STATE OF INDIANA
INDIANA UTILITY REGULATORY COMMISSION

IN RE AN EMERGENCY COMPLAINT AGAINST NORTHERN INDIANA PUBLIC SERVICE COMPANY ("NIPSCO") BY THE COUNTY OF LAPORTE INDIANA AND THE CITY OF MICHIGAN CITY INDIANA RELATING TO THE PRACTICES AND ACTS AFFECTING OR RELATING TO THE SERVICE OF NIPSCO AS BEING UNSAFE, UNREASONABLE AND INSUFFICIENT PURSUANT TO IC 8-1-2-54, AND REQUEST FOR COMMISSION )
INVESTIGA TION PURSUANT TO IC 8-1-2-58 )AND REQUEST FOR AN INTERIM STATUS QUO ORDER

CAUSE NO. 42194
ORDER ON RECONSIDERATION
APPROVED: OCT 19, 2005

BY THE COMMISSION:
David W. Hadley, Commissioner
Scott R. Storms, Chief Administrative Law Judge

On March 8, 2002, the LaPorte County Board of Commissioners and the City of Michigan
City ("Petitioners" or "Complainants") filed an Emergency Complaint ("Complainant") against
Northern Indiana Public Service Company, Inc., (hereinafter referred to as "NIPSCO" or
"Respondent" or "Company") with the Indiana Utility Regulatory Commission ("Commission") in
response to NIPSCO's plans to consolidate numerous Local Operating Areas ("LOAs" or
"maintenance facilities") in its service territory. Following its review of the Complaint and
supporting affidavits the Commission, on March 15, 2002, issued an Emergency Order requiring
NIPSCO to "cease taking any actions in furtherance of its planned maintenance office closings and
service district expansion" until a preliminary review was completed by the Commission.

On April 10, 2002, the Commission held a Prehearing Conference and Preliminary Hearing
and heard evidence from numerous witnesses. On April 24, 2002, the Commission approved an
Order in this Cause which included determinations made in its Emergency Order issued on March
15,2002. On April 29, 2002, NIPSCO filed its Notice of Appeal of the Commission's April 24,
2002 Order. The Indiana Court of Appeals affirmed the Commission's decision in Northern Indiana
Public Service Company v. LaPorte County 791 N.E.2d 271 (Ind. Ct. App. 2003). An Evidentiary
Hearing was conducted in this matter over the course of five days concluding on January 15,2004.
On August 10, 2005, the Commission issued a Final Order in this Cause.

On August 30, 2005, the Respondent filed its Verified Petition of Northern Indiana Public
Service Company for Rehearing and Reconsideration ("Motion for Reconsideration"). On
September 7,2005, United Steel Workers of America filed USWA's Response to "Verified Petition
on Northern Indiana Public Service Company for Rehearing and Reconsideration." On September
9,2005, the City of Crown Point, and Joint Intervenors Mayor Dan Klein, Vicki Klein, Robert
and Sheila Corbin filed the Reply of City of Crown Point and Joint Intervenors.(1) On September 12,
2005, LaPorte County, Indiana, Lake County, Indiana and the Lake County Council filed Petitioner
LaPorte County and Intervenors Lake County and Lake County Council's Response in Opposition to
NIPSCO's Verified Petition for Rehearing and Reconsideration.(2) On September 16, 2005, the
Respondent filed its Reply of Northern Indiana Public Service Company. On September 22, 2005,
The Hammond City Council filed its Objection to Northern Indiana Public Service Company's
Verified Petition for Rehearing and Reconsideration. On September 26, 2005, LaPorte County,
Indiana, Lake County, Indiana and the Lake County Council filed a Motion to Strike Portions of
NIPSCO's Reply Brief (3) On October 6, 2005, the Respondent filed a Response to the Motion to
Strike. On October 13, 2005, LaPorte County, Indiana, Lake County, Indiana and the Lake County
Council filed a Reply in Support of Motion to Strike Portions of NIPS CO 's Reply Brief.

1. Overview of Issues Presented bv NIPSCO in its Motion for Reconsideration. In
its Motion for Reconsideration NIPSCO contends that the Commission exceeded its legal authority
in this proceeding and seeks reconsideration of two specific aspects ofthe Commission's Final Order
resolving the Complaint filed in this Cause. First, the Company requests reconsideration of the
Commission's determination that the Hammond and Crown Point LOAs should remain open.
Second, the Company requests reconsideration of the Commission's determination that NIPSCO
should file certain annual reports.

