SOUTH BEND — The rate behind your monthly natural gas bill could soon be on its way up. In March, NIPSCO asked the state for its first base rate increase in 22 years. Tuesday, state regulators came to South Bend to ask what you think of that proposal.
Turnout for the event was fairly sparse. 280 of the 310 chairs set up at South Bend's Century Center sat empty, and just seven people stood up to speak during the hearing, which lasted just 30 minutes before the Indiana Utility Regulatory Commission went into recess.
But, that doesn't mean strong feelings don't exist on both sides of the issue.
Rate Rebuttals
They come from across the area from people like Norm Baloun, a NIPSCO residential customer in South Bend. Ask him what he likes best about retirement, and you'll get a quick and decisive answer.
"We've lived here for 49 years," he said, sitting in a rocking chair on his porch. "[My wife and I] are celebrating 50 years this year. That's it."
Ask Baloun what he likes least about retirement, and there's no hesitation either.
"I'm living on a fixed income," he said. "So, every time things go up, it's scary. And, with the economy the way it is, we took a pretty good hit on my IRA two years ago, and it hasn't really come back."
So, when Baloun learned his NIPSCO bill could soon be going up, he had a clear reaction.
"It's the wrong time," he said. "There are a lot of people affected by this worse than me. There are still a lot of people out of work. But, anytime there's an increase, it does affect us too, one way or another."
He wasn't alone in expressing that sentiment.
Tuesday's public hearing in front of the IURC was the last of three--previous hearings in Gary and Fort Wayne drew similar lackluster crowds. But, those that did speak had strong feelings on each side.
Some did rise to voice support to NIPSCO's request. But, all were representing pro-business or economic groups--including St. Joseph County's Project Future and Elkhart County's Economic Development Corporation. A representative from the St. Joseph County Chamber of Commerce said NIPSCO has been a "good business partner," but said the Chamber planned to remain neutral on the proposed rate hike until an independent audit of it is complete.
State Representative Ryan Dvorak (D-South Bend), who requested the IURC hold the additional hearing in South Bend, argued the event should have been postponed until that report was complete.
"It would have been nice if we'd been able to do this after the OUCC had completed its independent analysis. In the future, that would be my suggestion to this commission," Dvorak said during the hearing.
Indiana's Office of Utility Consumer Counselor--or OUCC--is the state's consumer utility advocate.
"If the IURC is the court, the judge and the jury, then the utility brings its case and expert witnesses. The OUCC is the attorney and expert witness on behalf of the public. We have about 50 people on staff, and our job is to represent the interests of all consumers in all cases before the regulatory commission," said OUCC spokesman Anthony Swinger.
On Tuesday, some of OUCC's clients had strong words on NIPSCO's proposed hike.
"I oppose this rate increase requested by NIPSCO. NIPSCO has demonstrated contempt of, and a lack of concern for public safety in the way in which it manages its gas delivery services," said Catherine Pieronek, whose home at South Bend's Sandpiper Cove condominium complex was destroyed during an explosion in February.
Asplundh construction crews contracted by Indiana-Michigan Power hit a gas line near Pieronek's home, allowing gas to enter the structure and explode.
The investigation into exactly what happened there is "still ongoing," spokespeople for both companies said in May.
Others who spoke at Tuesday's hearing said they are concerned about the rate hike's impact on low income households or senior citizens.
"We can't agree with the company's plans to reduce [contributions to the Universal Service Program for seniors]," said Michigan City resident Bob Jackson, representing AARP. "Consumers will pay the difference. Is that fair?"
"When utilities goes up, it's like a chain reaction--everything goes up in price," said Carol Board. "With this economy, people need to spend their money in businesses, rather than utilities."
NIPSCO Response
But, NIPSCO says--for most residential customers--the increase will be fairly minimal.
"This gas rate case would impact, or increase residential customer bills on average by $1.67 a month," said NIPSCO Communications Manager Nick Meyer.
