Despite the fact that the Indiana Utility Regulatory Commission (IURC)
ordered NIPSCO in August to decrease its annual operating revenues by $49
million, the Northern Indiana Public Service Company still found a way to
increase residential customers’ electric rates by 16.8 percent.
And the Indiana Office of Utility Consumer Counselor—the agency specifically
charged with protecting the interests of the state’s utility customers—isn’t
happy about it.
On Friday the OUCC filed two separate documents with the IURC in response.
The first is a “notice of contest,” challenging the “derivation of rates and
charges” which NIPSCO submitted to the IURC earlier this month.
The second document is a “notice of appeal,” which preserves the OUCC’s
“legal rights to challenge the IURC’s order before the Indiana Court of
OUCC spokesman Anthony Swinger told the Chesterton Tribune today that
the OUCC is taking a two-pronged approach in the matter, contesting both
NIPSCO’s final calculation of rates and charges and the IURC order which is
the basis of that calculation.
Neither the notice of contest nor the notice of appeal gives any indication
of what in particular the OUCC objects to, either in NIPSCO’s new rate
schedule or in the IURC order. “But the fact that an overall revenue
decrease was ordered, combined by (NIPSCO’s) significant rate increase in
the residential class, is troubling,” Swinger said.
In response to the notice of contest, Swinger noted, the IURC will set dates
for the submission of additional arguments and evidence in the matter, at
which time the OUCC will make its case against NIPSCO’s new electric rate
The Indiana Court of Appeals will do the same thing in the matter of the
IURC’s final order, issued on Aug. 25.
In that final order the IURC did three things: it decreased NIPSCO’s annul
authorized operating revenue by $49 million; it formally declared expired
customer bill credits of $55 million per year; and it approved a 4-percent
increase in electric base rates. The net effect of those three actions, the
IURC estimated at the time, would be an approximate increase in residential
customers’ rates of 10 percent.
Instead, what NIPSCO calculated a month later—in a compliance document
ordered by the IURC—was an increase in residential customers’ rates of fully
How exactly could that have happened? the Tribune asked Swinger.
“Rate making is complicated and that’s all the more reason we need more time
to look this over,” Swinger answered.
NIPSCO spokesman Nick Meyer told the Tribune last week that it
happened this way: the IURC did not take into account, when it calculated
the 10-percent increase, the widely varying usage rates among residential
The 16.8 percent hike would look like this, Meyer noted: 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. Over the course of the
year the hike would amount to an increase of $160.68.
Combined commercial and industrial customers, on the other hand, would see
only a 4-percent electric rate hike, because “it costs more to serve
residential customers than commercial and industrial,” Meyer said. “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.”
The OUCC’s own position in NIPSCO’s electric rate case was this: it
recommended a $135.2 million reduction in NIPSCO’s annual operating
revenues—compared to the $49 million reduction eventually ordered by the
IURC—to be achieved not by a slash in rates but by the simple expiration of
the $55 million per year in customer credits. Under that recommendation, the
base rates paid by residential customers would have remained at or near
their current levels.
NIPSCO has indicated that it intends to file a second electric rate case
sometime before the end of the year.