Majority of Indiana justices rule for NIPSCO in rate fight

Asserting in a 3-2 decision that allowing a group of angry industrial ratepayers to prevail could cause the lights to go out and the furnace to switch off, a split Indiana Supreme Court has upheld a utility’s petition to raise customers’ electric bills.

The NIPSCO Industrial Group had challenged Northern Indiana Public Service Co.’s second petition to adjust rates under the Indiana TDSIC (Transmission, Distribution, and Storage system Improvement Charges) statute.

Specifically, the industrial group argued the customer class revenue allocation factors NIPSCO used in this petition were not based on firm load as required by Section 9 of the TDSIC statute but rather were based on total load. In rejecting the group’s argument, the Utility Regulatory Commission pointed to the settlement agreement which the parties, including the industrial group, agreed to.

The industrial group appealed and the Indiana Court of Appeals reversed the commission’s ruling in NIPSCO Indus. Grp. V. N. Ind. Pub. Serv. Co., 104 N.E.3d 603 (Ind. Ct. App. 2018). The appellate panel concluded the commission had exceeded its statutory authority by allowing a rate adjustment based on allocation factors computed on total load.

However, the majority of the Indiana Supreme Court found the industrial group was estopped from challenging the petition because it was a party to and agreed to the settlement that included the multi-year TDSIC plan. The majority pointed out the group not only joined the Base Rate Case Settlement that provided the allocation factors it subsequently challenged, but it also testified in support of the agreement.

In addition, the majority found allowing the industrial group to object to the use of allocation factors at this stage would harm NIPSCO and the broader utility regulatory and infrastructure systems involved in this case. Moreover, the majority concluded, the injury would spread beyond NIPSCO.

“Allowing the Industrial Group’s delayed attacks against the Base Rate Case Settlement would risk disrupting the public’s interest in stable and modern electric and gas transmission, distribution, and storage infrastructure systems by hindering long-approved efforts at modernization,” Justice Christopher Goff wrote for the majority Friday in NIPSCO Industrial Group v. Northern Indiana Public Service Company, and Office of the Utility Consumer Counselor, 18S-EX-475, joined by Chief Justice Loretta Rush and Justice Mark Massa. “Further, permitting these tardy attacks would reduce parties’ and the public’s confidence in the durability of long-term regulatory settlements and orders. In light of the long-term, integrated procedures contemplated by the TDSIC Statute, allowing the Industrial Group to belatedly challenge the underlying settlement in NIPSCO’s base rate case would harm NIPSCO and the broader systems involved in utility regulation and supply.”

Justice Geoffrey Slaughter wrote a one-paragraph dissent which was joined by Justice Steven David. He argued the case was an issue of law and not a regulatory issue that warranted deference to the agency.  

“On the merits, I agree with the Court of Appeals that the utility regulatory commission exceeded its statutory authority by approving a rate adjustment based on allocation factors computed on total load rather than firm loan,” Slaughter wrote.