Chesterton Tribune



OUCC, CAC oppose NIPSCO's proposed 12 percent electric rate hike

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Residential electric bills for Northern Indiana Public Service Company (NIPSCO) customers would not rise under recommendations from the Indiana Office of Utility Consumer Counselor (OUCC), which has completed its analysis of NIPSCO’s proposed electric rate hike, filed before the Indiana Utility Regulatory Commission (IURC).

Nine OUCC witnesses filed testimony with the Indiana Utility Regulatory Commission (IURC) this week, following a three-month review of the utility’s pending rate request, according to a statement released today.

“Our technical and legal staff has developed a creative solution to the unique concerns NIPSCO has raised in this case,” Indiana Utility Consumer Counselor Bill Fine said. “Our recommendations maintain NIPSCO’s current revenue requirement and provide incentives to industrial customers without shifting costs to other customer classes.”

The OUCC is specifically recommending the following:

¥Keeping NIPSCO’s flat, monthly residential electric customer charge at its current $14 amount, with the volumetric portion of residential bills either remaining unchanged or diminishing slightly. NIPSCO is seeking to raise that charge to $17, an increase of 22 percent.

¥Decreasing NIPSCO’s authorized return on equity to 9.25 percent. The utility’s current authorized return is 9.975 percent, and it is requesting an increase to 10.8 percent in this case.

¥Reducing numerous line items from NIPSCO’s proposed amounts, including demolition and decommissioning costs for its remaining coal-fired generation facilities, vegetation management, and recovery of bad debt.

¥Not allowing remediation costs for solid waste management units to be included in customer rates. Instead, those costs would be absorbed by the company.

¥Recognizing all benefits from the 2017 Tax Cuts and Jobs Act.

¥Recognizing new power supply options available to the company’s largest customers and facilitating cost savings to those customers, while shielding residential and commercial customer classes from covering those costs.

The IURC will hold a public field hearing on the rate case at 6 p.m. March 11, in the Hammond High School auditorium, 5926 Calumet Ave. in Hammond.

Rebuttal testimony from NIPSCO is due on March 15, with an IURC evidentiary hearing scheduled to start on April 16. While evidentiary hearings are open to the public, participation is typically limited to attorney and IURC questioning of technical witnesses who have filed testimony on behalf of the case’s formal parties.

An IURC order is expected later this year, the OUCC said.

NIPSCO--which provides electric utility service to more than 468,000 customers in 20 counties in Indiana--is seeking a two-phase 12-percent rate hike, with the first phase taking effect in September 2019 and the second in March 2020. Average residential customers under the proposed hike would see an $11 per month increase in their electric bills. Included is a proposal to increase the existing, fixed monthly customer charge by $3 per month.

NIPSCO’s proposed hike would increase the company’s annual revenues by $21 million. “The primary drivers of the proposed increase include investments in upgrading electric infrastructure, environmental upgrades, and a shift in the way some large industrial customers will obtain electricity in the future,” NIPSCO said in November 2018 when announcing the rate case.

Natural gas rates and charges are not at issue in this case.

Citizens Action Coalition

Meanwhile, the Citizens Action Coalition (CAC) filed testimony before the IURC on Wednesday, in which it objected in particular to NIPSCO’s plan to “shift an extraordinary amount of costs from the largest industrial customers to everyone else.”

CAC also urged the IURC ti reject NIPSCO’s request to raise the monthly fixed customer charge of all NIPSCO residential customers.

Expert testimony was filed on behalf of CAC by Jonathan F. Wallach, vice-president of Resource Insight Inc. “The Company’s proposal would unduly subsidize large industrial customers by shifting recovery of $67-$80 million of embedded production costs to other rate classes,” Wallach said.

Wallach also testified that many of the costs which NIPSCO wants to shift to customers are the result of investments made by NIPSCO to serve, in part, the energy needs of the industrial customers, like the Schahfer and Michigan City coal-fired power plants. “With the company’s restructuring proposal, large industrial customers would enjoy the future economic benefits from early retirement of the Schahfer and Michigan City coal units without having to pay for the near-term incremental depreciation expense associated with early retirement,” Wallach said.

“We applaud NIPSCO for recognizing that a transition from dirty coal to clean energy will lower future costs to their customers, but this transition will not be a just one if future savings are not fairly apportioned among all of NIPSCO’s customers,” said Raghu Murthy, an attorney with Earthjustice, serving as outside counsel to CAC in this case.

Wallach, on behalf of CAC, is recommending that rates for the largest industrial customers be maintained at current levels and that rates for all other classes be increased by an equal percentage to recover NIPSCO’s requested revenue increase. “My recommended revenue allocation would substantially reduce the industrial subsidy from the company’s restructuring proposal and would provide for a fair allocation of the requested revenue increase,” he said.

Wallach is also recommending a decrease of the monthly fixed customer charge from $14 to $12.55. “The company’s proposal would dampen price signals to consumers for reducing energy usage, disproportionately and inequitably increase bills for the Company’s smallest residential customers and result in subsidization of larger residential customers’ costs by customers with below-average usage,” he said. “Accordingly, the Commission should reject the Company’s proposal to increase the monthly fixed customer charge for residential customers. Instead, consistent with long-standing cost-causation and rate-design principles, I recommend that the residential fixed customer charge be set at a cost-based rate of $12.55 per residential customer per month.”

John Howat, senior policy analyst at the National Consumer Law Center (NCLC), filed expert testimony as well on behalf of CAC by recommending a comprehensive low-income assistance program be put into place. “We have seen that many lower-income households in Indiana lack sufficient income to make ends meet, yet must devote an inordinate proportion of these inadequate incomes to retain access to basic, necessary electric utility service,” Howat said. “These affordability problems constitute a threat to the home energy security of NIPSCO’s low-income customers and call for program and policy interventions to mitigate that threat.”


Posted 2/14/2019




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