LAPORTE -- NIPSCO customers will share a $33.5 million refund as part of a settlement between the utility and LaPorte County.
The deal stems from action taken in 2006 by LaPorte County, the Office of Utility Consumer Counselor and a group of NIPSCO industrial customers.
They challenged the amount of electricity Northern Indiana Public Service Co. was purchasing from outside suppliers and how much NIPSCO customers were charged for that energy.
In addition to the refund, the settlement also requires NIPSCO to purchase outside energy at the lowest possible price, something that hasn't always been done, LaPorte County Attorney Shaw Friedman said.
NIPSCO must also shoulder a greater percentage of the expense for outside energy, another cost control measure.
The agreement still must be approved by the Indiana Utility Regulatory Commission.
If approved, the refund will appear as a separate line item reduction on consumers' bills during the months of February, March, and April, 2008. A typical NIPSCO customer will see a $5 a month reduction.
The state's Utility Consumer Counselor, Susan Macey, approved of the agreement.
"It provides protection for NIPSCO customers going forward while acknowledging that NIPSCO does have a need for certain amounts of purchased power."
Friedman called it a win-win for customers.
NIPSCO used to produce nearly all of the electricity that is sold to its customers.
But, since the utility indefinitely closed its Dean H. Mitchell generating station in Gary in 2001, it has been buying about 25 percent of the electricity it delivers to customers from other suppliers, Friedman said.
As a result, holding NIPSCO to more stringent price benchmarks on energy bought from outside sources is even more critical to keep the energy rates down, Friedman said.
In 2007, NIPSCO was on pace to spend $250 million on electricity from other sources compared to $80 million in 2004, Friedman said.
"LaPorte County has vigorously challenged this trend and this settlement will help reverse that trend," Friedman said.