Chesterton Tribune



OUCC likes NIPSCO overall electric upgrade plan, objects to cost recovery

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The Indiana Office of Utility Consumer Counselor (OUCC) is not objecting to most aspects of Northern Indiana Public Service Company’s (NIPSCO’s) proposed seven-year electric infrastructure replacement plan.

But the OUCC does believe that NIPSCO’s proposed methodology for recovering the plan’s $1.07 billion in costs should be denied.

The OUCC made its recommendations in testimony filed before the Indiana Utility Regulatory Commission (IURC) after deadline on Friday.

NIPSCO’s request is the first to be filed under a new Indiana law (Senate Enrolled Act 560) approved earlier this year, the OUCC said. That law provides for the following:

* It allows an investor-owned energy utility to seek IURC approval of a seven-year infrastructure improvement plan.

* If that plan is approved, the utility may then adjust rates every six months, subject to IURC and OUCC review, to recover 80 percent of the project costs as they are incurred. The remaining 20 percent must be deferred until the utility’s next base rate case, which must be filed before the end of the seven-year period.

* Rate increases--under a new Transmission, Distribution, and Storage System Improvement Charge (TDSIC) mechanism--may not exceed 2 percent of the utility’s total annual retail revenues.

In IURC Cause No. 44370, NIPSCO is seeking approval of its seven-year “Electric Infrastructure Modernization Plan.”

Under that $1.07 billion plan, capital improvements throughout NIPSCO’s electric service territory would include new transmission and distribution lines, new substations, upgrades to existing lines and substations, and replacement of aging poles, transformers, line equipment and other infrastructure.

The OUCC has reviewed the plan and believes “most aspects are reasonable and will benefit NIPSCO’s customers.” But the OUCC is recommending denial of NIPSCO’s request to use budgeted economic development funds for other purposes.

The OUCC is also recommending several reporting requirements to be adopted and used throughout the seven-year period.

Under Indiana law, the IURC must issue a final order on the plan by February 14, 2014.

Meanwhile, in IURC Cause No. 44371, NIPSCO is seeking establishment of the methodology for calculating future rate increases for the plan’s project costs.

According to NIPSCO’s testimony, annual rate increases through the TDSIC mechanism would average 0.9 percent each year over the seven-year term, with the first increase of 0.4 percent taking effect in 2015 and the last annual increase of 1.7 percent being implemented in 2020.

“The OUCC’s analysis shows that NIPSCO’s proposed rate recovery mechanism will overestimate the utility’s need for additional revenue between rate cases, overcharge customers for capital expenses, and not accurately measure NIPSCO’s transmission and distribution rate base investment growth as it relates to investments whose costs are already embedded in base rates,” the OUCC said.

“Analysis also shows that NIPSCO’s plan inflates the estimate of base rate growth and proposes cost allocators that are contrary to those required by statute,” the OUCC added.

An IURC technical evidentiary hearing in both cases is scheduled to start Nov. 12.

The proposals in these cases would not affect NIPSCO’s natural gas utility’s system, service, or rates. NIPSCO is seeking approval of a seven-year natural gas infrastructure replacement plan in IURC Cause No. 44403. The natural gas case was filed recently, with the OUCC scheduled to file testimony on Jan. 10.


Posted 10/14/2013