NIPSCO cost shift alarms consumer groups

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BY KEITH BENMAN
kbenman@nwitimes.com
219.933.3326 | Friday, September 05, 2008 | (16 comment(s))

In its proposed 16 percent rate increase, NIPSCO is telling state regulators it wants customers to shoulder a larger burden for everything from power plant coal to energy efficiency.

That has alarmed consumer groups, who say the utility is shifting risk onto the backs of customers already burdened by high energy costs.

"The affordability issue is just crucial in Northwest Indiana," said Grant Smith, of the Citizens Action Coalition. "The people up there are paying much too much for the service now."

The biggest shift under NIPSCO's rate plan would come in its fuel charge, which adjusts customer charges monthly to reflect the cost of fuel for power plants.

The company wants to shift all fuel costs now contained in its fixed base rate into its variable fuel charge.

NIPSCO calculates that the fuel surcharge that made up 7 percent of a customer's bill based on fuel costs in December would make up almost 25 percent of a customer's bill under its rate proposal.

In fact, NIPSCO's base rate actually goes down under its rate proposal. All of the utility's projected overall 16 percent increase in customer charges comes about because of the increase in the fuel charge.

NIPSCO contends the shift would help simplify customers' bills and subject all fuel charges to monthly review by the Indiana Utility Regulatory Commission.

"It's a chance to recover actual costs -- not more and not less than what it costs the company -- with no mark-up to customers," NIPSCO spokesman Nick Meyer said.

But what worries consumer representatives is the monthly up and down nature of fuel costs. For example, the fuel surcharge contained in customers' bills this month is 43 percent higher than the one in December.

That would add $9.71 to a typical customer's bill under NIPSCO's rate proposal.

"They would shift the volatility and risk for fuel costs almost entirely to ratepayers under this plan, rather than those being shared with stockholders," LaPorte County Attorney Shaw Friedman said.

Surcharges are widely used by utilities in the United States, but the increasing use is alarming consumer groups. NIPSCO currently has three in place, all previously approved by the Indiana Utility Regulatory Commission.

NIPSCO is the a largest utility in Indiana, with 445,000 electric and 712,000 natural gas customers.

In its rate case, NIPSCO is asking state regulators to approve one more tracker. The company is calling it a "reliability adjustment." It would pay for the cost of power purchases and fees paid to transmission grid operators.

That surcharge also would be used to refund some of the money NIPSCO makes from selling power to other utilities to its own customers.

NIPSCO also told regulators it will be seeking another tracker to cover costs associated with a new energy efficiency program it wants to begin. That proposal will come in a petition to be presented to state regulators this fall.

Those energy efficiency programs will give customers one more chance to cut their costs for electricity, Meyer said.

Shifting costs
How NIPSCO bill charges would change under the utility's rate proposal currently before the Indiana Utility Regulatory Commission*:

Electricity used: 735 kilowatt hours
Current bill: $81.68
Base rate charge: $77.89
Fuel charge: $5.76
Environmental charge: $2.70
minus $4.67 customer credit under previous rate settlement

Electricity used: 735 kilowatt hours
Bill under rate request: $94.82
Base rate: $70.57
Fuel charge: $22.59
Environmental charge: $1.18
Reliability charge: $0.48

* Total bill under rate request based on two-step rate increase fully implemented. Fuel cost charge based on December 2007 rate of $0.007834 per kilowatt hour. This rate changes monthly.
Source: NIPSCO

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Right on David Slings wrote on Sep 8, 2008 8:57 AM:

" You said it all! AMEN to that!

And for those like SUE who have a problem with that, go ahead tell your mom, your neighbor, your grandparents, your girlfriend, and I say that because SUE you are a man not a woman, and a Corporate one at that, maybe a nipsco corp. Sorry but most women are not even that whiny! So go ahead tell cause we don't care. Your right NIPSCO is NOT being a good neighbor, thanks for agreeing on that one! "

sue wrote on Sep 5, 2008 2:10 PM:

" I'm telling my mom on you Nipsco ! Your not being a good neighbor ! "

Davids Sling wrote on Sep 5, 2008 2:07 PM:

" Whenever stockholders are criticized for demanding huge increases in the returns they get each year on their investments, they whine that they're "taking all the risks." But in recent years, corporations have been passing ALL those risks on to consumers--who, unlike stockholders, never agreed to accept any risk at all.

When one profitable company buys out another in order to reduce its competition, stockholders don't get laid off--the now-"redundant" workers do. When a company makes foolish decisions and gets hurt by them (like mortgage-investment companies did), the stockholders don't bail them out--the taxpayers do. And when a company fails to predict its costs accurately (like NIPSCO), the stockholders don't take the hit--the consumers do.

Supposedly, the formula for entrepreneurship is, "The greater the risk, the greater the reward." But stockholders want to get all the reward without accepting any of the risks! And when we're dealing with a monopoly like NIPSCO, we don't even have the option of "voting with our feet" by buying from a competitor.

