Citizens Action Coalition of Indiana, Inc. v. Northern Indiana Public Service Company NIPSCO Industrial Group and United States Steel Corporation

FILED

Apr 19 2017, 9:25 am

CLERK

Indiana Supreme Court

Court of Appeals

and Tax Court

ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE –

Jennifer A. Washburn NORTHERN INDIANA PUBLIC

Citizens Action Coalition SERVICE COMPANY

of Indiana, Inc. Peter J. Rusthoven

Indianapolis, Indiana Nicholas K. Kile

Barnes & Thornburg LLP

Indianapolis, Indiana

Claudia J. Earls

Christopher C. Earle

Northern Indiana

Public Service Company

Indianapolis, Indiana

ATTORNEYS FOR APPELLEE –

NIPSCO INDUSTRIAL GROUP

Todd A. Richardson

Bette J. Dodd

Jennifer W. Terry

Joseph P. Rompala

Lewis Kappes, P.C.

Indianapolis, Indiana

ATTORNEYS FOR APPELLEE –

UNITED STATES STEEL

CORPORATION

Nikki G. Shoultz

Bryan H. Babb

Bose McKinney & Evans LLP

Indianapolis, Indiana

IN THE

COURT OF APPEALS OF INDIANA

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017 Page 1 of 25

Citizens Action Coalition of April 19, 2017

Indiana, Inc., Court of Appeals Case No.

Appellant-Intervenor, 93A02-1608-EX-1854

Appeal from the Indiana Utility

v. Regulatory Commission

The Honorable David Veleta,

Northern Indiana Public Service Administrative Law Judge

Company; NIPSCO Industrial The Honorable Carol Stephan,

Group; and United States Steel Chair

Corporation, Cause No.

Appellees-Petitioners 44688

Baker, Judge.

[1] Northern Indiana Public Service Company (NIPSCO) filed a petition with the

Indiana Utility Regulatory Commission (IURC) seeking to implement a new

rate design, pursuant to which certain rates would increase. NIPSCO and other

entities, including NIPSCO Industrial Group (Industrial Group) and United

States Steel Corporation (US Steel), engaged in settlement negotiations and

reached an agreement. Citizens Action Coalition of Indiana, Inc. (CAC), had

intervened in the proceeding and objected to the agreement. The IURC

ultimately approved the settlement agreement, and CAC now appeals, arguing

that there is not substantial evidence supporting the IURC’s order and that the

IURC should have required the inclusion of a low-income payment assistance

plan and the collection and reporting of customer data by NIPSCO. Finding

substantial evidence and no other error, we affirm.

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Facts

[2] NIPSCO is a public utility that provides electric service in all or parts of twenty

northern Indiana counties. Its customers’ electric bills generally consist of a

fixed monthly charge (the “fixed charge”) plus a variable energy charge (the

“energy charge”) based on the amount of energy used by the customer, and any

additional riders. The customers pay the fixed charge even if they consume no

energy in a month; the energy charge equals the approved rate multiplied by the

number of kilowatt hours consumed by the consumer in a month.

[3] In October 2015, NIPSCO filed a petition with the IURC seeking authority to

increase its rates and charges for providing electric utility service. A number of

entities intervened in the legal proceeding, including CAC, the Industrial

Group, and US Steel. The Office of Utility Consumer Counselor (OUCC),

which represents ratepayers, consumers, and the public, was also a party to the

proceeding. NIPSCO sought the rate increase based on a cost of service

analysis, which caused NIPSCO to conclude that a fixed rate increase would

improve recovery of its fixed costs.

