FILED
Jun 20 2017, 8:31 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Todd A. Richardson Brian J. Paul
Jennifer W. Terry Daniel E. Pulliam
Joseph P. Rompala Faegre Baker Daniels LLP
Lewis Kappes, P.C. Indianapolis, Indiana
Indianapolis, Indiana Claudia J. Earls
Christopher C. Earle
NiSource Corporate Services-Legal
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
NIPSCO Industrial Group, June 20, 2017
Appellant-Intervenor, Court of Appeals Case No.
93A02-1607-EX-1644
v. Appeal from the
Indiana Utility Regulatory
Northern Indiana Public Service Commission
Company, The Honorable
Lorraine L. Seyfried,
Appellee-Petitioner.
Chief Administrative Law Judge
The Honorable Carol A. Stephan,
Chair
The Honorable James F. Huston,
Commissioner
The Honorable David E. Ziegner,
Commissioner
Cause No.
44403-TDSIC-4
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 1 of 21
Kirsch, Judge.
[1] NIPSCO Industrial Group (“Industrial Group”) appeals the decision of the
Indiana Utility Regulatory Commission (“the Commission”) that approved
Northern Indiana Public Service Company’s (“NIPSCO”) petition for a plan
update, pursuant to Indiana Code section 8-1-39-9, to its previously
Commission-approved 7-year plan. Industrial Group raises two issues, which
we consolidate and restate as: whether the Commission erred in approving
NIPSCO’s petition for a plan update, finding certain categories of
improvements as eligible to be treated as transmission, distribution, and storage
system improvement charges (“TDSIC”) because the Industrial Group claims
that the projects within the categories were not identified with enough
specificity.
[2] We affirm.
Facts and Procedural History
[3] NIPSCO is a public electric and gas utility that services customers in northern
Indiana and owns, operates, manages, and controls plants and equipment in
Indiana used for the generation, transmission, distribution, and furnishing of
gas utility service to the public. NIPSCO provides gas utility service to more
than 821,000 residential, commercial, and industrial customers in northern
Indiana. Industrial Group is a group comprised of some of NIPSCO’s largest
industrial customers.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 2 of 21
[4] The rates a utility charges to its customers are traditionally adjusted through
periodic rate cases, which are expensive, time consuming, and comprehensive.
Another way to set rates is through tracker proceedings, which allow smaller
increases for specific projects and costs between general rate case proceedings.
The General Assembly has authorized several trackers, including a fuel charge
tracker, a tracker for qualified pollution control projects under construction, a
tracker for federally mandated costs, and a tracker for clean energy projects. In
2013, the General Assembly enacted Indiana Code chapter 8-1-39, which
allows a utility to petition for a tracker for certain proposed new or replacement
electric or gas transmission, distribution, or storage projects. The statute is
referred to as the “TDSIC” statute.
[5] Under the TDSIC statute, the utility seeks approval of a 7-year plan, pursuant
to Indiana Code section 8-1-39-10 (“Section 10”), that designates improvements
to transmission, distribution, and storage systems. If the Commission
determines that the 7-year plan is reasonable, reflects the best estimate of the
costs of the improvements, demonstrates that the improvements are required for
public convenience and necessity, and shows that the eligible improvements are
cost-justified, then the Commission approves the plan and designates the
improvements as eligible for TDSIC treatment. Ind. Code § 8-1-39-10(b). After
the 7-year plan is approved, periodic tracker proceedings may occur, pursuant
to Indiana Code section 8-1-39-9 (“Section 9”), to allow rate adjustments for
specific projects as they are completed. These petitions should include an
update of the 7-year plan, and any costs that exceed the approved expenditures
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 3 of 21
and TDSIC costs require “specific justification by the public utility and specific
approval by the [C]ommission before being authorized for recovery in customer
rates.” Ind. Code § 8-1-39-9(f).
[6] On October 3, 2013, NIPSCO filed a petition under Section 10 seeking
approval of its 7-year plan for its gas system, which included improvement
projects to transmission, distribution, and storage systems. By order, the
Commission approved the 7-year plan and found that NIPSCO’s cost estimates
for the 7-year plan were reasonable. Industrial Group appealed the
Commission’s order approving the 7-year plan, but on Industrial Group’s own
motion, the appeal was dismissed with prejudice on September 23, 2014.
