By KEVIN NEVERS

The Northern Indiana Public Service Company has been ordered to refund its customers $3.8 million, after the Indiana Utility Regulatory Commission (IURC) disallowed a portion of the company’s natural gas cost adjustment for March.

The IURC issued its order on Wednesday, following a complaint filed by the Indiana Office of Utility Consumer Counselor (OUCC) that a 28 percent increase in the gas cost adjustment for that month was the result of NIPSCO’s failure to mitigate the price swings in the wholesale market.

The gas cost adjustment is an allowed monthly adjustment to the gas supply portion of NIPSCO’s natural gas service rates. The adjustment, which must be approved subject to refund by the IURC, is supposed to reflect the fluctuations in the price which NIPSCO pays in the highly volatile marketplace for natural gas.

But OUCC spokesman Anthony Swinger told the Chesterton Tribune today that in March NIPSCO simply failed to take the necessary measures to protect its customers from that volatility. “Our belief is that the utility did not live up to its obligation to effectively mitigate gas price volatility. We see the order as a win for NIPSCO’s customers because it means the utility has to do a better job of managing gas price volatility.”

For its part NIPSCO defended the gas cost adjustment for March in a statement released Thursday. “Our purchasing practices have insured our customers have ample supplies of natural gas to meet their needs while fulfilling our legal obligations relative to reliability and price,” the company said.

NIPSCO spokesman Larry Graham said today that the company is reviewing the order, under which NIPSCO must issue the refunds to its customers over the course of three billing periods: November, December, and January.

Still, the order would appear to be a moral victory for customers more than a financial one. Graham said that the average residential customer would see a monthly refund of $1.20 a month, or a total refund of $3.60, and that the refund will not be in the form of cash but rather an allowance calculated into the gas cost adjustments for those three months.

“Admittedly,” Swinger said, “it is a relatively modest amount, especially when you consider the number of customers.”

NIPSCO has 20 days to respond to the order. It could ask the IURC to modify that order or it could file an appeal with the Indiana Court of Appeals, but Graham declined to say whether the company has any intention of doing either.

Swinger did note that in 2001 the IURC order similar refunds for the customers of Citizen Gas and Vectron. “For the last several years,” he said, “the IURC has issued clear directives about wholesale price volatility and the utilities’ obligation to manage it.”

Posted 9/12/2003