NIPSCO’s proposed 22% electric rate increase is big, but it’s not the only one facing Indiana regulators now.
Three of the state’s investor-owned utilities are asking for $40-plus monthly rate increases, “the likes of which we’ve never seen,” Citizens Action Coalition Executive Director Kerwin Olson said.
For NIPSCO’s typical residential customer, that’s a monthly increase of about $32, according to the utility, although the Citizens Action Coalition says it’s more like $45. For non-residential customers, the requested rate increases vary from 15% to 30%, according to the CAC.
Duke Energy Indiana and CenterPoint Energy Indiana South also have pending rate cases, bringing the total to three of the state’s five investor-owned utilities.
Duke, the state’s largest provider of electricity, hopes to collect an extra $500 million a year from its customers, raising a typical residential bill by about $42 a month, according to the Citizens Action Coalition. Including trackers, or surcharges, that’s about a 33% increase, the CAC says.
CenterPoint’s request would drive up monthly bills by $47, an increase of more than 30%, the CAC says.
“We have a significant, significant amount of trackers in Indiana,” Olson said. “Those are driving up electric bills.”
Trackers allow utilities to gather 80% of the money being spent without a formal rate case. “A fair amount of what they’re requesting the increase for is that uncollected amount from those trackers,” Olson said.
“We had the first significant tracker in 2011, called the federal mandate statute, that was put into place because the utilities were scared of President Obama’s EPA and all of those regulations he was going to rain down on industry, whether it was cleaning up coal plants and air pollution or fixing your dilapidated natural gas pipelines or whatever the case may be. They were concerned, and so they got a bill passed that effectively said any federal mandate that gets handed down, customers have to pay for it, not us,” Olson said.
In 2013 came a tracker for updating transmission and distribution equipment, basically everything between the power plant and the light switch, he said.
Those trackers, along with sales tax, make the difference between what NIPSCO says would be a $32 monthly increase and what the CAC says would be $45.
Clean energy costs
“What is driving all of these rate cases is we are in the midst of a clean energy transition,” Olson said. “We are in the midst of utilities needing to upgrade systems and spend a lot of money, and all utilities don’t spend their own money. They spend your money.”
In making the case for the request, NIPSCO points to $2 billion in capital investments for shifting from traditional fuel sources like coal to renewable energy, calling it an investment that will pay off in the future by eliminating the cost of coal. That coal cost is estimated at $126 million annually. The remaining coal-fired power plants would be retired in 2026 and 2028.
In addition, the utility plans $769.5 million in capital investments like replacing poles, lines and substations to improve reliability.
“The markets are very nervous about NiSource (NIPSCO’s parent company) for whatever reason, every cash-strapped utility,” Olson said. “So NiSource is going to be investing a lot of capital. They need to recover that capital. They want to improve their standing with the financial community. One way to do that is to increase cash flow and you do that by raising rates. CenterPoint’s the same way. They have that big acquisition with CenterPoint acquiring Vectren. They’re pretty cash-strapped, debt-heavy. They need to increase rates to increase cash flow.”
Olson attributes that to Indiana’s utility-friendly regulatory environment.
“Through all these laws that we have passed at the General Assembly, we really have shifted, you know, the financial risk of running the utility company away from where it belongs, and where it belongs is with the company and its investors,” he said. “We just completely flipped that model on its head.”
Back before trackers, utilities would invest their own money, raising cash through issuing stock or floating bonds, then making the case to regulators that they spend the money on “prudent, reasonable investments” and want to recoup that money from ratepayers, Olson said.
“With all of these trackers, they get pre-approval of all of this stuff and literally the company invests very, very little of their own money,” he said. “Yes, they need to sort of raise the cash in the moment to pay the bills, but they’re recovering all of that plus a rate of return from customers, so there’s absolutely no risk.”
Last week’s testimony
Olson sat in on last week’s IURC field hearing at Ivy Tech Community College in Valparaiso. The IURC heard about 90 minutes of testimony from school superintendents, municipal officials, senior citizens and others about struggling to pay electric bills.
Three school superintendents testified that even though they invested money in solar panels and other measures to reduce their energy bills, their NIPSCO electric bills have continued to increase, and that’s even without the proposed rate increase.
“I thought that was incredibly important because that’s the sort of thing the commission needs to understand,” Olson said. “Effectively, ‘you’re taking money out of my classroom’ is incredibly compelling.”
“It’s also good to hear these are schools that invested in solar, these are in schools that invested in efficiency. Those are some of the tools that utility consumers should have at their disposal to control their energy costs and reduce their bills, but yet the policy landscape in Indiana is so skewed towards the utilities that even school corporations that invested significant capital on self-generation of power and conservation measures are still seeing dramatic increases in their electric bill.”
