At the Indiana Utility Regulatory Commission (IURC) public field hearing in Gary on March 3, 2009, over 600 people showed up to testify against NIPSCO’s requested rate increase. The hearing was held at a venue that only seated about half of those people, so about 300 people were left outside protesting and chanting “Fight the Hike!” Here is why:

• In the 4th quarter of 2008, NiSource profits rose nearly $100 million dollars compared to the same quarter in the previous year. Their profits rose to $162 million, up from $67 million in the 4th quarter of 2007.

• NiSource directors more than doubled their salaries last year. In 2007, NiSource directors made $80,000. In 2008, they raised that to $165,000.

• NiSource announced that it plans to cut about 370 jobs across its 16-state operating territory over the course of 2009.

• If NiSource profits are increasing and it is doubling the salaries of its board members, why is it cutting jobs and asking for rate increases in the worst economy we have seen since the Great Depression? We need to make our voices heard! We need to demand more public field hearings across Northern Indiana so that all of the people who did not have the chance to testify can voice their plights and let the IURC understand how this rate increase would impact them!

To find out how to take action to fight NIPSCO's rate increase, click here!

NIPSCO Demands Unjustifiable 16.5% Rate Increase on Residential Ratepayers in Indiana!

NIPSCO wants the Indiana Utility Regulatory Commission to let them raise base rates by an unwarranted $85 million. CAC has intervened in the case.

Come to the public Field Hearing and speak out against unfair rates and bad service!

NIPSCO’s Scheme for Excessive Rate Increase:

• NIPSCO recently purchased the Sugar Creek power plant and wants to add it to their rate base. However, NIPSCO’s costs have gone down in other areas. It has closed its Mitchell power plant and has been depreciating its other power plants over the 15 years since its last rate case.

• NIPSCO is requesting a 12% return on equity for its shareholders, higher than any other utility in Indiana. This despite the fact that they have the worst customer satisfaction rating of all the Indiana investor-owned utilities (according to a 2008 JD Power survey: www.jdpower.com/corporate/news/releases/pdf/2008090.pdf).

• NIPSCO has a poor credit rating, so its debt costs are higher because it has to pay more interest on its debts. This is due in large part to the fact that its parent company, Nisource, bought troubled Columbia Energy nine years ago. The hostile takeover has not been paid off yet.

• Much of the increase for residential customers is not due to increased costs but to “reallocating” existing rates to shift costs from large customers to residential customers.

• As recently as 2001, a rate investigation by the IURC (Cause No. 41746) included strong evidence that NIPSCO was over-earning. According to CAC’s analysis, NIPSCO was over-earning by $120 million. As a result of settlement negotiations in this case, NIPSCO agreed to credit customers over $6 month – those credits will now go away.

• NIPSCO has proposed new trackers for “reliability.” Trackers allow NIPSCO to raise your rates when their costs go up in certain areas without having to lower your rates when their costs go down in other areas. NIPSCO’s responsibility as a public utility is to provide reliable electric service to it’s customers. They should not need incentives to do what they are already supposed to be doing. These trackers would also remove a significant amount of regulatory oversight from a utility that, if anything, needs more oversight.

• In addition, NIPSCO wants to disguise the true size of the increase in base rates by moving all of its fuel costs into a separate tracker.

• There are periods of time when NIPSCO generates more electricity than they need. The extra electricity is then sold on the wholesale market to the highest bidder. NIPSCO wants to keep a significant amount of the profits from those off-system sales for their shareholders. However, that electricity is generated by power plants paid for by ratepayers, so the profits from the extra electricity should be returned to ratepayers in the form of reduced rates.

Take Action: Write to the Office of Utility Consumer Counselor!

• Tell them to DENY NIPSCO’s request for a 16.5% rate increase;

• Tell them to make NIPSCO credit 100% of off-system sales to ratepayers;

• Tell them to deny NIPSCO’s request for additional “reliability” trackers. It is NIPSCO’s responsibility as a regulated utility is to provide reliable service. They should not need incentives to do what they are already supposed to be doing.