[4] Initially, NIPSCO proposed an increase in the fixed charge for residential and

small commercial customers from $11 to $20 and from $20 to $30 per month,

respectively. At some point, a subset of entities involved in the proceeding,

including the appellees and the OUCC but excluding CAC, engaged in

settlement negotiations. On February 19, 2016, those entities jointly submitted

to the IURC a Settlement Agreement. Among other things, the Settlement

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Agreement provided that the increase in the fixed charges for residential and

small commercial customers would be from $11 to $14 and from $20 to $24 per

month, respectively.1

[5] CAC and other entities2 opposed the Settlement Agreement. Throughout the

process, the parties filed settlement testimony and evidence, filed rebuttal

testimony and evidence, and engaged in voluminous discovery. Relevant to

this appeal are CAC’s arguments related to the fixed charge increase, the low-

income payment assistance program, and a request that NIPSCO be required to

collect and report certain consumer data. First, as to the fixed charge increase

in the Settlement Agreement, CAC offered two basic arguments:

(1) the fixed charge increase was unreasonable and not in the

public interest because it would erect barriers to energy

conservation and energy efficiency investments; and

(2) the fixed charge increase was unjust because it would

disproportionately impact low income, elderly, and Black

consumers, who CAC contends use less energy on

average.

CAC advocated for a different rate design, such that NIPSCO would collect its

needed revenue based on an increase in the energy charge rather than the fixed

charge.

1

The Settlement Agreement also increases the energy charge, but that increase is not at issue in this appeal.

2

The other entities are not parties to this appeal.

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[6] Second, in its initial petition, NIPSCO proposed a low-income payment

assistance program wherein qualified residential customers would receive a $50

credit on their June bills each year. OUCC opposed this proposal because

NIPSCO would benefit from the program by reducing expenses and lowering

uncollected revenue but would not lower its charges to reflect those reduced

costs. OUCC advocated for a voluntary donation program targeted at

ratepayers, shareholders, and employees with a donation match from NIPSCO.

CAC disliked both of those proposed plans, recommending a plan that includes

a low-income rate class and an arrearage program to help low-income

ratepayers pay down balances over time. CAC’s program would be funded by

mandatory surcharges on other customers. In response to OUCC’s opposition,

NIPSCO withdrew its proposed low-income assistance program; the Settlement

Agreement does not contain such a program at all. In opposing the Settlement

Agreement, CAC argued that its own low-income assistance program should be

included in the settlement.

[7] Third, CAC asked that the IURC require NIPSCO to collect and report the

following data: number of general residential and low-income customer

accounts, bills, receipts, arrearages, notices of disconnections, bill payment

agreements, disconnections of service for nonpayment, reconnections of service

after disconnection for non-payment, accounts written off as uncollectible, and

accounts sent to collection agencies. According to CAC, this data is critical for

the ability of NIPSCO, service organizations, ratepayers, and the general public

to understand affordability issues. CAC testified that without timely trend data,

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it is not possible to appropriately respond to the payment troubles experienced

within the low-income population. Moreover, the IURC has stated in the past

that it will not force the adoption of a low-income payment assistance program

without sufficient data to determine what is appropriate, but CAC is unable to

obtain that data absent a requirement that NIPSCO collect and report it.

[8] The IURC held an evidentiary hearing on April 13, 2016, and on July 18, 2016,

it approved the Settlement Agreement without modification in a ninety-six-page

order. In relevant part, the order notes as follows:

Dr. Gaske[, a NIPSCO witness,] determined that the proposed

rate levels and structure establish rates that are just, reasonable,

and not unreasonably preferential or discriminatory. Dr. Gaske

opined that the proposed rate structure and rates should provide

NIPSCO a reasonable opportunity to earn a reasonable return on

its invested capital and recover its necessary and reasonable

operating expenses.

***

Mr. Shambo[, a NIPSCO witness,] testified that NIPSCO’s

policy objectives with respect to this proceeding are to achieve

rates that are reasonable and just—rates that better align with the

recovery of costs from the customers that drive those costs, as

well as afford NIPSCO a reasonable opportunity to recover its

expenses and earn an appropriate return on its used and useful

assets. . . . He emphasized that establishing rates that will allow

NIPSCO to recover both its prudently incurred costs to serve

customers and a fair return to investors is necessary for NIPSCO

to continue to provide safe and reliable electric service to its

customers.