[7] On August 28, 2014, NIPSCO filed its first tracker petition for its gas system,
which sought approval of updates to the 7-year plan, including actual and
proposed capital expenditures and TDSIC costs that exceeded the amounts
approved in the original 7-year plan. NIPSCO’s petition projected the
estimated capital costs for the 7-year plan to be $862.2 million, which was an
increase of $149.1 million over the original plan. This tracker petition was
approved by the Commission, including NIPSCO’s proposed methodology for
calculating the TDSIC adjustment.
[8] NIPSCO filed its second tracker petition (“TDSIC-2”) on February 27, 2015.
Before the Commission issued an order on TDSIC-2, a panel of this court
issued a decision in the appeal of NIPSCO’s electric TDSIC case 7-year plan
(“the Electric Decision”), in which the Commission’s order was reversed in
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 4 of 21
part, affirmed in part, and remanded to the Commission. See NIPSCO Indus.
Grp. v. N. Ind. Pub. Serv. Co., 31 N.E.3d 1 (Ind. Ct. App. 2015). This court held
that NIPSCO’s 7-year plan for its electric TDSIC lacked sufficient detail for the
Commission to determine whether “NIPSCO’s plan for years two through
seven was ‘reasonable’ or to determine a ‘best estimate of the cost’ of the
improvements.” Id. at 8. The court also found that it was impermissible for the
Commission to establish a “‘presumption of eligibility’ regarding the undefined
projects for years two through seven” because such a presumption
“inappropriately shifts the burden of showing a project’s eligibility for TDSIC
treatment from NIPSCO.” Id. at 9. After the Electric Decision was issued,
because it impacted the TDSIC filings in its gas systems, NIPSCO moved to
dismiss its TDSIC-2 petition in its gas system with the understanding that it
would request to recover the expenditures and costs covered in TDSIC-2
through its third tracker petition (“TDSIC-3”), and the trial court dismissed
TDSIC-2 without prejudice.
[9] On August 31, 2015, NIPSCO filed its TDSIC-3, which again sought approval
of its updated 7-year plan and included actual and proposed estimated capital
expenditures and TDSIC costs that exceeded those amounts approved in
TDSIC-1. In TDSIC-3, NIPSCO sought to provide more specificity with
respect to the projects contained in the project groups in response to the Electric
Decision. In its TDSIC-3 order approving the petition, the Commission found
that, based on the Electric Decision in Nipsco Industrial Group, approval of a 7-
year plan requires a finding that the proposed projects in the plan contain
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 5 of 21
enough detail for the Commission to determine that the projects meet the
definition of eligible improvements. Appellant’s App. at 159. The Commission
also recognized that TDSIC-3 presented a “unique situation” because although
the Commission had previously approved NIPSCO’s 7-year plan, the Electric
Decision showed that such approval was not proper under the statute. Id.
Thus, the Commission found that, while it was making a determination under
Section 9, it was required to confirm that NIPSCO had shown sufficient
information in its petition to find the projects contained in TDSIC-3 to be
eligible improvements. Id.
[10] In its order, the Commission also interpreted the statutory term “update” to
require NIPSCO to explain and justify changes to the cost estimates for eligible
improvements that the Commission had previously approved. Id. at 160. The
Commission found that, in light of the Electric Decision, it had to reevaluate its
presumption that projects proposed for years three through seven of the 7-year
plan could be presumed eligible, and it determined that NIPSCO had presented
sufficient detail regarding project descriptions and cost estimates for those years
concerning a majority of the projects and projects groups. Id. at 163. In
TDSIC-3, NIPSCO sought to provide more specificity with respect to the
projects contained in the project groups in response to the Electric Decision. In
the TDSIC-3 order, the Commission found that NIPSCO had provided
ascertainable planning criteria for identifying and selecting specific
improvements that NIPSCO will undertake in the project groups. Id. at 164.
