NIPSCO wants 16 percent residential rate hike
BY KEITH BENMAN
kbenman@nwitimes.com
219.933.3326 | Saturday, August 30, 2008
The rate increases would take place in two steps. The utility hopes to have both steps completed by 2010.
"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," Northern Indiana Energy CEO Eileen O'Neill Odum said.
When electric rate increases for industrial and commercial customers are factored in, the overall increase would be 11.7 percent, according to NIPSCO.
Local governments and the Citizens Action Coalition already have filed to intervene in the case, with Hammond Mayor Thomas McDermott Jr. vowing to fight NIPSCO "every step of the way."
"The state government is forcing municipal governments ... to slice millions of dollars off payrolls and spending, and NIPSCO has the audacity to go to the Indiana Utility Regulatory Commission and ask for a 15 percent increase," McDermott said.
The Citizens Action Coalition will begin combing through NIPSCO's more than 1,000-page petition next week, said Jerry Polk, the lawyer representing the coalition in the rate case.
In 2001, the Citizens Action Coalition charged NIPSCO was earning profits that were higher than allowed by state law. The IURC later ordered the utility to grant customers a 5 percent rate credit on their monthly bills that continues to this day.
"It raises the question if there should be any rate increase at all," Polk said. "Or if rates should be going down."
Another utility, Indiana Michigan Power, has a rate case before the IURC in which it is seeking a 14 percent overall rate increase. Its residential customers would see rates increase more than 20 percent.
NIPSCO has 450,000 electric customers in 21 counties in northern Indiana. It also has 712,000 natural gas customers, making it the largest utility in the state. NIPSCO is a subsidiary of Fortune 500 utility-holding company NiSource Inc.
NIPSCO is experiencing escalating costs for fuel, transportation, environmental issues and materials, Odum said. It also faces increased customer demand for electricity.
The city of Hammond, city of Crown Point, LaPorte County Commission, the Citizens Action Coalition and a number of NIPSCO's largest industrial customers already have filed with the IURC to intervene in the case.
The state's Office of Utility Consumer Counselor, which represents the state's consumers, also will be a party to the case.
Intervenors can cross-examine NIPSCO witnesses at an IURC evidentiary hearing scheduled for Jan. 6 in Indianapolis. It could take until early 2010 for the case to conclude.
An IURC field hearing in which the public can comment also is planned and will take place in Gary. No date has been set.
In its request, NIPSCO proposes raising residential electric rates 8.9 percent in the first step and 6.6 percent in the second. Because the second increase comes on top of the first one, the total increase in a customer's bill would come to 16 percent.
NIPSCO told state regulators it needs the second step increase to pay for the cost of producing power at its newly purchased Sugar Creek gas-fired power plant in southern Indiana. That power will not be available to NIPSCO customers until June 2010.
Consumer groups also will be examining NIPSCO's application for "trackers," which are basically surcharges to pay for things such as environmental upgrades and fuel costs, Polk said.
MORE: NIPSCO wants Mitchell plant down.