NIPSCO Deal is a Sugar-Coated, Poison Pill Being Forced Down the Throats of Electric Ratepayers

NIPSCO Must Lower It’s Electric Rates

In January of 2001, the Citizens Action Coalition, United Senior Action and numerous NIPSCO customers filed a customer complaint known as a reverse rate case against Northern Indiana Public Service Company (NIPSCO). It was clear to CAC that NIPSCO’s rates were much too high and had been for years. As a result of the complaint, the Indiana Utility Regulatory Commission (IURC) opened an investigation into NIPSCO’s rates. A group of large industrial customers joined the investigation also claiming that NIPSCO was overcharging them. The Office of Utility Consumer Counselor (OUCC) and the IURC Staff agreed that NIPSCO’s rates were out of control. All of these groups agreed that NIPSCO should reduce its rates between 11% and 17%.

The NIPSCO Deal is Good for NiSource, But Bad for Ratepayers

NiSource recently signed a deal with the OUCC and the industrials to end the rate investigation. The NIPSCO deal was filed on June 21, 2002 at the IURC. NIPSCO claims that the deal will reduce its rates. However, the NIPSCO deal offers ratepayers no real rate relief but many very real risks. The deal is designed to allow NIPSCO to earn excessive profits to help pay off the huge debt incurred by NiSource to buy Columbia Gas. It sacrifices the rights of NIPSCO ratepayers to bail out NiSource management. The NIPSCO deal:

Establishes a floor, not a ceiling for NIPSCO’s rates. The deal does not really reduce NIPSCO’s rates; it only provides a temporary credit against current rates.
Allows NIPSCO to offset, even exceed the temporary credits by charging customers for 100% and more of increased costs resulting from environmental compliance and purchased power. At the same time, it permits NIPSCO to keep 100% of any reduced costs it experiences for any reason over the next four years without passing any of the savings on to customers.
Promises NIPSCO additional financial incentives to provide the adequate service already required by law.
Leaves NiSource management free to close NIPSCO offices, layoff NIPSCO employees, and divert NIPSCO resources.

NIPSCO Uses Hard Ball Tactics to Interfere With the Rate Case

To get support for its deal from the Office of Utility Consumer Counselor, NiSource threatened the economy of Northwest Indiana even further by suggesting that it might move its corporate headquarters, eliminating even more jobs in the Region, if the rate case were not resolved in a way favorable to NIPSCO. NIPSCO also went so far as to hire private investigators in an effort to intimidate expert witnesses in the rate case. NIPSCO’s hardball tactics are unmistakable signs of its management’s deepening desperation.

NiSource is Facing a Financial Crisis

The purchase of Columbia Gas has put NIPSCO’s parent company NiSource deep in debt. As a result, NiSource securities have declined to near junk-bond status. To pay down debt, NiSource is siphoning off as much cash as it can from NIPSCO, while mismanaging NIPSCO to generate as much cash as possible by keeping rates high while cutting costs through office closings and employee layoffs. The NIPSCO deal is a direct result of this NiSource financial crisis.

CAC Rejected the NIPSCO Deal

The Citizens Action Coalition flatly rejected the NIPSCO deal now before the IURC. CAC believes that the IURC should also reject the NIPSCO deal, issue its own rate order, and initiate a full-scale investigation of NiSource’s financial manipulation of NIPSCO.

CAC Wants True Rate Reductions for NIPSCO Ratepayers

Given the evidence in the rate case, CAC believes that an IURC order based on that evidence would protect the interests of ratepayers and reduce NIPSCO rates by 11% to 12% (or $110 to $120 million). An IURC order has been ready since late April or early May, but has been held up at NiSource’s behest. CAC has requested the IURC to issue the NIPSCO rate order, as well as initiate the NiSource investigation.

Please Write or Call the IURC and the OUCC

NIPSCO ratepayers can help persuade the Indiana Utility Regulatory Commission and the Office of the Consumer Counselor that the NIPSCO deal is a bad deal. Please call the OUCC and IURC today. Urge them to:

Award NIPSCO ratepayers a real rate reduction of $110 to $120 million;
Initiate a full-scale investigation into the financial manipulation of NIPSCO by NiSource;
Hold a public field hearing in NIPSCO territory prior to ruling on the case so the public can speak out.

Consumer Affairs and complaints number is 1-800-851-4268 or 1-317-232-2712.

Utility Consumer Counselor (OUCC)
100 N. Senate Ave., Room N501
Indianapolis, IN 46204-2215
Or Call at (888) 441-2494 or 1-317-232-2494

Utility Regulatory Commission (IURC)
302 W. Washington St., Suite E-306
Indianapolis, IN 46204
Or Call at (800) 851-4268

Please Write or Call Governor Frank O’Bannon

Tell the Governor to stand up for Main Street, not Wall Street. Tell him that:

There should be no sweetheart deals with NiSource;
To let the OUCC do its job by representing the interests of NIPSCO customers;
To let the IURC do its job by issuing its rate order and investigating NiSource’s mismanagement of NIPSCO.

Gov. O’Bannon
Statehouse Room 206
Indianapolis, IN 46204-2797
Call: (317) 232-4567
Fax: (317) 232-3443
E-mail: fobannon@state.in.us

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