NIPSCO 2006 Gas Cost Adjustment (GCA) Annual Review

An IURC order in this case was issued on July 26, 2006. The following fact sheet was distributed at the OUCC public information meeting and IURC public field hearing on Feb. 22, 2006 in Goshen.

OUCC Fact Sheet

Northern Indiana Public Service Company
Annual Natural Gas Cost Review - IURC Cause No. 41338-GCA7

On August 29, 2005, Northern Indiana Public Service Company (NIPSCO) filed its petition and testimony with the Indiana Utility Regulatory Commission (IURC) for its annual natural gas cost adjustment (GCA) proceeding.

  • All regulated natural gas utilities in Indiana are allowed to recover wholesale commodity costs on a dollar-for-dollar basis, subject to regular review by the Indiana Office of Utility Consumer Counselor (OUCC) and approval by the IURC. Indiana law prohibits utilities from profiting on these recoveries and requires that utilities purchase wholesale natural gas at the lowest costs reasonably possible.

    • The national wholesale market for natural gas is a competitive market subject to the law of supply and demand.

    • Costs on the competitive market were at record-high levels throughout most of 2005. While these costs have decreased thus far in 2006, they remain at very high levels.

    • As a result, retail natural gas costs for utilities throughout Indiana and the nation have been at unprecedented levels during the current winter heating season.

  • Under a 1999 IURC order, NIPSCO is allowed to seek commodity cost recovery on a monthly basis and recovery of annual pipeline demand, storage and gas transmission costs on a yearly basis. The yearly review also allows for a more in-depth review of the utility’s commodity costs and procurement.

  • The currently pending proceeding focuses on the annual review of NIPSCO’s commodity costs incurred from August 2004 through July 2005, and NIPSCO’s annual pipeline demand, storage and transmission costs for the twelve month period beginning November 1, 2005.

  • If the OUCC believes a utility has not met its legal obligations regarding prudent purchasing, it may request that the IURC disallow a portion of the requested recovery.

    • Two separate IURC orders, issued in 2003 and 2004, resulted in a combined $7.6 million in refunds to NIPSCO’s natural gas customers due to issues raised in GCA proceedings.

The OUCC is the statutory representative for the interests of all utility consumers in all IURC proceedings.

  • The OUCC filed testimony in this proceeding on December 14, 2005 based on its review of NIPSCO’s procurement for the time period at issue in this proceeding. The agency stated that NIPSCO has properly documented its gas cost claims and has complied with its legal obligations during the time period at issue.

The LaPorte County Board of Commissioners and a group of NIPSCO industrial customers - including Mittal Steel USA, Praxair, Inc. and United States Steel Corporation - have formally intervened in this proceeding.

On November 22, 2005, the IURC issued an interim order to allow NIPSCO to begin recovery of the pipeline demand, storage and transmission costs at issue in this proceeding, subject to refund pending a final order.

On December 15, 2005 and January 19, 2006, the IURC conducted technical evidentiary hearings in this proceeding in Indianapolis.

On February 22, 2006, an IURC public field hearing will be held in Goshen, Ind.

  • Consumers will be able to submit testimony in the form of written or oral comments, which will become part of the official evidentiary record to be considered by the IURC in reaching its final decision.

  • Consumer comments, whether written or oral, are given equal consideration.

  • Under the IURC’s February 7, 2006 docket entry granting the field hearing, testimony will be limited to natural gas cost issues.

The following issues are beyond the scope of this proceeding and will not be affected by the outcome of this case:

  • NIPSCO electric rates.

  • NIPSCO base distribution rates for natural gas service, which are frozen at least until 2010 under an approved settlement agreement in a separate proceeding.

  • Deposit, disconnection and reconnection matters.

All filing deadlines and hearing dates in any legal proceeding are subject to change.

A settlement agreement is possible in any legal proceeding; such an agreement would be subject to IURC approval.

Consumers with questions or concerns about this case or other utility issues are encouraged to contact the OUCC’s consumer services staff through the agency's Website or toll-free at 1-888-441-2494.

General Information

Indiana Office of Utility Consumer Counselor (OUCC)
  • State agency
  • Represents the interests of all utility consumers and the general public on issues concerning electric, natural gas, water, sewer and telecommunications utilities
  • Staff of accountants, engineers, economists, attorneys, consumer services and support personnel
  • Participates in regulatory and legal proceedings
  • Provides consumers with a voice in utility policy
  • Responds to consumer questions and information needs

Indiana Utility Regulatory Commission (IURC)
  • State agency
  • Regulates many, but not all, Indiana utilities
  • Regulates utility rates, financing, service territory, quality, etc.
  • Required by law to make decisions that balance the interests of utilities and consumers
  • Neutral, fact-finding body
  • Authority to investigate utility rates and practices

Information Meeting and Public Field Hearing:
What is the difference?

Public Information Meeting

  • Facilitated by the OUCC
  • Opportunity for attorney (OUCC) and client (consumers) discussion
  • Opportunity for consumers to advise OUCC staff of concerns
  • Provides an opportunity for consumers to ask questions and receive information
  • Opportunity for consumers to make written comments that can be entered into the official record considered by the IURC in its decision

Public Field Hearing

  • Conducted by the IURC
  • Formal, legal proceeding presided over by an Administrative Law Judge and recorded by a court reporter
  • Often required by law
  • Conducted in utility’s service territory
  • Allows consumers to make sworn written or oral comments on the utility’s proposal, its service and any other relevant issue
  • Not a question and answer/discussion format; designed to allow consumer comment
  • Consumers providing oral comments may, at the conclusion of their testimony, be asked questions by judge, commissioners or an attorney for any formal party to the proceeding
  • Comments are part of the official public record considered by the IURC in making its decision

Prepared by the OUCC 
115 W. Washington St., Suite 1500 South 
Indianapolis, IN 46204-2215

Toll-free 1-888-441-2494
Voice/TDD (317) 232-2494
Fax (317) 232-5923