The Commission also determined that NIPSCO had provided sufficient detail
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 6 of 21
and explanation for the changes in estimated cost of the eligible improvements
included in the updated 7-year plan, had sufficiently demonstrated that public
convenience and necessity required or would require the eligible improvements,
and had shown that the incremental benefits of the plan justified the costs. Id.
at 170-72. The TDSIC-3 order approved the use of “project groups,” which
included some “identified” projects and other “yet to be identified” projects and
found that NIPSCO “provided ascertainable planning criteria for identifying
and selecting the specific improvements that it will undertake in these project
groups.” Id. at 163-64. Industrial Group did not appeal the TDSIC-3 order.
[11] NIPSCO filed its fourth tracker petition (“TDSIC-4”) on February 29, 2016,
which was before the Commission issued its order on the TDSIC-3 petition. In
the TDSIC-4 petition, NIPSCO sought approval of an updated 7-year plan,
which again included actual and proposed estimated capital expenditures and
TDSIC costs that exceeded the amounts included in the TDSIC-3 petition. The
TDSIC-4 petition provided greater detail than the previous petitions, including
project estimates, summary of unit cost estimates, multiple unit project lists and
supporting documentation, and project change requests. Id. at 8.
[12] The updated plan included changes made to projects slated for 2015 and 2016
and updated actual costs associated with projects across the entire plan.
Specifically, the updated 7-year plan included different types of projects in
various categories with both single unit and multiple unit projects. The
multiple unit projects were described generally as a category of smaller projects
that NIPSCO cannot anticipate exactly. Tr. at 25. As an example, NIPSCO
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 7 of 21
has thousands of pipes that are annually inspected, and when leaks are
discovered, they may need unexpected replacement. Id. Although it is not
known which exact projects will need replacement, based on history, it is
known that a certain percentage of the projects will fail each year. Id. The
multiple unit projects were listed in three ways: (1) a specified asset list, which
included the specific assets to be addressed each year; (2) a list of inspection and
remediation projects; and (3) other projects that were prioritized through
alternative means. Appellant’s App. at 17. An asset register was included as an
appendix, which listed all projects that were subject to inspection and could be
addressed in the next few years. Tr. at 48. The list of inspection and
remediation projects were prioritized based on United States Department of
Transportation (“DOT”)-mandated annual inspections. Appellant’s App. at 17.
Based on the results of an inspection, NIPSCO would schedule actions to
mitigate risk, which could include replacement. Id. TDSIC-4 contained greater
detail than TDSIC-3 in its description of the project groups and was consistent
with, and more detailed than, the ascertainable planning criteria that had been
previously approved by the Commission in TDSIC-3. Non-Confidential Ex. Vol.
II at 89-90.
[13] The Commission issued an order approving the TDSIC-4 petition on June 22,
2016. In the TDSIC-4 order, the Commission reasoned that, because the
TDSIC statute does not discuss what may be included in a Section 9 update and
what review was required, it would follow its findings in TDSIC-3 that Section
9 updates “should include a discussion of any changes in an eligible
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 8 of 21
improvement’s best estimate of cost, necessity, and associated incremental
benefits upon which the Commission based its determination to approve [the]
proposed Plan as reasonable.” Appellant’s App. at 31. The Commission
acknowledged that the updated plan reclassified and identified additional
projects that fit into the project groups that had been approved in TDSIC-3 as
having sufficiently ascertainable planning criteria. Id. at 33. The Commission
determined that NIPSCO’s project groups and multiple unit project categories
were supported by sufficient ascertainable planning criteria for identifying and
selecting the specific improvements to be undertaken and the reclassification
and further identification of projects or asset replacements within the project
groups was reasonable and consistent with the TDSIC-3 order. Id. at 33-34. In
the TDSIC-4 order, the Commission approved the updated 7-year plan and the
cost increases contained in the petition. Industrial Group now appeals.
Discussion and Decision
[14] Industrial Group argues that the Commission erred in approving NIPSCO’s
TDSIC-4 petition. Industrial Group contends that the Commission erroneously
approved the multiple unit categories in NIPSCO’s updated 7-year plan because
the improvements were not identified with particularity and because NIPSCO
sought to identify specific projects year by year through tracker updates
pursuant to Section 9 instead of identifying the projects in the 7-year plan.