Like the housing industry, the energy industry needs more regulation...and regulation with teeth! "

To Alarmed are you wrote on Sep 5, 2008 1:25 PM:

" Are you alarmed by the increase in costs for:
1. Gas for your car?
Yes
2. Doctor's visit?
NO
3. Grocery bill?
No
4. Cost to fix a lawn mower?
NO, buy a new one
5. Price of insurance for car, home, life, personal property?
NO
6. Starbucks Latte?
unlike you I don't even like starbucks it turns nice people into people like you.
7. New Car Payment?
don't need one
8. Your new big-screen HDTV?
don't need one
Starbucks, big tv, what does that have to do with nipsco. looks like you uncovered to true pettiness in your own response. Yes Costs go up due to CORPORATE GREEDS like you. Lets see how long you feel that way, when you are on the receiving end of this, then you can "Get over it". yeah waaaaah waaaah.YOU are a true whiner and selfish inconsiderate person. I bet you are the type that drinks your latte and throughs the cup onto the street because you can! thinking the world is your dumpster. deadbeat, clean up your own mess because everyone else shouldn't have to. "

Tom wrote on Sep 5, 2008 12:29 PM:

" well, time to find another job so I can keep my house warm which i'll never spend any time in cause i'm working to pay for it... good times... "

To Alarmed Are You wrote on Sep 5, 2008 11:56 AM:

" I am alarmed by the fact that I:
1. Buy less gas for my car
2. Barely make Doctor's Copay
3. Buy less Groceries
4. Can't fix my lawn mower
5. Have dropped insurance for car, home, life, personal property
6. Never bought a Starbucks Latte
7. Can't afford New Car
8. Can't fix my 25" tube TV

My house is worth nothing and my pay doesn't increase... What's one more cost hike... Maybe I'll just collect welfare and YOU can pay my NIPSCO! "

Break the monopoly wrote on Sep 5, 2008 11:24 AM:

" its time for a healthy competition "

Railroad Fan wrote on Sep 5, 2008 10:45 AM:

" Hopefully, the people opposed to this rate change aren't supporting Canadian National's purchase of the EJ&E line. NIPSCO's coal is transported on that line...as the the railroads continue to narrow into a monopoly throughout the U.S. the cost of transporting that coal continues to go up. Previous articles stated that one of the greatest costs associated with Power Generation is coal transportation costs. CN has increased coal transportation costs in other ares of the country as it has acquired lines...the Surface Transportation Board admitted that our energy prices will go up as these deals go down...yet, the RR aren't regulated as heavily as our utilities...there's another player in the energy cost game that's hiding. Let's keep our eye on the bigger picture rather than targeting NIPSCO for everything. "

ripdog wrote on Sep 5, 2008 10:16 AM:

" There's no use complaining. Our legis-latures(all of which has been re-elected way too many times)can care less about us. Call them and you'll get a response that does'nt even remotely address your condern(s). Stop eating and buy candles, then we'll be able to heat our houses. Nipsco is in bussiness to make money, and so are our elected officials.Good luck when it gets cold "

so wrote on Sep 5, 2008 8:45 AM:

" Wasn't there a story the other day that nipsco prices were going down? "

KINGPIN wrote on Sep 5, 2008 8:08 AM:

" JIPSCO is at it again. Ripping us on fuel that they buy.
Why try to save on fuel when you can shift all the cost to the customers?

The more the fuel cost the more $ they will make. They are already robbing us blind and now they want more.

How much fuel do they waste with there leaky trammission lines and inefficiencies at power plants? Why fix them when the more they leak the more money JISPCO makes.

Make there shareholder take the hit for there inefficiencies . Not the customers. "

stacy wrote on Sep 5, 2008 7:38 AM:

" nipsco is such a badly run company, Are there any other companies besides nipsco in indiana. Because they absolutely suck. "

Alarmed Are You wrote on Sep 5, 2008 7:32 AM:

" Are you alarmed by the increase in costs for:
1. Gas for your car?
2. Doctor's visit?
3. Grocery bill?
4. Cost to fix a lawn mower?
5. Price of insurance for car, home, life, personal property?
6. Starbucks Latte?
7. New Car Payment?
8. Your new big-screen HDTV?

Stop whining about NIPSCO, the favorite whipping boy of the malcontents.
Costs go up. That's life. Get over it. "

Dear Utility Regulators wrote on Sep 5, 2008 6:40 AM:

" There is no other utility company in nwi, nipsco monopolizes that. If they had allowable competitors all this game playing with the utility regulators would stop. c'mon, they first had to refund customers for overcharging and were made to pay "tiny increments" as a credit. Now they are playing a number crunching game to recoup that reprimand. NO! our lawmakers should Help on this! There is enough nickle and diming customers from food to gas! The buck stops here! We Pay too much already! "

Overtaxed wrote on Sep 5, 2008 6:26 AM:

" Why no mention that our great state of Indiana adds a 7% sales tax to our utility bill? As the cost to keep warm this winter goes up the state feels it is necessary to also take more money away from us. As least, NIPSCO provides us a product we need. "

Geezer wrote on Sep 5, 2008 5:58 AM:

" Just what we need less for more.
I particularly like the part where if we are efficient in the use of gas we get to pay more "

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