(SBT24/7News) NIPSCO electric customers will get a $33.5 million refund as part of a settlement between the utility and LaPorte County.

The deal stems from action taken in 2006 challenging the amount of electricity the Northern Indiana Public Service Co. was purchasing from outside suppliers and how much NIPSCO customers were charged for that energy.

In addition to the refund, the settlement also requires NIPSCO to purchase outside energy at the lowest possible price, something that hasn't always been done, said LaPorte County attorney Shaw Friedman.

NIPSCO must also shoulder a greater percentage of the expense for outside energy, another cost control measure.

"I think the case is a win, win for ratepayers," Friedman said.

NIPSCO used to produce nearly all of the electricity that's sold to its customers.

But, since NIPSCO closed the Dean H. Mitchell generation station in Gary in 2001, the utility buys about 25 percent of the electricity it delivers to customers from other suppliers, Friedman said.

As a result, holding NIPSCO to more stringent price benchmarks on energy bought from outside sources is even more critical to keeping down among the highest rates in the nation, Friedman said.

In 2007, NIPSCO was on pace to spend $250 million on electricity from other sources compared to $80 million in 2004, Friedman said.

"LaPorte County has vigorously challenged this trend and this settlement will help reverse that trend," Friedman said.

The refund was based on the amount of higher-priced outside energy purchased by NIPSCO in 2006 and through much of 2007.

Disappointing, perhaps, is the probability that the Mitchell generation station will stay closed.

Reopening the facility was among the options LaPorte County asked to be explored to restore the quantity of NIPSCO-produced electricity, which is typically cheaper.

But, concerns about emissions from coal-fired power plants makes restarting the generating station a long shot, Friedman said.

NIPSCO President Mark Maassel said the utility is looking to generate more of its own power but electricity from outside sources will continue to be part of the overall supply as the demand for energy keeps increasing.

"We are investigating adding additional generation and implementing programs that will provide customers attractive choices to reduce their energy use," Maassel said.

LaPorte County was joined in the challenge by the Office of Utility Consumer Counselor and a group of NIPSCO industrial customers.