Industrial Group also claims that the Commission incorrectly granted a
designation of eligibility to the multiple unit project categories, even though the
specific improvements in these categories would not be identified until later
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 9 of 21
filings under Section 9. Industrial Group further asserts that the Commission’s
order, which approved a $20 million increase in costs, erroneously allowed
NIPSCO to expand the scope of its 7-year plan to add projects that were not
identified in the original 7-year plan filed pursuant to Section 10.
[15] The Commission was created by the General Assembly primarily as a fact-
finding body with the technical expertise to administer the regulatory scheme
devised by the legislature. N. Ind. Pub. Serv. Co. v. U.S. Steel Corp., 907 N.E.2d
1012, 1015 (Ind. 2009); Ind. Code § 8-1-1-5. The Commission’s assignment is
to ensure that public utilities provide constant, reliable, and efficient service to
the citizens of Indiana. Nipsco Indus. Grp., 31 N.E.3d at 5. The Commission
only can exercise power conferred upon it by statute. Id. “Its authority also
‘includes implicit powers necessary to effectuate the statutory regulatory
scheme.’” Id. (quoting United States Gypsum, Inc. v. Ind. Gas Co., 735 N.E.2d
790, 795 (Ind. 2000)). Any doubts regarding the Commission’s statutory
authority must be resolved against the existence of such authority. U.S. Steel
Corp. v. N. Ind. Pub. Serv. Co., 951 N.E.2d 542, 550 (Ind. Ct. App. 2011), trans.
denied.
[16] An order of the Commission is subject to appellate review to determine whether
it is supported by specific findings of fact and by sufficient evidence, as well as
to determine whether the order is contrary to law. Nipsco Indus. Grp., 31 N.E.3d
at 5. On matters within its jurisdiction, the Commission enjoys wide discretion.
Id. at 5-6. The Commission’s findings and decision will not be overridden just
because this court might reach a contrary opinion on the same evidence. Id. at
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 10 of 21
6. On appeal, we first review the entire record to determine whether there is
substantial evidence to support the Commission’s findings of basic fact. U.S.
Steel Corp., 951 N.E.2d at 551. Next, we review ultimate facts, or mixed
questions of fact and law, for their reasonableness with the amount of deference
owed depending on whether the issue falls or does not fall within the
Commission’s expertise. Id. Finally, legal propositions are reviewed for their
correctness. Id. More precisely, “an agency action is always subject to review
as contrary to law, but this constitutionally preserved review is limited to
whether the Commission stayed within its jurisdiction and conformed to the
statutory standards and legal principles involved in producing its decision,
ruling, or order.” Id.
[17] Under Section 10, a utility shall petition the Commission for approval of its 7-
year plan for eligible transmission, distribution, and storage improvements.
Additionally, under Section 10, if the Commission approves the 7-year plan, it
designates the eligible improvements included in the 7-year plan as eligible for
TDSIC treatment. Ind. Code § 8-1-39-10. Indiana Code section 8-1-39-2 states
that eligible transmission, distribution, and storage system improvements are
defined as:
new or replacement electric or gas transmission, distribution, or
storage utility projects that . . . either were (A) designated in the
public utility’s seven (7) year plan and approved by the
[C]omission under [S]ection 10 of this chapter as eligible for
TDSIC treatment; or (B) approved as a targeted economic
development project under section 11 of this chapter.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 11 of 21
Ind. Code § 8-1-39-2(3). Therefore, under Indiana Code section 8-2-39-2(3), if a
project was not designated in the utility’s 7-year plan and approved under
section 10, or approved under Section 11, then the project is not an eligible
improvement for purposes of TDSIC rate treatment.
