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Split COA affirms northern Indiana utility rate increase

June 20, 2017

A northern Indiana utility company can increase its rates after a divided Indiana Court of Appeals held Tuesday that the Indiana Utility Regulatory Commission followed the appropriate statutory guidelines in approving the rate hike.

In October 2013, the Northern Indiana Public Service Co., or NIPSCO, filed a petition for approval of its seven-year plan for its gas system, which would include transmission, distribution and storage system improvement projects. The Indiana Utility Regulatory Commission approved the seven-year plan and found the related cost estimates were reasonable.

Then in August 2014, NIPSCO filed a tracker petition, which allows for smaller rate increases for specific projects pursuant to Indiana Code 8-1-39-9, for its gas system, seeking to update the seven-year plan with higher costs. The commission approved the petition, and NIPSCO then filed a second tracker petition in February 2015.

However, before the commission ruled on the second petition, a panel of the Indiana Court of Appeals reversed and affirmed in part the approval of the seven-year plan and remanded the case, finding the plan lacked sufficient detail. NIPSCO then moved to dismiss its second petition, but filed in August 2015 a third petition seeking to update the seven-year plan.

The commission approved a third petition, finding it contained “ascertainable planning criteria for identifying and selecting specific improvements… .” NIPSCO’s fourth petition, which included different project categories with single and multiple unit projects that cannot be exactly anticipated, was then approved in similar grounds.

NIPSCO Industrial Group appealed in NIPSCO Industrial Group v. Northern Indiana Public Service Company, 93A02-1607-EX-1644, arguing the approval of the fourth petition was erroneous. Specifically, the industrial group said the updated seven-year plan did not identify improvements with particularity because “NIPSCO sought to identify specific projects year by year through tracker updates pursuant to Section 9 instead of identifying the projects in the 7-year plan.” Further, the group said the approval of a $20 million cost increase allowed NIPSCO to add projects not identified in the original seven-year plan.

In a Tuesday opinion, Indiana Court of Appeals Judge James Kirsch wrote that the instant case presented a “unique situation” in that the approval of the original seven-year plan was not proper after the court’s 2015 opinion. Instead, the updated-plan in the third petition was the proper plan of reference when deciding whether to approve the fourth tracker petition, the judge said.

Thus, “(a)s long as the future projects contained in Section 9 updates are determined by utilizing the ascertainable planning criteria from (the third petition), the projects should be considered eligible improvements and may be considered in the updates,” Kirsch said.

“We, therefore, conclude that the Commission did not err in its approval of NIPSCO’s (fourth petition),” Kirsch wrote for the majority. “The Commission properly approved NIPSCO’s updated 7-year plan because the improvements included in the update were not new projects as they were chosen by utilizing the ascertainable planning criteria previously approved by the Commission and contained in NIPSCO’s 7-year plan.”

However, Judge Michael Barnes dissented, writing in a separate opinion that “NIPSCO’s inclusion of broad categories of unspecific ‘multiple unit projects’ does not comply with the statutory requirements.”
 

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