COA finds utility company met TDSIC requirements

Business Law
IL file photo

An attempt to short circuit the state’s approval of a power company’s plan to upgrade the system and increase rates through the TDIC mechanism was disrupted when the Court of Appeals of Indiana found the plan and the state regulators were grounded in statute.

Northern Indiana Public Service Co. petitioned the Indiana Utility Regulatory Commission for approval of its five-year plan for upgrading its electric system infrastructure, saying the improvements were needed to meet growing demand for electricity.

As part of it petition, the utility filed a Transmission, Distribution and Storage System Improvement Charge plan (TDSIC). Defined in Indiana Code 8-1-39, TDSIC ensures power companies will be able to recoup their investments by allowing them to get pre-approval for projects and raise rates to recover those approved costs.

The IURC approved NIPSCO’s TDSIC plan in December 2021. The NIPSCO Industrial Group, an ad hoc collection of businesses located in the utility’s geographic service area and the Office of the Utility Consumer Counselor appealed the commission’s approval.

In particular, the parties focused on NIPSCO’s system deliverability projects which were presented to the commission as necessary for the utility to maintain adequate capacity to serve current and future customer needs. Included in the system deliverability portion of its plan, NIPSCO highlighted the need to upgrade the Marktown substation which provides electricity to several large industrial facilities along Lake Michigan and to improve both the distribution- and the transmission-related system deliverability in the Nappanee area.

The parties argued, in part, the commission did not follow the TDSIC statute and determine whether each one of the individual improvements in NIPSCO’s plan was cost-justified.

However, the Court of Appeals ruled the opposing parties’ interpretation of the statute is not supported by the language in the law.

Namely, the parties pointed to subsection 10(b)(1)’s requirement that the commission’s order must include a “best estimate of the cost of the eligible improvements” and argued this required a best estimate of the cost of each eligible project. The appellate panel countered the statute uses the collective phrase “the eligible improvements” rather than “each individual improvement” which indicates the mandates of the law are met by the best estimate of the cost of the PDSIC plan as a whole.

Also, the Court of Appeals noted, the language in subsection 10(b)(3)’s language indicates the statute’s requirements are satisfied when the improvements are justified by the benefits as a whole instead of individually.

“Appellants also make what are, essentially, policy arguments regarding the purposes of subsection 10(b)(3) and how accepting the Commission’s interpretation would open the door for wasteful, unnecessary, or overpriced projects,” Chief Judge Cale Bradford wrote for the court. “… (A)rguments regarding the policy considerations behind the TDSIC statute are best addressed to the General Assembly, not this court.”

The case is NIPSCO Industrial Group, and Office of the Utility Consumer Counselor v. Northern Indiana Public Service Company, and Indiana Utility Regulatory Commission, 22A-EX-187.

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