A 2013 state law allows electric and natural gas utilities to seek IURC approval of 7-year infrastructure plans. If a utility’s plan is approved, it is then allowed to request rate increases every 6 months to cover the costs of projects in the plan. The law requires the IURC to consider the plans and increases within very short timeframes.
Northern Indiana Public Service Company’s (NIPSCO’s) natural gas utility received approval of such a plan in April 2014, referring to the program as its Natural Gas Infrastructure Modernization Plan. NIPSCO’s most recent increase under the plan was approved in March 2016. To date, the TDSIC adjustment has raised the monthly residential gas bill for a customer using 72 therms (an average monthly amount over the course of a year) by $1.23.
NIPSCO is currently seeking an additional rate increase under the plan.
- The utility’s proposal would raise the residential bill for 72 therms by $1.44, bringing the total increase to date under the law to $2.67.
- The OUCC is currently scheduled to file testimony on April 29, 2016.
- An IURC evidentiary hearing is scheduled for May 16, 2016.
A brief summary of the 2013 law
Indiana Code 8-1-39 allows electric and natural gas utilities to submit 7-year infrastructure improvement plans for IURC approval. It requires the IURC to rule within 210 days once such a request is filed.
- Once a 7-year plan receives IURC approval, the utility may request incremental rate increases every 6 months to pay for the projects. The rate adjustment is referred to as the Transmission, Distribution and Storage System Improvement Charge (TDSIC). The IURC has 90 days to rule on such a request.
- TDSIC rate increases are limited to no more than 2 percent of total retail revenues.
- The TDSIC rate adjustment (or tracker) allows the utility to recover 80 percent of the costs as they are incurred. The remaining costs are deferred until the utility's next base rate case, which must be filed before the end of the 7-year period.
NIPSCO's Seven-Year Plan
NIPSCO filed its seven-year natural gas system improvement plan in October 2013, in IURC Cause No. 44403. The utility's testimony and exhibits stated that:
- The plan would include about $713.1 million in capital improvement projects.
- Projects throughout NIPSCO's natural gas service territory would include replacement of aging infrastructure, new transmission mains, the installation of automated valves, and expansion into rural areas that currently do not have natural gas service.
- Construction would start in 2014 with the first rate increase of approximately 1.0 percent taking effect in 2015.
- Annual rate increase amounts from 2016 through 2020 would vary by year, ranging from 1.5 percent to 1.9 percent each year. The average annual percentage increase over the 7-year term would be 1.4 percent.