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***

. . . With respect to fixed charges, Mr. Shambo explained that

NIPSCO proposed to take a relatively small step toward further

fixed-variable alignment, by increasing the customer charge

applicable to residential and small commercial customers, albeit

not to the full cost of service level for the customer costs (let

alone full fixed costs). Mr. Shambo testified that this increased

customer charge would not disproportionately impact low-

income customers because NIPSCO’s data indicates that the

average monthly usage for low-income customers is actually

higher than the normal customer population’s average monthly

usage.

***

. . . Mr. Rábago[, a CAC witness,] testified that NIPSCO’s

proposed fixed customer charges would create significant barriers

and impediments to energy efficiency, conservation, and

renewables that would result in improper discrimination against

customers investing in these options. . . .

Mr. Rábago argued that the proposed increases in fixed customer

charges have a larger impact on some customers over others with

the largest burden on low use customers without regard for why

they are low users, and minimize impacts on high use customers.

. . . He further contended that increasing fixed charges have a

disproportionate impact on low usage customers and those that

have pursued energy efficiency. He noted that NIPSCO did

provide a measure to mitigate the impact on low-income

customers, namely, a single bill credit of $50 to be applied to the

June bills of [qualified customers]. Mr. Rábago stated that he

was not satisfied with a one-time $50 credit offset, an amount

that is less than half of the proposed fixed customer charge

increase, and the credit will not encourage energy efficiency, and

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will not address high bills in other months. . . . Mr. Rábago noted

that using volumetric rates instead of fixed customer charges

would be more beneficial, noting policy and being less

burdensome to low-income customers.

. . . [Mr. Howat, a CAC witness,] recommend[ed] that the

Commission direct NIPSCO to implement a comprehensive low-

income bill payment assistance program that targets current bill

benefits to [eligible customers] and includes an arrearage

management design component. Mr. Howat’s proposed program

would provide fixed credits and a 25% discounted rate for . . .

eligible customers. He also recommended that NIPSCO report

monthly to the Commission and stakeholders data regarding

general residential and low-income customer accounts . . . .

Mr. Howat further argued that increasing utility cost recovery

from the volumetric to the monthly customer charge portion of

bills disproportionately harms low volume consumers within a

rate class. He argued that low-income households, households

headed by an African American, and seniors use less electricity

than their counterparts. Therefore, he claimed that increased

monthly fixed or customer charges cause disproportionate harm.

Lastly, he argued that higher fixed charges discourage energy

efficiency. . . .

***

. . . [In rebuttal,] Mr. Shambo stated that there are better ways to

address energy efficiency and renewable energy than to subsidize

it implicitly through rate design. Mr. Shambo also does not

believe that the higher customer charge has a negative impact on

low-income customers. He provided data that showed that

NIPSCO’s 18,000 low-income customers show higher usage than

NIPSCO’s average customer.

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. . . He explained that a specific low-income rate [for a payment

assistance program] should not be established, as it sends a

negative price signal. He also stated that there should not be an

arrears program, as that is currently available through assistance

agencies and programs and added that NIPSCO’s current billing

system is not set up to administer such a program so a great deal

of time and expense would be needed to make necessary

modifications.

***

Mr. Shambo also addressed NIPSCO’s initial proposed low-

income program. He noted that both the OUCC and CAC

opposed the program as proposed. Accordingly the Settlement

Agreement does not provide for such a program and NIPSCO is

no longer proposing such a program in this case. However, he

emphasized that NIPSCO will agree to meet with the OUCC and

any other interested parties, independent of this rate case, to

discuss the parameters of a similar program that could be

requested in the Company’s next base rate case.

. . . He noted that the Settlement Agreement is consistent with

the public interest by providing all customer segments with a

reasonable outcome and providing NIPSCO with a solid

foundation from which it can invest in northern Indiana’s energy

infrastructure, help fuel job creation and economic growth, and

provide customers with means to manage their energy

consumption and bills. . . .

***

. . . [T]he OUCC, as the statutory representative of all ratepayers,

believes the Settlement Agreement is a fair resolution, supported

by evidence and should be approved.

