NIPSCO customers bracing for an electric rate increase may see a significant hike in bills all at once instead of in two steps as the utility originally planned.

The utility plans to file a rate change amendment with state regulators as early as this week. The increase could have customers bearing the full brunt of the rate increase next year, said Jerry Polk, a lawyer with the Citizens Action Coalition.

The unexpected availability of electricity from NIPSCO's recently purchased Sugar Creek electric generating plant is the reason for the adjustment in the rate case, according to a news release issued last week by NIPSCO.

That power was not expected to be available until June 2010. It would have triggered the second rate increase for customers in a two-year period if the two-step rate case was approved by state regulators.

On Monday, NIPSCO spokesman Nick Meyer said he could not say how specifics of the rate case might change in response to the availability of electric power from Sugar Creek. He said full details would be contained in a filing NIPSCO is preparing for the Indiana Utility Regulatory Commission.

In August, NIPSCO proposed the two-step increase in rates, which would hike a typical residential customer's bill 8.9 percent in 2009 and 6.6 percent in 2010.

The combined overall increase in a typical customer's bill would have been 16 percent under that proposal.

Industrial and commercial customers also would see rate increases.

Polk said NIPSCO informed the coalition of the availability of Sugar Creek electricity and its plans to amend its rate case last week.

In late November, NIPSCO reached an arrangement to relieve the Sugar Creek plant from providing the PJM Interconnection with electricity through May 2010, according to the utility. Sugar Creek was obligated to provide power to PJM under contracts signed by the previous owner.

The utility in its release last week also said Sugar Creek now can provide power to the Midwest Independent Transmission System Operator, or MISO.

The MISO serves utilities, including NIPSCO, in 11 Midwest states.

"With the immediate need for additional capacity in our service territory, the addition of Sugar Creek to our generating portfolio in Midwest ISO is a positive move for our customers," NIPSCO CEO Eileen O'Neill Odum said.

NIPSCO's rate case filing with regulators is the utility's first in more than 20 years. NIPSCO says it is experiencing escalating costs for fuel, transportation, environmental issues and materials. It also faces increased customer demand for electricity.

NIPSCO has 455,000 electric customers in 21 counties in northern Indiana. It also has 712,000 natural gas customers, making it the largest utility in the state. NIPSCO is a subsidiary of Fortune 500 utility holding company NiSource Inc.