NIPSCO's Motion for Reconsideration is colored by a claim, presented to the Commission
for the first time, that this matter was a union driven complaint proceeding. NIPSCO's contention
that the Complaint filed by the Petitioners was actually a union driven proceeding, along with
background information that purportedly framed the issue, was presented for the first time in
NIPSCO's Motion for Reconsideration. As this issue is not found anywhere in the record of this
proceeding it is not considered further by the Commission.

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(1) The Intervenor's Reply contains a settlement agreement entered into between the City of Crown Point and
NIPSCO that these Intervenors indicate is "similar to settlement agreements approved by the Commission in its
August 10, 2005 Order." As the record of this proceeding is closed, the settlement agreement cannot
appropriately be considered by the Commission in this proceeding.
(2) On September 16, 2005, the Respondent filed a Motion of Northern Indiana Public Service Company to
Strike. On September 26, 2005, LaPorte County, Lake County and the Lake County Council filed Petitioner
LaPorte County and Intervenors Lake County and Lake County Council's Response in Opposition to
NIPSCO's Motion to Strike. On October 4,2005, NIPSCO filed a Notice of Withdrawal of Motion to Strike.
(3) The Motion to Strike requests that the Commission strike portions of NIPSCO' s response regarding the
settlement agreement with Crown Point, Indiana. As we have determined that we can not consider the
settlement agreement, the Motion to Strike is hereby denied.

__________________________________

NIPSCO further asserts that the Commission ignored evidence presented by NIPSCO in
reaching the findings set forth in its Final Order. NIPSCO's arguments, with respect to issues that
are part of the record in this proceeding, are based on a reiteration of previously asserted policy and
factual arguments that were considered and rejected by the Commission in its Final Order. With
respect to the annual reporting requirements contained in the Final Order, it appears that NIPSCO
misunderstood the nature of the information being requested by the Commission. Accordingly, the
reporting requirement issue is clarified in this Order. With the exception of clarification of the
reporting requirement issue, and as discussed further herein, we hereby reject NIPSCO' s Motion for
Reconsideration on all other grounds.

2. Commission Findings and Analysis. Requests for rehearing are governed by the
requirements set forth in 170 lAC 1-1.1-22(e)(I), which states, inter alia, that if a petition seeks
rehearing, it shall be verified or supported by affidavit and shall set forth:
(A) The nature and purpose of the evidence to be introduced at rehearing.
(B) The reason or reasons such new evidence was not available at the time of
the hearing or could not be discovered with due diligence.
(C) A statement of how such evidence purportedly would affect the outcome
of the proceeding if received into the record.
(D) A showing that the evidence will not be merely cumulative.

NIPSCO's Motion for Reconsideration fails to address any of the issues required by 170 lAC
1-1.I-22(e)(I). For that reason, we find that NIPSCO's request is properly limited to request for
reconsideration.

It is well settled in Indiana that the General Assembly created the Commission primarily as a
"fact-finding body with the technical expertise to administer the regulatory scheme devised by the
legislature." United States Gypsum v. Indiana Gas Co., 735 N.E.2d 790,795 (Ind. 20(0). This broad
grant of regulatory authority includes implicit powers necessary to effectuate the statutory regulatory
scheme. Office of Utility Consumer Counselor v. Public Servo Co. of Indiana, Inc., 608 N.E.2d
1362, 1363 (Ind. 1993). While orders of the Commission are subject to appellate review to
determine whether they are supported by specific findings of fact and by sufficient evidence, and to
determine whether orders are contrary to law, on matters within its discretion the Commission enjoys
wide discretion. United States Gypsum, 735 N.E.2d at 795. Determinations made by the
Commission will not be lightly overridden just because the Court of Appeals might reach a contrary
opinion on the same evidence. Id.

While NIPSCO may disagree with our specific findings and conclusions in this proceeding
there is no basis whatsoever to support a claim that the Commission ignored evidence presented by
any party to this proceeding. The Commission takes its role as a fact-finding body very seriously and
recognizes the importance that the thorough review of testimony and evidence plays in allowing us to
reach a considered determination on issues presented to us for resolution. The Final Order issued in
this Cause is the product of several days of hearings and hundreds of pages of prefiled testimony.

