Indiana's utility consumer advocate has challenged state regulators' Feb. 17 order giving NIPSCO the right to raise rates a cumulative 6 percent by 2020 to pay for electric system improvements.
The Office of Utility Consumer Counselor on Monday asked for reconsideration of the order, which it alleges will result in customers paying for equipment that is no longer in use while also paying for the new equipment that replaces it.
"We believe earning a return on both is not appropriate," Office of Utility Consumer Counselor spokesman Anthony Swinger said.
NIPSCO said Tuesday the consumer advocate's filing looks to resurface an issue that was addressed and decided upon by the Indiana Utility Regulatory Commission during a seven-month proceeding.
"Essentially, the OUCC is requesting the IURC to reverse its well-thought out decision, which allows NIPSCO to timely recover its costs associated with the replacement of infrastructure to maintain the safe, reliable provision of electric service to our customers," the company stated in an emailed response to The Times.
The Office of Utility Consumer Counselor filing is unusually blunt for an agency that sometimes works closely with regulators and utilities, using words like "unfathomable" to describe NIPSCO's action in seeking what the consumer advocate calls "double-recovery."
The NIPSCO case is precedent-setting because it was the first filed under Senate Bill 560, passed last year by the General Assembly. It authorized the IURC to consider utility modernization requests.
Under the IURC's Feb. 17 order, NIPSCO will undertake $1.07 billion in electric system improvements in the next seven years. The utility would recover 80 percent of that cost through surcharges embedded in customers bills.
Those surcharges, called trackers, would be small to start, with customers seeing about a 0.5 percent increase in bills in 2015. But they would increase each year before reaching a cumulative 6 percent in the last year of the improvement program in 2020.
Under the IURC's order, NIPSCO is required to file a new base rate case during the seven-year period when the improvements are underway.
The Office of Utility Consumer Counselor alleges until the new base rate case is filed and approved, replacing one settled in 2011, NIPSCO could collect millions of dollars in excess charges from customers.
The Office of Utility Consumer Counselor is also asking several industrial rates the IURC excluded from the new surcharges be included. It alleges excluding those rates favors customer classes using those rates over those who do not use them, which would violate the terms of the 2011 settlement.
"We believe these customers should be treated the same way they were under the base rate order two years ago," Swinger said.
The Indiana Utility Regulatory Commission, in its order, excluded those rates because it felt industrial customers should not have to pay for improvements to portions of the electric distribution system that do not in any way provide service to their facilities, according to NIPSCO.