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***

. . . Mr. Rábago argued that the compromise between NIPSCO

and the OUCC is an inadequate foundation for the approval of

the fixed customer charge increase. . . . He recommended that

the Commission disapprove any proposed increase in a fixed

customer charge, and adopt [CAC’s payment assistance]

proposal.

***

. . . Mr. Shambo pointed out that the evidence in this case

establishes that NIPSCO’s fixed customer and distribution costs

for each residential customer are greater than $14.00 per month,

and that a $3.00 customer charge increase, from $11.00 to

$14.00, is reasonable. . . .

. . . He further noted that [CAC’s] low-income proposal is

burdensome, including the adverse impact on industrial

customers who would see no benefit from the program. . . .

***

Commission Discussion and Findings. . . .

***

. . . Mr. Rábago was the only witness in opposition to the

proposed Settlement Agreement increase to the customer charge,

suggesting that it is inconsistent with “sound ratemaking

principles.” We disagree with Mr. Rábago. . . . [T]he

Commission finds that the increase in the monthly customer

charge from $11.00 to $14.00 for residential customers and from

$20.00 to $24.00 for small commercial customers is cost-based

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based upon the evidence presented, consistent with gradualism,

and is reasonable and should be approved.

***

In its case-in-chief, NIPSCO proposed a low-income program.

However, the OUCC and CAC both opposed the program as

proposed by NIPSCO, and offered their own proposals for

alternative programs. NIPSCO withdrew its request for approval

of a low-income program in this case. NIPSCO stated it may

present a similar program in the future and indicated its

willingness to continue discussing such a program with its

stakeholders. No other party supported the form of program

proposed by CAC, which was actively opposed by several

parties. . . . [In a prior rate case,] we recognized the importance

of the issue raised by the CAC, but found that there are

numerous implementation and policy related concerns and

declined to adopt the CAC’s program in that case. The CAC

provided us with no better record or rationale in this case as to

why we should adopt such a program . . . . The OUCC filed

testimony in this case opposing NIPSCO’s proposed low-income

program and . . . provided testimony concerning certain utilities’

voluntary “Round Up” programs that might be more appropriate

from the OUCC’s perspective. . . .

Notwithstanding, the Commission is perplexed over the sequence

of events that led to NIPSCO’s decision to ultimately not offer a

low-income proposal. NIPSCO, not the CAC, was the first to

propose a low-income program. The CAC offered an alternative

program in response. It would have made sense for NIPSCO to

engage the CAC and other parties to discuss alternatives and to

reach a consensus on an alternative. The evidence points to the

CAC being left out of any settlement discussion. . . . It is

confounding to understand the exclusion of parties with mutually

held goals. Few initial proposals are accepted by all parties at the

onset. When offering a proposal, the expectation would be for

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the utility to act in good faith and afford all the parties the

opportunity to dialogue, with the goal of reaching consensus.

Further, as for CAC’s recommendation that NIPSCO collect and

report on trend data on arrearages, disconnections, and related

data points, as we noted in [an earlier order in a different case],

“we decline to order such collection and reporting solely on the

basis of the evidence before us. We believe that any such effort is

best pursued by the utility and interested stakeholders outside the

regulatory constraints of a specific Commission directive.”

Indianapolis Power & Light, 2016 WL 1118795, at *72.

[9] Appealed Order p. 13, 27, 28, 45-46, 58, 71-72, 74, 78-80, 88, 90-91. CAC now

appeals.

Discussion and Decision

I. Standard of Review

[10] The General Assembly created the IURC “primarily as a fact-finding body with

the technical expertise to administer the regulatory scheme devised by the

legislature.” Ind. Gas Co. v. Ind. Fin. Auth., 999 N.E.2d 63, 65 (Ind. 2013)

(internal quotation removed). Because the “complicated process of

ratemaking” is “a legislative rather than judicial function,” it “is more properly

left to the experienced and expert opinion present in the Commission.” Office of

Util. Consumer Counselor v. Pub. Serv. Co. of Ind., 463 N.E.2d 499, 503 (Ind. Ct.

App. 1984).