The Presiding Officers were present during the entirety of the hearing and were able to carefully
consider the testimony and evidence presented and observe the demeanor and credibility of the
witnesses. The Final Order in this Cause is a lengthy, detailed, and thorough analysis of the complex
issues presented in this matter. In its Motion for Reconsideration, NIPSCO merely invites the
Commission to allow the Company to act as the trier-of-fact and substitute its conclusion--based on
its own consideration of the evidence--for our own. We decline NIPSCO's invitation, and find that
simply urging us to reweigh the evidence in a manner that supports arguments that were fully
presented and rejected by the Commission in its Final Order does not justify reconsideration.

The Commission further rejects, as a basis for reconsideration, NIPSCO's claim that the
Commission has overstepped the bounds of its authority or that our findings in this proceeding
represent a radical departure from past Commission actions. In reaching this conclusion, the
Commission notes that we fully discussed the legal and factual underpinnings of our decision and
placed our discussion of the issues within the context of the governing case law and appropriate
statutory provisions. While our Final Order is replete with citations to applicable statutory
authorities and case law, the conclusion of the Final Order contains the following overview:

As stated in the matter of South E. Ind. Nat. Gas Co. v. Ingram, 617 N.E.2d 943 (Ind.
App. 1993), "[t]he legislature has explicitly given the IURC the authority, upon its
own motion, r.c. 8-1-2-58, or when the issue is otherwise properly presented to it, to
investigate into the "service" provided by a regulated utility, to find facts based upon
the evidence before it, and to prospectively rectify any perceived inadequacies in the
utility's practices or the regulatory scheme. r.c. 8-1-2-54,69. Inherent in this grant of
power is the implicit power and authority to do that which is necessary to effectuate
the regulatory scheme." Id. Therefore, the Commission has the requisite authority to
address the issues presented in this matter and cannot ignore the possible impact that
implementation of the Consolidation Model might have on service quality and
reliability. To the extent that we find that NIPSCO's incomplete review and
development of the Consolidation Model appears likely to present service quality
issues in the future (even if the model is implemented as modified by the Settlement
Agreements) we will not wait for negative impacts to service quality to occur prior to
addressing an issue that was properly presented to us in this matter as part of a
Complaint proceeding under r.c. 8-1-2-54.

NIPSCO's Motion for Reconsideration would have us fundamentally change the conclusion
resolving this Complaint proceeding. We find that modifying our Final Order to allow NIPSCO to
proceed with a Consolidation Model, that we determined was based on incomplete review and
development, and wait for negative impacts to service quality to occur, would not represent
responsible regulatory oversight. We therefore reject NIPSCO's argument on this issue.

As a final matter the Company questions the Commission's requirement that NIPSCO file
annual reports for three years that address the Customer Average Interruption Duration Index
("CAIDI"), the System Average Interruption Duration Index ("SAIDI") and System Average
Interruption Frequency Index ("SAIFI") as defined in 170 lAC 4-1-22. In its Motion for
Reconsideration NIPSCO indicates that the Final Order ignores the fact that NIPSCO has already
filed CAIDI, SAIDI and SAIFI data for the last three years with the Commission as required by the
Commission's rules. NIPSCO's argument on this issue appears to be based on a misunderstanding
of the information that should be filed pursuant to the terms of the Final Order. The Commission
recognizes that NIPSCO has already filed system-wide indices for CAIDI, SAIDI and SAIFI. The
Final Order is more specific and closely targeted to address the issues presented in this proceeding.
We therefore clarify that NIPSCO should file annual reports for three years which contain CAIDI,
SAIDI and SAIFI indices for the sub-regions identified in the proceeding.

Based on the foregoing, we find that the reporting requirements contained in our Final Order
should be clarified as specifically set-forth herein. In all other respects we find that NIPSCO's
Motion for Reconsideration should be denied.

IT IS THEREFORE ORDERED BY THE INDIANA UTILITY REGULATORY COMMISSION THAT:

    1. The Commission clarifies the reporting requirements contained in its August 20, 2005
Order in this Cause to reflect that NIPS CO shall file annual reports for three years which contain
CAIDI, SAIDI and SAIFI indices for the sub-regions identified in the proceeding.

    2. The Commission finds that in all other respects NIPSCO's Motion for Reconsideration is denied.

    3. This Order is effective on and after the date of its approval.

HARDY. HADLEY. LANDIS. SERVER & ZIEGNER CONCUR;
APPROVED: OCT 19 2005
 

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