“Hopefully, the more that the commission and the state hears this kind of testimony, the more we’ll have a serious policy conversation about how to address these affordability issues that everybody’s facing,” he said.
Opportunities to weigh in
Two IURC field hearings on NIPSCO’s electric rate case will be held Thursday, at 12:30 p.m. at Hammond City Hall and 5 p.m. at the Carter G. Woodson Branch of the Gary Public Library, 501 S. Lake St.
In addition to Thursday’s field hearing, the public can offer comments at www.in.gov/oucc/2361.htm or by mail at Public Comments, Indiana Office of Utility Consumer Counselor, 115 W. Washington St. Suite 1500 South, Indianapolis, IN 46204. Don’t include sensitive or personal information because the comments will be public online. Refer to either IURC Cause No. 46120 or NIPSCO Electric Rates. Include your name, city and ZIP code.
On Dec. 19, the Indiana Office of the Utility Consumer Counselor plans to offer its recommendations on NIPSCO’s rate request. The IURC makes the final determination.
With this rate case before the IURC, NIPSCO seeks to boost its annual revenue by $368.7 million.
If approved, NIPSCO’s rates would go up in September 2025 and March 2026, increasing its revenue from $1.8 billion annually to nearly $2.2 billion.
Already, NIPSCO has the highest utility bills in the state.
The IURC’s 2024 residential bill summary looked at residential electric bills for July. In that report, NIPSCO’s bills for 1,000 kilowatt hours – a standard for comparison, because all bills are based on actual usage – were $184.33, higher than other investor-owned utilities.
That’s ahead of CenterPoint at $176.75; Indiana Michigan Power Co., at $160.30; Duke Energy Indiana at $130.06; and AES Indiana at $141.29.
Help is available
NIPSCO offers a series of energy assistance programs based on income for customers struggling to pay their utility bills. Additional assistance is proposed in the rate increase request, with a portion funded by NIPSCO.
These programs include:
Low-Income Home Energy Assistance Program: If electricity is the primary source of customers’ heat, LIHEAP support is available to households at or below 60% of the state median income. Customers can learn more at eap.ihcda.in.gov or by calling 211.
Flexible payment agreements: NIPSCO offers flexible payment plans to customers who need financial support. Customers can learn more and enroll at NIPSCO.com/PaymentPlans.
Township trustees: A limited amount of energy assistance funds is available through local township trustees.
Emergency Rental Assistance Program: This program provides up to 18 months of rental and utility assistance for renters. See www.in.gov/ihcda/homeowners-and-renters/rental-assistance/.
Budget plan: All NIPSCO customers can use this free program to spread out electric costs over an entire year. Visit NIPSCO.com/budget.
All customers experiencing difficulty with paying their bills – regardless of income – can call NIPSCO between 7 a.m. and 7 p.m. Central time at (800) 464-7726. Visit NIPSCO.com/FinancialSupport for more information.
Similar assistance is available for NIPSCO’s natural gas customers.
Available programs include NIPSCO Hardship, SERV (Supply Energy Resources to Veterans) and SILVER (Seniors in Indiana Low-Income and Vulnerable Energy Resources). Eligible customers can apply through May 31, 2025, or until funds are exhausted. Programs provide a one-time benefit of up to $400 per year to help cover NIPSCO residential gas utility bills.
NIPSCO Hardship Program: This program is for customers whose income is just above the federal poverty guidelines for the Low-Income Home Energy Assistance Program (LIHEAP). It provides gas bill assistance to households with income levels between 151% and 250% of the federal poverty level. Visit NIPSCO.com/IncomeEligible.
SILVER and SERV: SERV is an income-eligible assistance program for active military and eligible veterans who need financial help with their gas utility bills.SILVER is an income-eligible program available for customers 60 and older who require assistance with their gas bills.
The SERV and SILVER programs are available to customers who qualify for LIHEAP or Hardship assistance. Visit NIPSCO.com/IncomeEligible. Processing takes up to 30 business days. If they meet all requirements, they will get a one-time credit.
Customer Assistance for Residential Energy Discount Program: The NIPSCO CARE program is designed to provide further bill reductions to LIHEAP-approved customers. Once enrolled in LIHEAP, customers are automatically enrolled in the program. Reductions range from 15% to 32%.
Indiana Emergency Rental Assistance Program: IERA provides financial assistance for rent and utility payments for Indiana residents whose income has been negatively impacted by the pandemic. Call 211.
NIPSCO offers also energy-efficiency programs to help reduce usage. To learn about programs, rebates and energy-saving tips, visit NIPSCO.com/SaveEnergy.
Doug Ross is a freelance reporter for the Post-Tribune.