That's an average increase, according to NIPSCO, of 2.64 percent, and it comes from a utility with the lowest average customer billing in Indiana over the last 12 months.
The IURC surveys billing data from utilities across the state, and according to its records, NIPSCO billed the lowest amount to customers during nine months out of the last 12. The latest numbers for July show NIPSCO with the 9th highest rate out of the state's 22 natural gas utilities.
"We're very proud of that, and under this proposal, that is something we expect to continue offering our customers, even with this first base rate increase request we've made in 22 years," Meyer said.
That isn't to say, however, that your utility bills haven't gone up since 1988.
The IURC also regularly grants "quarterly adjustments" to utilities across the state, based on wholesale prices.
"They're allowed to make incremental adjustments to rates for fuel costs, gas costs," said Swinger. "Those are done on a quarterly basis on a dollar for dollar. And that's not at issue in this case."
However, OUCC does also review each of them.
"Those adjustments also require them to shop prudently in the wholesale competitive natural gas market. So, we look to make sure they've shopped prudently in the market. That makes up about 70-75 percent of a typical winter heating bill for natural gas," Swinger said.
But, according to documents provided by OUCC, NIPSCO's proposed new base rate would also include a $20 monthly "fixed" service charge--meaning your gas bill would never be lower than $20 in a single month.
Click here to read documents provided by the OUCC.
The question for OUCC's analysis is: is that a fair way to bill customers?
"The utility has an obligation to provide safe, dependable service to it's customers. It needs revenue to do that. We want to make sure the utility has the revenue it needs to do that, but no more," Swinger said.
Utility Usage
In its request for the rate hike, NIPSCO argues its customer usage has dropped by 32 percent since its last rate hike in 1988. Customer distribution has also shifted between residential and commercial.
Distribution costs, in many cases however, have gone up. So, the proposed increase, Meyer says, won't bring in new profits.
"We're not looking to increase our revenue that we gain from all of our collective customers. We need to make sure those costs serving customers are continuing to be fairly and appropriately allocated to all customer classes," he said.
Because of that, while costs to residential customers would go up, costs to commercial customers would likely go down, Meyer said.
"It isn't increasing the amount of revenue that's coming into the company. It's simply changing the costs of how we're allocating those costs of service to each of the customer classes," Meyer said.
Some term the move as "revenue de-coupling." But, Meyer argues--whatever you call it--it won't create an additional fixed charge.
According to the utility, the flat $20 monthly fee would end up lowering monthly bills for most residential customers during the winter, while boosting bills in the summer months. Averaging those bills out creates the $1.67 per month increase, Meyer said.
Click here for a chart showing the fixed rate's potential impact
"We feel that's very modest when you consider it's been more than 20 years since our last rate increase," Meyer said.
Unconvinced
"That's very possible," said referringrefering to NIPSCO's 22 year rate hike hiatus. "But, answer me this: are they still making money? It's the wrong time to be asking for more."
Some say that poor timing is compounded by the fact that the Board of Directors for NIPSCO's parent company--Merillville based NiSource--voted in late 2008 to give themselves huge raises.
A WSBT investigation of company documents showed the raises to be as high as 112 percent in some cases when stock options were factored in. A NIPSCO spokesman said at the time that the numbers contained in the report were "confusing," and that the raises were closer to "5 or 6 percent."
Click here to read that story".
For some, asking for a rate increase on the backs on that pay increase is a slap in the face.
"To me, that just doesn't justify them going to ask for a rate increase. That's too much," said Baloun.
"Certainly, compensation for either board directors or executive level staff for instance, are all weighed into that consideration. We make sure that is fair and on par with other utilities across the country," Meyer said.
The question now for IURC members: is NIPSCO's proposed increase fair to consumers?
The answer will likely come by early 2011.
Make Your Voice Heard
You can still comment on NIPSCO's proposed rate increase until August 9th, by mail, email or fax. For information on how to do that, Click here.
OUCC plans to finish it's independent review by August 16th, and release results shortly thereafter.