• If you have had problems with NIPSCO’s quality of service, include that in your letter. Let the IURC know that NIPSCO does not deserve to have the highest rate of return for the poorest quality of service of all the Indiana investor-owned utilities.

• Ask that your letter be included in the testimony that the OUCC files with the Regulatory Commission for Cause No. 43526.

We helped to stop the Leucadia coal-gasification power plant from being built!
Many thanks are due to Valleywatch and Spencer County Citizens for Quality of Life, who worked in coalition with us and were very instrumental in helping to stop this plant. Leucadia wanted to build it to turn coal into synthetic natural gas and force the $5 billion price tag onto Indiana natural gas customers. We intervened in all of the proceedings before the Regulatory Commission, and we put pressure on Vectren and NIPSCO Gas to withdraw from contract negotiations with Leucadia, which they finally did.

Two Indiana natural gas utilities, Vectren and NiSource (parent company of NIPSCO Gas), are currently engaged in negotiations with an unregulated power plant developer that could make life very hard on Indiana natural gas customers.

Background of Indiana Gasification LLC
When people think of a coal gasification plant, they generally think of electricity generation. However, the gas produced from gasifying the coal could also be sold to heat homes or for industrial operations. However, the cost is astronomical for ratepayers.

Leucadia Corporation, headquartered in New York City (with offices in Utah and California), wants to build and ostensibly own a coal-gasification plant in southern Indiana near Rockport. The project is called Indiana Gasification LLC.

Wall Street is skeptical about financing coal-gasification plants because of the astronomical costs for construction and operation, and because the technology has yet to be proven to work on a large commercial scale. Therefore, Leucadia wants to employ the same old utility scam for financing risky, unneeded power plants that Wall Street won’t touch; namely, forcing ratepayers and taxpayers to pick up the tab.

Leucadia and company are now negotiating with Vectren and NiSource (NIPSCO Gas) to lock their ratepayers into a 30-year contract to pay for the plant through gas sales to the utilities without knowing how much the gas produced by the plant will cost.

Indianapolis-based Citizens Gas dropped out of the negotiations.

Negotiations were started in 2006 and still no contracts have been produced. Once contracts are signed, the Indiana Utility Regulatory Commission can approve or deny the contracts. If approved, there is no way out for ratepayers.

Same Old Scam: Leucadia Wants to Sell Indiana a Bridge in Brooklyn
This multi-billion dollar boondoggle in the making would not be feasible without ratepayers footing the bill. So in 2007, Leucadia first duped the state legislature and Governor Daniels by spinning this as “Indiana Home-Grown Energy.” That year, the Indiana legislature passed a bill to force ratepayers to keep paying for this ill-conceived project for 30 years without any way out. The legislation promised that the plant would be built in Indiana and use only Indiana coal, supposedly providing jobs and an economic boost to Indiana. Then, in 2008, Leucadia came up with another piece of legislation that reneged on the promises that the plant would be built in Indiana and use Indiana coal. The legislation passed, so as it stands now, this plant could be build outside of Indiana, does not have to use Indiana coal, and yet if the contracts are signed, Indiana taxpayers and ratepayers would still be saddled with the costs of paying for the plant, even if it never produces any natural gas. Despite strident objections from CAC, the legislature and the Governor eagerly bought into the numbingly one-sided, get-rich-quick power plant construction scheme.

