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
The OUCC is
specifically recommending the following:
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.
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.
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.
remediation costs for solid waste management units to be included in
customer rates. Instead, those costs would be absorbed by the company.
benefits from the 2017 Tax Cuts and Jobs Act.
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.
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
An IURC order is
expected later this year, the OUCC said.
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.
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 (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
CAC also urged the
IURC ti reject NIPSCO’s request to raise the monthly fixed customer charge
of all NIPSCO residential customers.
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.
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.”