[18] In Nipsco Industrial Group, 31 N.E.3d 1, a panel of this court examined
NIPSCO’s 7-year electric plan to ascertain if it identified proposed projects for
the projected seven years with sufficient specificity. After reviewing the plan,
the court found that NIPSCO provided sufficient details for the projects for year
one of the plan, including the type of improvement, reason for the
improvement, the project title and location, and a project cost; however, the
same detailed information was not included for projects in years two through
seven, and only expected annual total spends for major project categories were
provided. 31 N.E.3d at 7. This court concluded that the Commission erred in
approving NIPSCO’s 7-year electric plan because the plan lacked sufficient
detail for the Commission to determine whether “NIPSCO’s plan for years two
through seven was ‘reasonable’ or to determine a ‘best estimate of the cost’ of
the improvements,” as is the standard required by Indiana Code section 8-1-39-
10(b). Id. at 8. Although the court acknowledged that NIPSCO required
flexibility in creating its 7-year plan as some equipment may require
replacement earlier or later than originally planned, it believed that this
flexibility was anticipated by the legislature when it enacted the updating
process contained in Section 9. Id. The court cautioned that the updating
process did not relieve a utility from its obligation to provide an initial 7-year
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 12 of 21
plan that met the statutory requirements. Id. Additionally, the court found that
it was impermissible for the Commission to establish a “‘presumption of
eligibility’ regarding the undefined projects for years two through seven”
because such a presumption “inappropriately shifts the burden of showing a
project’s eligibility for TDSIC treatment from NIPSCO to other intervening
parties.” Id. at 9.
[19] Section 9 requires that the utility update its 7-year plan with each tracker
petition it files with the Commission. Ind. Code § 8-1-39-9(a). In Nipsco
Industrial Group, this court concluded that the updating process under Section 9
allows for flexibility in the writing of a 7-year plan as with each petition under
Section 9, a utility must submit an updated plan. 31 N.E.3d at 8. Although the
term “update” is not defined in Section 9, in its TDSIC-3 order, the
Commission interpreted the statutory term “update” to require a showing of
changes that have occurred to the designated eligible improvements contained
in the 7-year plan since the last TDSIC filing. Appellant’s App. at 160. The
Commission also found that an update under Section 9 should include changes
to the factors considered in approving the plan, i.e., changes in an eligible
improvement’s cost estimate, necessity, and associated benefits. Id. This
interpretation discusses changes to previously-approved improvements
contained in the previous 7-year plan, but does not contemplate new
improvements or projects not included in the previously-approved 7-year plan.
[20] Recently, a panel of this court decided Indiana Gas Co. v. Indiana Utility
Regulatory Commission, __ N.E.3d __, No. 93A02-1604-EX-943 (Ind. Ct. App.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 13 of 21
Apr. 27, 2017), in which Vectren appealed the Commission’s order that
partially denied Vectren’s petition to update its 7-year plan under Section 9.
The Commission denied the petition as to new projects that had not been
previously listed and approved in the original 7-year plan, reasoning that it did
not have the authority to approve projects that were not included in the original
7-year plan. Id. at *4 __. In denying the petition as to new projects, the
Commission found that a plain reading of the term update in Section 9
indicated that the term only applied to projects that had been designated in the
original 7-year plan under Section 10. Id. Our court affirmed the
Commission’s denial, concluding that the Commission’s interpretation that the
Section 9 updating procedure precluded the addition of new projects was
consistent with the language of the TDSIC statute referring to eligible
improvements because, under the statute, an eligible improvement is a project
that was designated in the original 7-year plan and approved by the
Commission under Section 10. Id. at *6__. Therefore, because there is not a
corresponding definition of eligible improvements that are approved in a
Section 9 update, there is no basis under the TDSIC statute for a new project to
be added to an updated 7-year plan, and this court held that the Commission
did not err in denying the Section 9 update as to the addition of new projects.
Id. at *8 __. Based on the holding in Indiana Gas and on the Commission’s
interpretation of the word update in TDSIC-3, we agree with the interpretation
that an update under Section 9 should include changes to the cost estimates for
previously-approved improvements in the 7-year plan under Section 10, but not
new or previously-unknown improvements.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 14 of 21
[21] Updates under Section 9 should not include new projects and should merely
include changes to the previously-approved 7-year plan. However, the present
case presents a “unique situation” because, although the Commission had
previously approved NIPSCO’s original 7-year plan, the Electric Decision
determined that such approval was not proper under the TDSIC statute.
Therefore, the Commission found in its TDSIC-3 order that, while it was
making a determination under Section 9, it was required to confirm that
NIPSCO had shown sufficient information in its petition to find the projects
contained in TDSIC-3 to be eligible improvements. Appellant’s App. at 159.
