Justia Energy, Oil & Gas Law Opinion SummariesArticles Posted in Supreme Court of Indiana
NIPSCO Industrial Group v. Northern Indiana Public Service Co.
Under traditional rate regulation, an energy utility must first make improvements to its infrastructure before it can recover their cost through regulator-approved rate increases to customers. The process is an expensive, onerous rate-making case, which involves a comprehensive review of the utility’s entire business operations. In 2013 the legislature authorized utilities to obtain regulatory preapproval for “designated” improvements to their infrastructure. Under the “TDSIC” Statute, a utility can seek regulatory approval of a seven-year plan that designates eligible improvements, followed by periodic petitions to adjust rates automatically as approved investments are completed. The Indiana Utility Regulatory Commission preapproved approximately $20 million in infrastructure investments and authorized increases to NIPSCO’s natural-gas rates under the TDSIC mechanism. The approval referred to categories of improvements that describe broad parameters for future improvements but did not designate those improvements with specificity. The Indiana Supreme Court reversed, in part, concluding that the TDSIC Statute permits periodic rate increases only for specific projects a utility designates, and the Commission approves, in the threshold proceeding and not for multiple-unit projects using ascertainable planning criteria. A utility must specifically identify the projects or improvements at the outset in its seven-year plan and not in later proceedings involving periodic updates. Commission approval of “broad categories of unspecified projects defeats the purpose of having a plan.” View "NIPSCO Industrial Group v. Northern Indiana Public Service Co." on Justia Law