Chesterton Tribune                                                                                   Adv.

OUCC to contest NIPSCO rate hike for residential customers and IURC order

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By KEVIN NEVERS

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 Appeals.”

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 schedule.

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 16.8 percent.

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 customers.

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.

 

 

Posted 9/27/2010

 

 

 

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