The state's largest consumer group, the Citizens Action Coalition (CAC), today began a court challenge to a controversial settlement between the Northern Indiana Public Service Company (NIPSCO) and other consumer groups, which recently ended a lengthy state investigation of the utility initiated by a CAC complaint in October, 2000. The Coalition sought a permanent reduction in NIPSCO's electric rates worth approximately $175 million per year, but the settlement calls only for temporary credits of approximately $55 million per year for four years. Chris Williams, CAC's Executive Director, said the Coalition was initiating the appeal on behalf of its members who are NIPSCO customers for two principal reasons. "First," Williams said, "the result reached in the settlement is unfair to NIPSCO's customers. They will still be paying too much for their electricity and NIPSCO will still be over-earning at their expense so that NiSource can siphon off the extra cash to pay off the huge debt it accumulated to buy Columbia Energy in November, 2000." "Second," Williams concluded, "the process by which this unfair result was reached was improper. The Governor's Office, at a utility holding company's behest, should not be able to direct the Office of Utility Consumer Counselor to settle a case on terms unfair to a utility's customers." The Coalition's attorneys for the legal challenge will be the Indianapolis-based firm, Mullett & Associates. This firm has previously represented CAC in several successful appeals involving Indiana utilities, including precedent-setting cases which won refunds totaling $81 million for NIPSCO electric customers and $152 million for PSI customers.

The firm's lead attorney is Michael A. Mullett. Said Mullett, "The key to a successful appeal in this case is identifying clearly the major legal errors made in approving the settlement and then explaining effectively how those legal errors hurt customers economically.

The legal errors involved here are numerous, obvious and serious. They cost NIPSCO customers hundreds of millions of dollars. Consequently, I am confident from past experience that the appellate courts will recognize these errors and order regulators to correct them to the benefit of NIPSCO customers." According to Mullett, the legal errors made by the Indiana Utility Regulatory Commission (IURC) in approving the NIPSCO settlement include:

• the refusal to consider unrebutted evidence of improper intervention by the Governor's Office in the settlement negotiations at NIPSCO's request, resulting in a settlement which would not otherwise have occurred;
• the unlawful award of almost $6 million in attorney's fees and litigation costs at customer expense; 
• the unauthorized approval of excessive profits for NIPSCO of as much as $300 million over the next four years; and
• the unlawful authorization of a novel credit plan which effectively repudiates sixty years of legal precedent and practical experience in regulating utility rates in a manner which consider the interests of customers as well as investors.

Briefing and argument before the Court of Appeals are not expected to be completed until Spring 2003 and a decision not reached before Summer 2003.

Whichever side prevails in the Court of Appeals, the losing litigants will likely seek to transfer the case to the Indiana Supreme Court given its major economic and legal implications.

MICHAEL A. MULLETT
Biographical Information

Mr. Mullett is an attorney in private practice in Indianapolis and Columbus, Indiana. His firm, Mullett & Associates, has a practice focused exclusively on the representation of individuals and organizations whose cases present issues of broader public policy, especially as they relate to energy, utilities, and the environment. His practice includes interventions in administrative proceedings before government agencies, civil actions and appeals in state and federal court, and bill drafting and lobbying activities before legislative bodies. He is also a member of the adjunct faculty of the Indiana University School of Law at Indianapolis, teaching a seminar in public utility regulation and deregulation.

For the past twenty years, Mr. Mullett has represented the Citizens Action Coalition of Indiana, the state’s largest consumer advocacy organization. Major cases which Mr. Mullett has litigated on behalf of the Coalition have included:

• Citizens Action Coalition v. Northern Indiana Public Service Company--a series of three cases which culminated in a decision of the Indiana Supreme Court ordering a refund to NIPSCO customers of approximately $81 million unlawfully collected through rates for the sunk costs of the cancelled Bailly nuclear project.
• Citizens Action Coalition v. PSI Energy, Inc.--a series of six cases which culminated in decisions of the Indiana Supreme Court and Court of Appeals ordering refunds to PSI customers of approximately $152 million unlawfully collected through hidden charges for the costs of the cancelled Marble Hill nuclear project.

Mr. Mullett has also represented other public interest and non-profit organizations including the Hoosier Environmental Council, the AFL-CIO Labor Institute for Training, and Administrative Resources association, as well as numerous individuals and community groups.

Prior to practicing law, Mr. Mullett served as the Executive Director and Consultant to the Governor’s Committee on Youth Employment; Project Consultant to the Cummins Engine Foundation; Executive Director of Human Services, Inc.; a Personnel Director for Cummins Engine Company; and a Personnel Administrator for Ford Motor Company.

Mr. Mullett received his J.D., magna cum laude, from the Indiana University School of Law at Indianapolis and his LL. M. from the Northwestern School of Law at Lewis & Clark College in Portland, Oregon. His LL M. thesis was published by the Pace Environmental Law Review in its Summer, 2001 issue. He also has B.A. and M.A. degrees, both with honors, from the University of Michigan. He is a member of the Indiana State, and American Bar Associations. Mr. Mullett has been listed in Who’s Who in American Law since 1990. He was selected as a co-recipient of the Indiana Trial Lawyer of the Year award in 1994 and the sole recipient of the Hoosier Environmental Litigator of the Year award in 1999.

Mr. Mullett is married with three children. He makes his home in Columbus, Indiana.

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