NIPSCO residential customer bills will increase an estimated 10 percent under an order issued Wednesday by state regulators, who cut down the utility's request for a 15.6 percent increase and rebuked the utility for poor customer service.

After more than two years of hearings and consideration in NIPSCO's electric rate case, the Indiana Utility Regulatory Commission also slashed NIPSCO's authorized operating revenue by $49 million.

"The amount the company has been authorized to earn on its equity investment serves as a directive to the company that it must improve the customer and operational shortcomings that were a subject of the proceedings," the IURC stated in a news release.

NIPSCO was quick to counter the IURC's criticism of its customer service on Wednesday, noting that regulators acknowledged the utility's recent progress in addressing those issues.

"Improving customer service, increasing responsiveness and enhancing the reliability of Indiana's energy infrastructure have been key areas of focus for NIPSCO," NIPSCO CEO Jimmy Staton said.

Staton added that despite recent improvements, NIPSCO recognized work remains to be done and that the utility is committed to meeting the challenge.

In the most recent J.D. Power survey of residential electric customers released in July, NIPSCO ranked ninth out of 11 Midwest midsize utilities. Its customer satisfaction score of 587 was lower than all but seven utilities out of 121 ranked nationwide.

Staton confirmed Wednesday that NIPSCO plans to file another rate case later this year. The case the IURC issued its order on Wednesday was the utility's first in more than 20 years.

On Tuesday, NIPSCO and consumer groups reached a settlement in the utility's recent request for an increase in residential natural gas rates with an agreement that actually will reduce gas bills for a typical residential customer. According to NIPSCO, a typical residential customer will save about 62 cents per month, or $7.50 per year.

Much of the increase in customer electric bills will be due to the elimination of a $55 million per year bill credit NIPSCO customers have received for eight years under a 2002 settlement plus an overall 4 percent increase in base electric rates, according to the IURC.

The order will not immediately go into effect, as the IURC gave NIPSCO 30 days to file a new cost-of-service study and revised rates and charges. When those are approved, customers will know exactly how much of an increase they are in for.

The order issued by the IURC appears to impact commercial and industrial customers far less than residential. That was also the case with NIPSCO's original rate request.

Consumer groups were quick to criticize that aspect of the order.

"As always, residential customers end up picking up the tab," said Kerwin Olson, an organizer with the Citizens Action Coalition. "It's true with our rate dollars and true with our tax dollars."

NIPSCO's rate request drew a vociferous response from consumers, with more than 600 people descending on an IURC hearing at Indiana University Northwest in March 2009 to protest.

NIPSCO has 457,000 electric customers and 712,000 natural gas customers.

On the mothballed Dean H. Mitchell Generating Plant, in Gary, which NIPSCO wants to take down, the IURC did not deliver a definite verdict. Its order denies NIPSCO's request to include the final decommissioning of the plant in its depreciation costs, but states the utility can make another request in its next rate case.