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IURC okays NIPSCO's $713M plan to upgrade gas infrastructure

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By KEVIN NEVERS

The Indiana Utility Regulatory Commission (IURC) has approved NIPSCO’s seven-year $713-million plan to modernize its natural-gas transmission, distribution, and storage infrastructure.

The IURC issued its order on Wednesday after finding the plan “reasonable.”

The Northern Indiana Public Service Company originally petitioned the IURC on Oct. 4, pursuant to a new state law (Senate Enrolled Act 560), approved in 2013, which allows an investor-owned electric or natural-gas utility to seek IURC approval of a seven-year infrastructure improvement plan. If that plan is approved, the utility may then adjust its rates every six months, subject to review by the IURC and the Indiana Office of Utility Consumer Counselor (OUCC), to recover project costs as they are incurred.

Those incremental rate adjustments--under a new Transmission, Distribution, and Storage System Improvement Charge (TDSIC) mechanism--may not exceed 2 percent of the utility’s total revenues each year. Meanwhile, 20 percent of the costs must be deferred until the utility’s next base rate case, to be filed before the end of the seven-year period.

Among the projects which NIPSCO will pursue over the next seven years: installing 80 miles of transmission pipeline and adding automated valves ($280 million); eliminating bare steel gas mains and replacing them with low pressure systems ($61 million); extending natural gas service to rural areas ($99 million); and retrofitting lines for in-line inspection ($46 million).

NIPSCO is touting “a number of direct benefits” of the plan, including “maintaining the overall safety and integrity” of the company’s natural-gas system; supporting “hundreds of direct and indirect jobs, including local trades”; and providing a “direct local economic boost” through the investment of $713 million over seven years.

NIPSCO expects to file its first TDSIC natural-gas rate increase request in September and the first TDSIC rate increase of approximately 1.0 percent will take effect in 2015. The annual rate increases from 2016 to 2020 will vary annually, ranging from 1.5 percent to 1.9 percent each year. The average annual percentage increase over the seven-year term is 1.4 percent.

“Customers will experience minimal bill impacts, with little to no change in their natural gas bills for the first two years of the plan,” NIPSCO said.

“Homes and businesses across the 32 counties we serve depend on safe, reliable, and affordable natural-gas service,” said NIPSCO CEO Jim Stanley. “We are proud to be among the lowest cost natural-gas providers in Indiana. And this plan helps to ensure a safe and modern natural-gas system for the future, while continuing to maintain competitive rates for customers.”

Some plan-related work could begin as early as this summer, NIPSCO said.

The IURC’s approval of NIPSCO’s natural-gas plan on Wednesday follows its approval in February of the company’s seven-year $1.1-billion electric-infrastructure improvement plan. Under that plan, annual rate increases through a surcharge on the customer’s bill--the TDSIC--will average 0.9 percent each year over the seven-year term, with the first increase of 0.38 percent taking effect in 2015 and the last annual increase of 1.7 percent being implemented in 2020.

Modernization projects under that plan include replacing 450 miles of underground cable ($140 million); rebuilding 500 miles of electric lines and circuits ($365 million); and replacing 75 substation transformers and 900 breakers ($290 million).

 

 

Posted 5/1/2014