TDSIC settlement agreement rejected by state utility regulators

Citing the Indiana Court of Appeals’ ruling, the state utility regulatory agency rejected a power company’s attempt to use a new state statute to charge customers more.

The Indiana Utility Regulatory Commission denied approval of a settlement agreement worked out between Northern Indiana Public Service Co., the Indiana Office of the Utility Consumer Counselor and the NIPSCO Industrial Group, a collection of business customers.

At issue was NIPSCO’s 2013 petition for approval to use the state’s new Transmission, Distribution and Storage System Improvements Charges statute to get the funds to improve the safety and reliability of its electric system. The TDSIC statute, signed into law in 2013, allows gas and electric utilities to collect the costs of upgrades immediately from the consumers rather than having to go through the lengthy process of raising base rates.

The TDSIC is a tracker, which is a mechanism for utilities to pass-through costs. Critics of trackers assert power and water companies use them to raise prices without having to subject their operations and finances to a full public review. Advocates say trackers are necessary because they enable utilities to increase consumers’ bills gradually rather than unloading a big price hike at one time.

As part of TDSIC, power companies are required to submit a seven-year plan of the improvement projects and costs.

In rejecting NIPSCO’s use of the TDSIC, the commission found the utility’s seven-year plan did not contain sufficient detail. Ironically, the commission had initially approved NIPSCO’s plan but the consumer counselor and the industrial group appealed.

The Indiana Court of Appeals ruled in April 2015 that the utility’s seven-year roadmap did not meet the statutory requirements. It noted while NIPSCO provided a very detailed plan for the first year, it gave only expected costs for major project categories in years two through seven. That was not enough information for the commission to determine if the plan was reasonable and gave the best cost estimates for the improvements.

Remanded by the Court of Appeals, the TDSIC petition returned to the commission where NIPSCO and the intervening parties settled on an agreement which they submitted for approval.

However in a Sept. 23 order, the commission squashed the agreement. Citing the guidance provided by the Court of Appeals, the commission ruled the agreement was not in the public’s interest because the plan still did not have sufficient detail.

The commission did salvage one piece of the settlement. Prior to the Court of Appeals ruling, NIPSCO had been allowed to collect money through the TDSIC on an interim basis. Now that its petition is dead, the utility must refund those funds to consumers.