Sierra Club Expert: IURC Should Reject NIPSCO Rate Cost Shift

Indianapolis - Yesterday, The Sierra Club filed testimony in NIPSCO’s rate case (Cause No. 45159) currently pending before the Indiana Utility Regulatory Commission (IURC). Sierra Club is requesting that the IURC reject NIPSCO’s rate case proposal, including a cost shift from industrial to other classes of customers. Sierra Club is also asking that the IURC reject NIPSCO’s requested increase in the fixed charge, and instead reduce the current fixed charge from $14 to $12.77.

Expert testimony was filed on behalf of Sierra Club by Avi Allison, senior associate with Synapse Energy Economics, Inc. Allison found that NIPSCO's proposed industrial rate structure, which would shift costs from industrial to residential and commercial customers, is not justified based on the evidence presented by NIPSCO. This is a burdensome cost shift that will disportionately hurt low-income and fixed-income communities, who already struggle to afford their current NIPSCO bills.

NIPSCO is proposing to increase its residential customer charge from $14 per month to $17 per month. This amounts to a 21 percent overnight increase in the monthly charge that residential customers must pay regardless of the amount of electricity they consume, and a 55 percent increase in less than three years. Keeping fixed charges low will reward homes, schools and businesses who install solar power, buy more efficient appliances or work to reduce their energy use and avoid unfairly penalizing low and fixed income customers.  

“NIPSCO’s residential customer charge proposal is inconsistent with sound ratemaking principles and would negatively impact energy conservation efforts and low-income customers,” Allison stated. “A reasonable residential customer charge would be lower, not higher, than the current NIPSCO customer charge.”

NIPSCO has made an important commitment to renewable energy with its 2018 20-year energy plan, which replaces all coal generation with renewable energy, energy efficiency, and storage. Although there is no money for renewable energy projects in this rate case, NIPSCO’s electric bills should also promote efficient infrastructure, energy conservation and local generation of clean electricity, like rooftop solar.

In addition, Allison found that the company's proposal for accelerated depreciation of coal plant capital expenses is reasonable and should be approved by the IURC.

“The Commission should approve NIPSCO’s plan to recover the remaining depreciation expenses associated with its Schahfer and Michigan City coal plants through 2030,” he said. “However, this approval should not imply pre-approval of any specific investments at those plants and should be contingent on NIPSCO following through with its newly planned coal plant retirements.”

Wendy Bredhold, senior campaign representative for the Sierra Club’s Beyond Coal Campaign in Indiana, said, “As Indiana’s first utility to make a commitment to 100 percent renewable energy to replace its coal fleet, NIPSCO can set an example for other Indiana utilities to follow  by not asking that its low-usage, and low- and fixed-income customers pay the most.”

Copies of the testimony of Avi Allison are available upon request.