Thus, we conclude that, in this unique situation where the original 7-year plan
was approved, but such approval was later shown to be in error, the updated 7-
year plan in TDISC-3, which was the first tracker proceeding after the Electric
Decision, represented the 7-year plan to which the Commission was required to
look when determining if the updated 7-year plan in TDSIC-4 was correct.
[22] NIPSCO initially filed its petition under Section 10 seeking approval of its 7-
year plan for its gas system on October 3, 2013. The Commission approved the
7-year plan and found that NIPSCO’s cost estimates for the 7-year plan were
reasonable, and that determination was never appealed. On August 28, 2014,
NIPSCO filed its first tracker petition, and the petition was approved by the
Commission, including NIPSCO’s proposed methodology for calculating the
TDSIC adjustment. NIPSCO filed its TDSIC-2, which was subsequently
dismissed in light of the Electric Decision with the understanding that NIPSCO
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 15 of 21
would request to recover the expenditures and costs covered in TDSIC-2
through its petition in TDSIC-3.
[23] On August 31, 2015, NIPSCO filed its TDSIC-3, which again sought approval
of its updated 7-year plan, and in its first order subsequent to the Electric
Decision, the Commission approved NIPSCO’s TDSIC-3. Based on the
Electric Decision, the Commission reevaluated its presumption that projects
proposed for years three through seven of the 7-year plan could be presumed
eligible and determined that NIPSCO, in its TDSIC-3, had presented sufficient
detail regarding project descriptions and cost estimates for those years
concerning a majority of the projects and projects groups. Appellant’s App. at
163. In TDSIC-3, NIPSCO sought to provide more specificity with respect to
the projects contained in the project groups in response to the Electric Decision.
In the TDSIC-3 order, the Commission approved the use of “project groups,”
which included some “identified” projects and other “yet to be identified”
projects and found that NIPSCO “provided ascertainable planning criteria for
identifying and selecting the specific improvements that it will undertake in
these project groups.” Id. at 163-64. The Commission also determined that
NIPSCO had provided sufficient detail and explanation for the changes in
estimated cost of the eligible improvements included in the updated 7-year plan,
had sufficiently demonstrated that public convenience and necessity required or
would require the eligible improvements, and had shown that the incremental
benefits of the plan justified the costs. Id. at 170-72. Industrial Group did not
appeal the TDSIC-3 order.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 16 of 21
[24] NIPSCO then filed its TDSIC-4 on February 29, 2016 and sought approval of
its updated 7-year plan, which again included actual and proposed estimated
capital expenditures and TDSIC costs that exceeded the amounts included in
the TDSIC-3 petition. The TDSIC-4 petition provided greater detail than the
previous petitions, including project estimates, summary of unit cost estimates,
multiple unit project lists and supporting documentation, and project change
requests. Id. at 8.
[25] In TDSIC-3, the Commission approved of the ascertainable planning criteria
that NIPSCO utilized to identify the improvements projects that were included
in TDSIC-4. Specifically, for multiple unit projects in the categories of “inspect
and mitigate” and “storage,” NIPSCO stated that asset replacements are
planned and prioritized based on DOT-mandated annual inspections and that if
a deficiency is identified through these inspections, federal regulations require
NIPSCO to reduce the risk presented by the deficiency. Id. at 164. NIPSCO
also identified specific work to be done and prioritized it based on a preset list
of planned replacements through 2020. Id. at 33. In the category of “system
deliverability,” NIPSCO utilizes several planning criteria to plan for adequate
system deliverability and to identify and evaluate projects to accommodate
customer demands and delivery requirements. Non-Confidential Ex. Vol. I at 92.
The criteria include periodic field measurements and natural gas modeling and
analysis software to perform system performance assessments and look into
alternate operating scenarios. Id. The gas system models analyze and predict
customer demand and pressure delivery requirements. Id. Projects are selected
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 17 of 21
when field measurements of pressure, flow rates, ambient temperatures, and gas
system modeling indicate that service to customers may be at risk. Appellant’s
App. at 163-64.
