NIPSCO Gas Infrastructure Plans
A 2013 state law allows electric and natural gas utilities to seek IURC approval of long-term 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 (IURC Cause No. 44403), referring to the program as its Natural Gas Infrastructure Modernization Plan.
- The plan originally included about $713.1 million in capital improvement projects.
- Projects throughout NIPSCO's natural gas service territory 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.
In recent tracker filings:
- NIPSCO’s June 2016 TDSIC adjustment raised the monthly residential gas bill for a customer using 72 therms (an average monthly amount over the course of a year) by $2.67 over the utility's base rates.
- In December 2016, the IURC approved NIPSCO's request to decrease that amount to $1.87. OUCC testimony recommended approval of the request.
- NIPSCO's adjustment receiving Commission approval in June 2017 raised the 72-therm amount by 36 cents, to $2.23. For the case file, click here, enter cause number 44403, and click the link for "44403 TDSIC 6."
- In December 2017, NIPSCO received approval of an adjustment reducing the 72-therm amount by 60 cents, to $1.63. The OUCC filed testimony (Grosskopf and Golden) in October 2017. Under the federal Tax Cuts and Jobs Act, the amount was further reduced to $1.41.
- NIPSCO's most recent tracker filing received Commission approval in August 2018 and raised the 72-therm amount to $5.81. For the case file (Cause No. 44403-TDSIC 8), click here. The OUCC filed testimony (Grosskopf and Golden) on April 30, 2018.
- In Cause No. 44403-TDSIC 9, the OUCC, industrial customers, and NIPSCO reached a settlement agreement that would reduce the amount for an average residential customer to a 78-cent credit. Reductions are primarily due to federal tax reform and the withdrawal of certain projects in light of a 2018 Indiana Supreme Court ruling. The OUCC filed settlement testimony on November 7, 2018. The settlement received Commission approval on December 27, 2018.
- Cause No. 44403-TDSIC 10 is pending and would set the average residential charge at seven cents.
NIPSCO's Second Seven-Year Plan
NIPSCO filed its second 7-year natural gas system improvement plan in April 2018, in IURC Cause No. 45074. This case was dismissed on September 4, 2018. The utility's testimony and exhibits stated that:
- The plan would include about $1.06 billion in capital improvement projects.
- Projects throughout NIPSCO's natural gas transmission and distribution systems would include replacement of aging infrastructure, public safety improvements, storage projects at NIPSCO's liquefied natural gas facility, new mains, new regulator stations, and expansion into rural areas that currently do not have natural gas service.
- Construction would start in 2019 and continue through 2025. The plan's first rate increase of approximately 1.3 percent would take effect in 2020.
- Annual rate increase amounts through 2025 would vary by year, ranging from 1.3 percent to 2.2 percent each year. The average annual percentage increase over the 7-year term would be nearly 1.5 percent.
A brief summary of the TDSIC law
Indiana Code 8-1-39 allows electric and natural gas utilities to submit infrastructure improvement plans for IURC approval. A plan may cover a 5- to 7-year range. The IURC must rule within 210 days once such a request is filed.
- Once a 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 120 days to rule on such a request.
- TDSIC rate increases are limited to no more than 2 percent of a utility's total retail revenues.
- The TDSIC rate mechanism (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.