Leucadia Project Holds Vectren and NIPSCO Gas Ratepayers Hostage for 30 Years

• It is highly likely that Indiana coal will not be used in the project because Leucadia has not been able to secure a 30-year coal contract in Indiana.
• Although outside Rockport, IN is the chosen area for this coal-gasification plant, Leucadia is having a hard time securing a definite site because landowners are refusing to sell their land.
• Leucadia can’t tell ratepayers the ultimate cost of the project, yet wants Vectren and NiSource to sign a 30-year contract holding Vectren and NIPSCO Gas ratepayers hostage to pay for the gas produced by the plant.
• According to the passed legislation, if state regulators approve the contract, they can’t change it for 30 years.
• According to the legislation, at the times when the plant is not operating, ratepayers will be double charged. At those times, ratepayers are obligated to pay for the gas that is not being produced as well as the replacement gas that would have to be purchased. If the contracts are signed, this will be the case even if the project is a failure and the plant never produces any natural gas.
• Ratepayers would be liable for all costs in the future relative to carbon dioxide regulations which everyone agrees will soon be created and will be highly expensive. Vectren and NIPSCO Gas would be able to ignore service at the cheapest cost as stipulated in current law.

Take Action!!

A ratepayer revolt is required because we can’t afford to pay Leucadia’s way to bigger profits!

• Demand that they withdraw their companies from the Indiana Gasification, LLC negotiations with Leucadia!
• Urge them to use the same reasonable approach that Vectren took in abandoning the Duke Energy project, yet another multi-billion boondoggle in the making.
• Remind them that Citizens Gas in Indianapolis has pulled out of the negotiations, and they should do the same.

The Citizens Action Coalition, the state's largest consumer group, has issued a report on the $10 million investment which the Northwest Indiana Regional Council of Carpenters Pension Fund made in the Coffee Creek Center development near Chesterton. The Coalition urges a broader probe of the controversial land deal, for two very important reasons.

First, the Coalition believes that the retirement incomes of working people can be protected only when money illegally diverted from a pension fund is traced and returned, and the people who conspired to loot the fund are indicted, convicted, and incarcerated. In our view, that is what must happen here - the Carpenters should get all of their money back, and everybody involved in committing or abetting illegal acts should be jailed.

It appears that the Carpenters' Pension Fund lost more than $6 million through the illegal conspiracy associated with the Coffee Creek land deal. It seems unlikely that the Pension Fund will get all or even most of that money back from the three conspirators who have already pled guilty- Kevin Pastrick, Peter Manous and Gerry Nannenga.

Together, they received only $600,000 of the $10 million which the Pension Fund originally invested. The other $9.4 million went to Coffee Creek's developer - NiSource subsidiary Lake Erie Land Company. If the Carpenters are to get their money back, it will almost certainly have to be from Lake Erie or NiSource.

The criminal charges brought by the U.S. Attorney and the civil suit filed by the Pension Fund regarding Coffee Creek are based largely on the Employee Retirement Income Security Act (ERISA). ERISA was intended by Congress to be a very powerful tool, to prevent and remedy abuses of employee pension funds like the ones that occurred here.

As the Coalition's attorneys read the Supreme Court's precedent-setting Harris Trust case, ERISA would allow both the Carpenters' Pension Fund and the Secretary of Labor to reach pension fund assets wrongfully diverted to third parties by fiduciaries and parties in interest - at least when those third parties knew or should have known of the wrongdoing. Consequently, what Lake Erie officials knew or should have known could prove to be the crucial issue as to whether the Carpenters Pension Fund gets its money back.

Second, as CAC reads the legal documents and other information in this case, there may be other conspirators who are, as the indictments state, “known and unknown” to the Grand Jury. There may also be other violations of state and federal law, which the plea agreements obligate the Coffee Creek conspirators to disclose to federal authorities. The indictments and pleas filed so far could prove to be important tools to help federal officials to identify, investigate and prosecute other conspirators and other conspiracies, in addition to the ones involved at Coffee Creek. In the Coalition’s view, those tools should be used with maximum effect by the responsible officials.

The criminal charges and the civil suit filed to date are based in part on the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO was intended by Congress to be a powerful tool to investigate and punish organized criminal conspiracies, including specifically those that loot employee pension funds. Thus, investigators and prosecutors have a daunting but essential duty to perform here. Their job is not done until all the criminals have been identified and segregated from their victims and all the crimes have been properly investigated and appropriately punished. And, as the Coalition sees it, there is still work for those officials to do.

Read the report by Mike Mullett, Special Counsel to CAC