The Northern Indiana Public Service Company had been seeking a new natural-gas rate structure which—if approved by the Indiana Utility Regulatory Commission (IURC)—would have increased the average residential customer’s monthly gas bill by 2.65 percent or $1.67.

Instead, NIPSCO has settled for something very different: an agreement with the Indiana Office of Utility Consumer Counselor (OUCC) which—again, if approved by the IURC—would save the average residential customer $7.50 per year.

NIPSCO filed the settlement agreement on Tuesday with the IURC.

The agreement—endorsed by the Citizens Actions Coalition of Indiana, the NIPSCO Industrial Group, and the NIPSCO Marketer Group—would do two basic things: “result in a rate decrease for all NIPSCO natural-gas customer classes”; and continue to support “low-income customer assistance, energy efficiency, and conservation programs.”

Under the agreement NIPSCO would reduce its overall natural gas rates by $14.8 million, based on a $5 million reduction for residential customers and a $9.8 million reduction for commercial and industrial customers. For NIPSCO’s 660,000 residential natural gas customers, the reduction equates to a savings of approximately $7.50 per year per customer, the company said. Rates for commercial and industrial classes will also be lower.

NIPSCO would also adjust its rate design for the residential class to reduce seasonal volatility in customer bills and support energy conservation. “This change helps separate fixed monthly service costs from variable, usage-driven costs, allowing customers to better track and manage energy consumption,” the company said. “This design will include increasing the utility’s monthly gas service charge from $6.36 to $11, instead of the $20 charge originally proposed.” But “(r)eductions to the base rate’s volumetric charges will offset the service charge increase, especially in winter months.”

NIPSCO would revise its low-income customer assistance program to make it similar in design to the Universal Service Program currently in place for Citizens Gas and Vectren Energy Delivery, and at the same funding level it currently contributes to the current Winter Warmth program, the company said. NIPSCO would contribute 25 percent of the program’s costs, which under current usage levels total approximately $1.5 million. The first $500,000 of NIPSCO’s funding will be used to continue a hardship program for non-eligible Low-Income Home Energy Assistance Program customers.

NIPSCO would continue to offer a variety of natural gas energy efficiency and conservation programs. NIPSCO currently provides $1 million in annual funding for these programs, and would provide an additional $1 million in funding for future extensions or enhancements to the programs within 30 days following the issuance of an order approving the settlement.

The settlement addresses a number of additional natural gas rate related matters, including revision to NIPSCO’s depreciation and amortization expense levels, regulatory treatment of Alternative Regulatory Plan (ARP) revenues, and other items.

“We commend all the parties involved for taking a constructive and customer-focused approach in developing this settlement,” NIPSCO CEO Jimmy Staton said. “We believe this represents a fair and reasonable outcome which serves the interests of NIPSCO’s customers and the public at large. This settlement is consistent with our expectations for the outcome of this case, and provides a strong platform for continued enhancements to customer service, reliability and our ongoing investment in Indiana’s energy infrastructure.”

“The OUCC negotiated aggressively for an overall rate decrease for consumers, while preserving funding for low-income assistance during these difficult economic times,” Indiana Utility Consumer Counselor David Stippler said. “Our staff listened to consumers’ comments and kept those comments in mind throughout these negotiations. We are very pleased with the outcome of the negotiations that led to this agreement.”

“The settlement agreement provides much needed rate relief and improvements to payment assistance CAC has supported for some time,” Citizens Action Coalition of Indiana Executive Director Grant Smith said. “It also offers a reasonable solution to reducing seasonal volatility and a process for continuing gas efficiency programs. It shows what can be achieved when ratepayers and utilities work collaboratively.”

NIPSCO natural-gas rate case is the first in more than 20 years.

The Indiana Office of Utility Consumer Counselor (OUCC) represents Indiana consumer interests before state and federal bodies that regulate utilities.

Citizens Action Coalition of Indiana is a statewide nonprofit, nonpartisan, member-based organization that was founded in 1974 and represents residential consumers before the Indiana Utility Regulatory Commission and Indiana General Assembly on utility, energy, environmental and health care policy issues.

Posted 8/25/2010