[26] The challenged multiple unit projects at issue here contain both specified and
unspecified projects. These multiple unit projects are determined by utilizing
the ascertainable planning criteria that was introduced and approved previously
in TDSIC-3. Therefore, any projects utilizing the ascertainable planning
criteria approved of in TDSIC-3 are not new projects because the multiple unit
project categories and the criteria utilized were designated and approved in the
7-year plan contained in the TDSIC-3 petition. As long as the future projects
contained in Section 9 updates are determined by utilizing the ascertainable
planning criteria from TDSIC-3, the projects should be considered eligible
improvements and may be included in the updates. However, to the extent that
the projects contained in the updates are new or are not determined using the
approved ascertainable planning criteria, they will be considered new projects
and cannot be included in a Section 9 update. Likewise, it would be improper
for a Section 9 update to include new criteria under which projects could be
determined.1
1
However, we do note that in its TDSIC-4 order, the Commission found that NIPSCO should work with the
Industrial Group to further delineate the criteria that NIPSCO uses to ensure that the parties “have a
sufficient understanding of the information used to evaluate whether a particular project satisfies the planning
criteria described by NIPSCO.” Appellant’s App. at 34. Therefore, to the extent that the planning criteria in
future plan updates changes to meet this directive, it will not be considered new criteria.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 18 of 21
[27] We, therefore, conclude that the Commission did not err in its approval of
NIPSCO’s TDSIC-4 update. The Commission properly approved NIPSCO’s
updated 7-year plan because the improvements included in the update were not
new projects as they were chosen by utilizing the ascertainable planning criteria
previously approved by the Commission and contained in NIPSCO’s 7-year
plan. We also do not find that the Commission erroneously granted a
designation of eligibility to the multiple unit project categories, because,
although the specific improvements in the categories would not be identified
until later filings, the improvements were not presumed to be eligible for TDSIC
treatment, but instead, would be selected by utilizing the ascertainable planning
criteria that had been previously approved by the Commission. Because we
find that the improvements included in TDSIC-4 were properly included in the
TDSIC-4 plan update, we affirm the Commission’s order.
[28] Affirmed.
Robb, J., concurs.
Barnes, J., dissents with separate opinion.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 19 of 21
IN THE
COURT OF APPEALS OF INDIANA
NIPSCO Industrial Group,
Appellant-Intervenor, Court of Appeals Case No.
93A02-1607-EX-1644
v.
Northern Indiana Public Service
Company,
Appellee-Petitioner.
Barnes, Judge, dissenting.
[29] I respectfully dissent. Given the outline and structure articulated in NIPSCO
Industrial Group v. Northern Indiana Public Service Co., 31 N.E.3d 1 (Ind. Ct. App.
2015), I see no basic difference here. The “plan” that NIPSCO says it has for
the future and the “update” it says it needs run afoul, in my opinion, of Indiana
Code Chapter 8-1-39, the TDSIC statute.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 20 of 21
[30] We recognized in NIPSCO Indus. Group that the “legislature anticipated the
necessity of flexibility when it enacted the updating process of Indiana Code
Section 8-1-39-9.” NIPSCO Indus. Group, 31 N.E.3d at 8. “Allowing for
flexibility in a plan is not the same thing as not having a plan at all.” Id. Here,
NIPSCO’s inclusion of broad categories of unspecified “multiple unit projects”
does not comply with the statutory requirements. Allowing the utility to
include broad categories of unspecified projects defeats the purpose of having a
“plan.”
[31] It is also important to note that, even if NIPSCO does not receive rate increases
for a project through the TDSIC process, NIPSCO still may be reimbursed for
unexpected issues in the way it did before TDSIC was enacted through general
rate making cases. The TDSIC statute requires a specific plan, and it was not
designed to deal with those unexpected issues. Rather, it was intended for
planned projects. Of course, those projects might cost more than projected, and
the annual “update” provisions allow the utility to address those issues.
[32] No one expects NIPSCO to anticipate with pinpoint clarity what its needs and
requirements may be years in the future. What can and should be expected,
though, is that there be an amount of specificity in anticipated projects and
needs and that the utility simply not get carte blanche to “update” its plan while
exploring a rate increase. I understand that any utility, and NIPSCO in
particular, has a right to enjoy a profit. I have no problem with that. I do have
a problem with the overall vagueness and almost sleight of hand NIPSCO is
using to justify the TDSIC rate increase.
Court of Appeals of Indiana | Opinion 93A02-1607-EX-1644 | June 20, 2017 Page 21 of 21