Date posted online: Saturday, November 03, 2007
NIPSCO wants parent's plant
Consumer groups could question deal
BY KEITH BENMAN
kbenman@nwitimes.com
219.933.3326

  NIPSCO has an agreement to buy the Whiting Clean Energy electric generating plant next year, a move that has been fiercely resisted by consumer groups in the past.

The utility also has an agreement to buy the Sugar Creek electric generating plant in Terre Haute. Both plants produce electricity with gas-fired turbines and would increase the utility's electric generation by 39 percent.

"The addition of these two plants to NIPSCO generating capacity will resolve the capacity shortfall facing the company," said NIPSCO president Mark Maassel.

Consumer groups once charged that using electricity from the Whiting plant could increase electric rates for NIPSCO customers as much as 8 percent. They were further rankled by the fact that NIPSCO parent company NiSource Inc. owns the plant.

Some appear wary still of any effort to use gas-fired generating plants, whose costs are subject to volatile swings in natural gas prices.

"It would still be my suspicion it could be a bail out for those plants," said Dave Menzer, utility campaign organizer for the Citizens Action Coalition. "Natural gas prices are going to go higher, and how wise is that for ratepayers?"

NIPSCO spokeswoman Colleen Reilly said that by purchasing the two plants, NIPSCO can avoid the "significant" cost of building its own plant.

She added price volatility is something that happens with all fuels, including coal.

NIPSCO estimates it needs 1,000 megawatts of generating capacity in addition to the 2,694 megawatts it already has.

The Whiting Clean Energy and Sugar Creek plants will provide NIPSCO with a combined 1,060 megawatts of electricity, according to the utility. Under normal conditions, one megawatt can supply about 1,000 homes with electricity.

NIPSCO would pay LS Power Group $329 million for the Sugar Creek plant. NIPSCO would pay NiSource $210 million for the Whiting plant.

The purchase of both will have to be approved by the Indiana Utility Regulatory Commission and the Federal Energy Regulatory Commission. NIPSCO expects the transactions to close in the first half of 2008.

The Whiting plant was a big money loser for NiSource from 2001 to 2006. However a new agreement with BP, which uses steam from the plant, appears to have erased those losses, according to NiSource's most recent financial filings.

NiSource CEO Robert Skaggs Jr. told Wall Street analysts a settlement with consumer groups in October has paved the way for bringing the two plants into the NIPSCO fold.

"It has been an open process," Skaggs said. "We tried to be inclusive; we tried to keep folks current on the studies and the process. We expect consensus to develop around this plan."

The agreements to purchase the two plants come just five months after NiSource took NIPSCO off the sales block.

NIPSCO is also finalizing contracts for 100 megawatts of wind power, according to Reilly.

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nwi comments

The following are comments from the readers. In no way do they represent the views of The Times or Lee Enterprises.

 

will never happen wrote on Nov 6, 2007 4:02 PM:

" NIPSCO would pay LS Power Group $329 million for the Sugar Creek plant. NIPSCO would pay NiSource $210 million for the Whiting plant. Something funny going on here a little discount for your sister company - this will never happen it will be fought till the end nisource!! "

 

PAY OFF wrote on Nov 6, 2007 10:28 AM:

" NiSource CEO Robert Skaggs Jr. told Wall Street analysts a settlement with consumer groups in October has paved the way for bringing the two plants into the NIPSCO fold. Somebody got paid off. Plus you already own it, just move it around and let taxpayers pay for it. Nice move NISOURCE. "

 

WHAT A JOKE wrote on Nov 6, 2007 9:36 AM:

" PAY OFF LAWYERS NOW BUY THE WHITING PLANT, I SMELL A RAT - THIS WILL NEVWE HAPPEN!!! "

 

rustcity wrote on Nov 3, 2007 7:24 PM:

" Oh, the electricity for which NIPSCo already charges among the nation's highest prices is just about to become even more costly. Boy, I guess this will help attract more business to NW Indiana.. When is Indiana's Public Utility Board going to put some incentives into NIPSCo's pricing structure that would stop this kind of stinking deal?.. Shades of ENRON! "

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