letter blasting the commission’s order approving NIPSCO’s rate hike.

“We are in the middle of a recession,” Tallian said in that letter. “Consumers need to know what justifies the state regulators’ decision to allow this dramatic increase to happen.”

Tallian also urged the Indiana Office of Utility Consumer Counselor—which represents utility consumers in the state—to take a position on the IURC’s order.

Posted 9/21/2010