Utility could file a second rate hike request
Keith Benman - keith.benman@nwi.com, (219) 933-3326 | Posted: Sunday, August 9, 2009 12:00 am
NIPSCO is not confident about reaching a settlement with consumer groups on its request for a 15.6 percent residential electric-rate increase, and it appears increasingly likely a final decision will have to be left to state regulators.
On a conference call with investors on Tuesday, NiSource CEO Robert Skaggs Jr. said NIPSCO settlement talks were not dead, but that the company had grown less optimistic about the chances of reaching any settlement before the Indiana Utility Regulatory Commission issues an order in the case.
Skaggs said a major stumbling block in settlement talks was over how to split the increase between industrial and residential customers. He said NiSource earlier had warned that issue "would likely be contentious and hard to deal with, and that's still the view today."
The IURC is expected to rule by early next year on the Indiana utility's first rate case in more than 20 years, he said.
NiSource is the parent company of NIPSCO, which has 712,000 natural gas and 457,000 electric customers in northern Indiana.
In another development, Skaggs told investors that declining sales volumes and increased pension costs at NIPSCO suggest a second rate case is "almost inevitable."
Under IURC regulations, the earliest the second rate case could be filed would be the last quarter of this year. That means NIPSCO customers could see a second rate hike on top of any the IURC may order in the current case.
The IURC also has the option of cutting rates, something that at least one prominent consumer group already has argued for in the current case.
The IURC has been conducting evidentiary hearings in Indianapolis since last week on NIPSCO's proposed 15.6 percent residential rate hike. Consumer groups and utility lawyers and experts have been squaring off in their last face-to-face encounter with the commission.
LaPorte County Attorney Shaw Friedman, contacted on break from the hearings, said Skagg's characterization of settlement talks at this point was accurate.
"There are a number of stumbling blocks, and there is a gap between the parties that remains significant," Friedman said.
He said an expert witness for LaPorte County and the city of Hammond yesterday explained to commissioners why it is necessary to "ring fence" NIPSCO assets and profits to keep them from being siphoned off by the parent company.
As to the possibility of a second NIPSCO rate case on the heels of the current one, Friedman said consumer groups right now are totally focused on the case being argued this week.