Chesterton Tribune

NIPSCO electric rates likely to go up 4.5% later this year

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By KEVIN NEVERS

First, in August 2010, the Indiana Utility Regulatory Commission (IURC) issued an order in NIPSCO’s first electric rate case in 24 years, authorizing an increase in residential rates of 16.8 percent (although the IURC itself estimated that its order would result in a net increase for households of only around 10 percent).

Then, in January 2011—amid a hue and cry raised not only by the Indiana Office of Utility Consumer Counselor (OUCC) but by a coalition of Northern Indiana municipalities—NIPSCO sought to quash that first rate case and filed a second, proposing instead an increase in residential rates of 7.9 percent, or exactly half of the originally authorized 16.8 percent.

Now, under a settlement agreed announced today, households would see an electric rate hike of just 4.5 percent, or approximately $3.33 per month.

NIPSCO reached that settlement late Monday night with the OUCC, its industrial customers, and the Northern Indiana municipalities. The IURC must still approve the agreement, although NIPSCO anticipates that, pending IURC review, the new rates could take effect late this year or early in 2012.

“The settlement also eliminates any further action around the company’s (initial) rate case,” filed in August 2008, NIPSCO said in a statement released this morning. The 16.8 percent residential hike authorized by the IURC last summer was never actually applied to customers’ bills, the company noted.

“This settlement balances the interests of our diverse customer base, while providing a solid foundation from which NIPSCO can invest in Northern Indiana’s energy infrastructure to help fuel job creation and economic growth,” NIPSCO CEO Jimmy Staton said. “Together, the parties have reached an agreement that provides Indiana families, businesses, and industries with the affordable, reliable, and environmentally sustainable energy they need now and in the future.”

“If approved” by the IURC, “this agreement will bring a fair resolution to litigation that has been before the IURC for more than three years,” Utility Consumer Counselor David Stippler said. “Regulatory review of NIPSCO’s electric rates has been a complex process given the fact that these rates have not been modified since the 1980s. I am pleased that the OUCC, NIPSCO, and the other settling parties have been able to fairly address all pending issues, thereby providing a balanced resolution for the benefit of all NIPSCO customers, while ensuring that NIPSCO may continue to make needed investments to provide safe, reliable service.”

“We believe the concerns raised by the local municipalities were addressed through this process, which was both open and collaborative,” said Michael Griffin, representing the municipal coalition comprised of Dyer, East Chicago, Griffith, Highland, Munster, Schererville, Valparaiso, and Winfield. “This agreement provides a fair and reasonable solution for local communities across Northern Indiana working hard to manage very tight budgets.”

NIPSCO: How Customers

Would Benefit

NIPSCO said that the announced settlement would benefit customers in several ways. Average household customers, for instance, would see a “minimal bill impact” of 4.5 percent or $3.33 per month. Under the increase originally authorized by the IURC last summer, average households would have seen an increase of 16.8 percent or $13.39 percent.

The settlement also provides a “platform for ongoing NIPSCO investments in improving customers services, reliability, and environmental technology—including the recent $330 million purchase of the highly efficient 535-megawatt Sugar Creek natural gas-fired electric generating plant,” the company said.

In addition, the settlement provides for “NIPSCO-funded rebates to convert electric furnaces to more efficient gas units,” NIPSCO said, as well as addresses the municipal coalition’s “concerns regarding rates for streetlights and traffic lights.”

How NIPSCO’s Electric

Rates Compare

NIPSCO noted that, while its electric rates for all classes of customers are higher than the average in Indiana, the new rates would still be lower than other Midwest states’ average or the national average, according to the current Edison Electric Institute’s survey:

•Average residential monthly price per kilowatt (KwH) in Indiana: 9.11 cents. NIPSCO’s price: 10.84 cents. Ohio’s average price: 11.34 cents. Michigan’s: 12.8 cents.

•Average commercial monthly price per KwH in Indiana: 8.27 cents. NIPSCO’s price: 9.51 cents. National average price: 10.21 cents.

•Average industrial monthly price per KwH in Indiana: 6 cents. NIPSCO’s price: 6.02 cents. National average price: 6.71 cents.

Industrial and Commercial

Customers under Settlement

NIPSCO was unable to generalize about how the settlement would affect industrial and commercial customers.

“The impact on individual commercial and industrial customers will vary,” the company said. “Many factors determine commercial and industrial customers’ rates. On average, rates for commercial and industrial customers would increase approximately 4.8 percent to 11 percent per month compared with current bills.”

The settlement does include an expanded “interruptible service” component, “which provides incentives for NIPSCO’s largest industrial customers to reduce or shift energy use. This voluntary program ultimately benefits all customers by meeting near-term and planned system needs, including periods of peak demand when market prices are high.”

Cost associated with expanded interruptible service will “eventually be shared across all customer classes, with no impact on customer bills until May 2012 or later,” NIPSCO said. “Residential bill impacts will vary depending on customer participation in the voluntary program.”

Posted 7/19/2011