The Indiana Supreme Court will soon decide whether to take up a case between a major state electricity provider and big industrial customers — and if so, whether state regulators were right to green-light increases after inflation-related cost overruns.
The state’s highest court heard arguments May 21 from the Northern Indiana Public Service Co. and six customers known as the NIPSCO Industrial Group.
Brian Paul, an attorney representing NIPSCO, said the utility didn’t use bad estimates, miss predictable risks or seek reimbursement for “ordinary” inflation.
“This is a case where NIPSCO faced extreme cost increases due to events entirely beyond its control, and for projects crucial for maintaining a safe, reliable system capable of serving a growing market,” Paul told the five-justice court.
The Indiana Utility Regulatory Commission first approved the five-year transmission, distribution and storage system improvement charges — or TDSIC — plan in 2021 and has sanctioned several changes since.
TDSIC plans are one supplement to base rates. Utilities can periodically ask the state commission for adjustments to recover 80% of approved costs, and must update the plan at least annually. An update can include asks for approval of new costs.
NIPSCO petitioned for a fifth rate adjustment and third plan update in 2024, prompting the NIPSCO Industrial Group — a group of six major industrial customers including U.S. Steel — to intervene in opposition of the update.
After regulators approved both changes later that year, the industrial customers appealed approval of the update. A three-judge panel of the Indiana Court of Appeals affirmed the commission’s action in a unanimous 2025 decision.
The customers allege NIPSCO failed to provide “specific justification” for its spending and cost increases, and that the commission didn’t provide “specific approval” for some of the hikes — as required by Indiana law for any TDSIC overspending.
Todd Richardson, an attorney representing the NIPSCO Industrial Group, argued the utility should have pursued cost recovery in a base rate case.
“NIPSCO is a for-profit enterprise and return on investment is its profit margin, and so the more it can persuade the commission to approve through the TDSIC mechanism, that just drives up its profits,” Richardson told the court.
General rate-making cases can take about a year.
“NIPSCO, with the pre-approval, can move forward with projects that are not cost-justified and may very well not survive a prudence review in an ordinary rate case,” or that warrant a higher approved profit margin, Richardson suggested.
The justices pressed both sides on the level of justification NIPSCO owes regulators and the level of risk it should face in overspending.
“Counsel, we appreciate your excellent briefing, excellent advocacy today,” Chief Justice Loretta Rush said after oral arguments concluded. “We will be discussing the case, with the first issue being whether transfer is granted.”
This story originally was published by Indiana Capital Chronicle, which is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence.
