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Thoughts on NIPSCO rate hike?

January 18, 2019

HAMMOND – NIPSCO has proposal an electric rate increase – about 12 percent for residential customers – and the Indiana Utility Regulatory Commission wants to know what customers think of the plan.

According to the Office of Utility Consumer Counselor, Northern Indiana Public Service Company’s proposal would raise monthly electric charges for an average residential customer – using 689 kilowatt hours – from $94.54 to $105.96. A residential customer using 1,000 kWh would see his or her monthly electric charges rise from $130.96 to $146.07.

“Balancing the need for system improvements while limiting the bill impact on customers is important,” a statement from NIPSCO said. “Newly proposed electric rates would be phased in over two steps in September 2019 and March 2020.”

One group which has already opposed the increase is the Citizens Action Coalition.

“CAC has multiple concerns with this latest rate increase request from NIPSCO,” executive director Kerwin Olson said.

“NIPSCO customers should be very skeptical of this rate increase. NIPSCO is only seeking a 1.4 percent increase in its annual revenue requirement, or total amount of money that they are approved to collect from customers. Yet if the IURC approves this request, every class of customers, except for the large industrial users, will realize a rate increase of 11.75 percent.”

NIPSCO spokesman Nick Meyer said public comment is always welcome, but said the increase is needed.

“Customers have a voice and it’s an important part of the review process,” he said. “And, while our electric rates remain below the national average, our proposal seeks to balance the need for system improvements while limiting the impact on bills.”

NIPSCO has about 468,000 customers in 20 counties. Those who would like to comment can do so by attending one of two public meetings, scheduled for Hammond and Goshen later this month, or by submitting written comments.

The OUCC, a state agency which represents consumer interests in cases before the Indiana Utility Regulatory Commission, is “using its legal and technical resources to review NIPSCO’s request and is scheduled to file testimony on Feb. 6,” according to OUCC spokesman Anthony Swinger.

“OUCC analysts are reviewing the potential impact of the proposed increase, including its effects on residential bills.”

In its testimony and exhibits to the IURC, NIPSCO identified the “key drivers” for the proposed increase as realignment of depreciation rates for coal-fired generating facilities (including costs of planned retirements), and impacts from the federal Tax Cuts and Jobs Act of 2017, according to the OUCC

The utility also cited the “near-term” shifting of certain costs from industrial customers to other customers to address options industrial customers have for generating more of their own electricity.

“In this case, NIPSCO is proposing tariff changes that would allow its largest customers greater access to wholesale power market pricing while retaining them as retail customers,” Swinger said.

That is one of the major concerns of the CAC, Olson said.

“While residential and small business customers would see a rate hike of 11.75 percent, industrial customers would receive a rate reduction of nearly 19 percent.

“It is fundamentally inequitable and unfair for one class of customers to see a rate decrease, while every other customer class will be saddled with a significant increase,” he said.

“NIPSCO wants to shift an extraordinary amount of system costs from the industrial customers to everyone else. NIPSCO is also proposing new rate structures for industrial customers which will effectively allow them to pay wholesale market prices for energy, while everyone else is stuck paying NIPSCO monopoly prices.”

Olson said the CAC is “not opposed to providing competitively priced energy to the large industrial customers who play a significant role in the economy of Northwest Indiana. However, if NIPSCO wants to provide sweetheart deals to the large industrial customers, it should come out of NIPSCO’s pockets, not on the backs of customers who are struggling to make ends meet. If the big guys can pay market prices, why can’t everyone else?”

NIPSCO says all customers will save in the long run.

“As we envision a brighter future for northern Indiana, we are focused on making the transition to lower-cost, cleaner energy options when it comes to supplying the future energy needs of our customers,” the utility said in an FAQ sheet on the proposal.

“Though customers will realize savings over the long-term as a result of these changes – largely through lower fuel costs from increased utilization of renewable energy, and the avoidance of costs associated with maintaining and upgrading aging facilities – NIPSCO is making a request to adjust electric rates, which proposes an increase for customers to support the transition.

“NIPSCO’s proposal seeks to balance the needs of customers and support the company’s future plans,” it said.

The proposed increase includes a hike in the monthly residential customer charge – which does not vary among customers – from $14 to $17 for residential customers, and from $24 to $30 for small and medium commercial customers, according to OUCC spokesman Anthony Swinger.

CAC is opposed to that part of the proposal, Olson said.

“We are very concerned with NIPSCO’s request to once again increase the monthly fixed charge on residential and small commercial customers. Increasing fixed charges diminishes customer’s ability to control the costs related to their energy use, and most importantly, disproportionately impacts households on fixed- and low-incomes, including those on disability and senior citizens.”

NIPSCO’s current base electric rates were approved in July 2016, however, billing amounts have changed since then due to rate recovery mechanisms – or “trackers” – which allow rate increases for specific items on an expedited basis, according to OUCC.

Trackers are separate from base rates and are also subject to OUCC review and IURC approval. All Indiana investor-owned electric utilities use trackers to varying degrees, Swinger said.

NIPSCO uses trackers to recover costs for generating fuel, energy efficiency programs, environmental mandates, resource adequacy, cybersecurity, transmission and distribution system upgrades, and regional transmission, he said.

NIPSCO’s electric rates were adjusted downward in April 2018 to reflect federal income tax reductions the utility received under the Tax Cuts and Jobs Act of 2017.

NIPSCO’s natural gas rates and charges are not affected by the proposal.

Get your two cents in

NIPSCO customers who wish to comment on the proposed rate increase can send written comments to the Indiana Office of Utility Consumer Counselor or speak at one of the IURC’s public field hearings.

Hearings are scheduled for Monday, Jan. 28, in the Hammond High School auditorium at 5926 Calumet Ave. in Hammond; and Wednesday, Jan. 30, at the Goshen College Newcomer Center at 1900 S. Main St. in Goshen.

Each hearing starts at 6 p.m. local time and consumers are encouraged to arrive by 5:45 p.m. for an overview of procedures and the rate case process.

Consumers will be able to speak directly to the commission, under oath and on the record, regarding the case, and submit written comments. While commissioners are not allowed to answer questions, OUCC staff will be available before, during, and after each hearing to address questions.

Written comments can be submitted via the OUCC’s website at in.gov/oucc/2361.htm; by email to uccinfo@oucc.IN.gov; or by mail at Consumer Services Staff, Indiana Office of Utility Consumer Counselor, 115 W. Washington St., Suite 1500 South, Indianapolis, IN 46204

All written consumer comments must be received no later than Jan. 31 to be considered in preparing OUCC testimony and to be included in the formal evidentiary record.

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