NIPSCO rate hike action shifts to Indy

BY KEITH BENMAN
kbenman@nwitimes.com
219.933.3326 | Sunday, January 11, 2009

Action in NIPSCO's quest to raise residential electric rates by 15.6 percent will kick off Monday in Indianapolis when the utility's top executives are quizzed by consumer groups.

NIPSCO chief executive Eileen O'Neill Odum is expected to take questions from consumer groups opposed to the hike at an Indiana Utility Regulatory Commission hearing scheduled to begin at 9:30 a.m.

"We are keenly aware of the challenges facing our residential customers in managing their monthly energy budgets, and we have taken steps to moderate the level of increase they will experience," Odum said when rate case documents were filed in August.

But because of the economic downturn and slashes in services by local governments, NIPSCO's request promises to generate even more heat than the typical utility rate case.

"What I've learned from Gov. Daniels is we need to cut back," said Hammond Mayor Thomas McDermott Jr. last week. "We need to cut out the extras and the perks. And why shouldn't utilities have to do the same?"

McDermott and other consumer intervenors in the case say consumers may in fact deserve a rate cut based on a 2002 utility commission order mandating a $225 million NIPSCO refund that is still a part of customers' bills.

McDermott and the Citizens Action Coalition of Indiana are urging citizens to get involved, something they will have the chance to do at a March 3 commission field hearing in Gary.

Until then, the action will be in Indianapolis, with Monday's hearing scheduled to stretch until at least Jan. 23. In all, 21 NIPSCO witnesses are scheduled to be quizzed by consumer groups.

First up Monday will be Robert J. Skaggs Jr., chief executive officer of NIPSCO parent company NiSource Inc. Odum is scheduled next.

In addition to Hammond, other intervenors include Beta Steel Corp., the City of Crown Point, LaPorte County Board of Commissioners, Indiana Municipal Utilities Group, Citizens Action Coalition of Indiana and the Indiana Office of Utility Consumer Counselor.

NIPSCO is asking for a smaller increase for industrial and commercial customers, bringing the overall increase to 9.8 percent.

Despite the lower increase for those customers, U.S. Steel, Mittal Steel USA and other prominent companies have bounded together as the NIPSCO Industrial Group to get involved in the case.

NIPSCO's request for a rate increase is not unusual, said Ed Legge, a spokesman for the Edison Electric Institute, an association of the nation's share-holder owned utilities.

U.S. electricity prices have been on the rise mainly because of higher fuel costs and the need for new generating capacity, Legge said. From 2000 to 2005, electricity prices rose 19 percent nationally, according to a recent report commissioned by the institute.

"Customers are using more electricity than before," Legge said. "We just have more electronic gadgets in our homes, and we even use them to get from point A to point B."

Consumer groups such as the Citizens Action Coalition point out that although NIPSCO has not gone to regulators for a base-rate increase in more than 20 years, customer bills have gone up.

A commission fuel cost adjustment allows NIPSCO to adjust charges upward when fuel costs increase. The commission also has approved surcharges on NIPSCO customers' bills that pay for environmental safeguards at NIPSCO plants.

Increases like those, coupled with everything else for which consumers must pay, have consumer groups ready to rumble. Here is how an average residential customer's bill would be affected by NIPSCO's proposed electric rate increase:
Average use: 735 kilowatts
Current bill: $81.68
Proposed bill: $94.44
Increase amount: $12.76
Percent increase: 15.62 percent
Source: NIPSCO