[11] An order from the IURC is presumed valid unless the contrary is clearly

apparent. Citizens Action Coalition of Ind., Inc. v. S. Ind. Gas and Elec. Co., 70

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N.E.3d 429, 438 (Ind. Ct. App. 2017). More specifically, “[o]n matters within

its jurisdiction, the IURC enjoys wide discretion and its findings and decision

will not be lightly overridden simply because we might reach a different

decision on the same evidence.” Id. at 439. Essentially, “so long as there is any

substantial evidence to support the rates as fixed by the Commission as

reasonable, the judicial branch of the government will not interfere with such

legislative functions” and has “no power or authority to substitute [its] personal

judgment for what [it] might think is fair or reasonable in lieu of the [IURC’s]

administrative judgment.” Boone Cty. Rural Elec. Membership Corp. v. Pub. Serv.

Comm’n, 239 Ind. 525, 532, 159 N.E.2d 121, 124 (1959) (emphasis added).

[12] In reviewing an IURC decision, we apply a multi-tiered standard of review.

Citizens Action Coalition of Ind., Inc. v. S. Ind. Gas and Elec. Co., 45 N.E.3d 483,

491 (Ind. Ct. App. 2015). First, we must determine whether specific findings

exist as to all factual determinations material to the ultimate conclusions. Id.;

see also Capital Improvement Bd. of Mgrs. v. Pub. Serv. Comm’n, 176 Ind. App. 240,

260, 375 N.E.2d 616, 631 (1978) (holding that the findings “must be specific

enough to enable the court to review intelligently the Commission’s decision”).

Second, we must consider whether substantial evidence supports the IURC’s

findings of fact. Citizens Action, 45 N.E.3d at 491; see also N. Ind. Pub. Serv. Co. v.

U.S. Steel Corp., 907 N.E.2d 1012, 1016 (Ind. 2009) (observing that the IURC’s

order will stand “unless no substantial evidence supports it”) (emphasis added).

Finally, we must determine whether the decision is contrary to law. Citizens

Action, 45 N.E.3d at 491. In conducting our review, we neither reweigh the

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evidence nor assess witness credibility and will focus solely on the evidence

most favorable to the IURC’s findings. Ind. Gas, 999 N.E.2d at 66.

[13] Furthermore, where, as here, we are considering the IURC’s approval of a

settlement contract, substantial deference is required. Because approval of

settlement agreements is intrinsic to the IURC’s supervision and regulation of

utility rates, “substantial deference [is] owed to the Commission in supervising

settlements and even modifying or revoking orders entered attendant thereto.”

U.S. Gypsum, Inc. v. Ind. Gas Co., 735 N.E.2d 790, 803-04 (Ind. 2000). This is

especially true when, as here, the OUCC—which represents ratepayers,

consumers, and the public—has joined the settlement agreement. See Citizens

Action Coalition of Ind., Inc. v. N. Ind. Pub. Serv. Co., 796 N.E.2d 1264, 1268 (Ind.

Ct. App. 2003) (rejecting CAC challenge to settlement agreement, including

CAC claim that an IURC-approved settlement should be subject to the more

rigorous inspection of a settlement in class action cases).

II. Rate Design

[14] Any change to a utility charge “shall be reasonable and just, and every unjust or

unreasonable charge for such service is prohibited and declared unlawful.” Ind.

Code § 8-1-2-4. Here, CAC contends that the rate design included in the

Settlement Agreement (and the IURC Order), which incorporates an increase

in the fixed charge for residential and small commercial consumers, is unjust

and unreasonable. CAC has three primary reasons for this position: first, CAC

contends that NIPSCO did not produce substantial evidence to support the

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increase to the fixed charge; second, CAC argues that this rate design

discourages energy efficiency and conservation; and third, it contends that this

rate design will have a disparate, deleterious impact on low-income, Black, and

elderly populations.3

A. Substantial Evidence

[15] CAC insists that NIPSCO has failed to produce evidence proving that its

proposal is just and reasonable:

it produced no evidence of actual cost shifts or “cross subsidies”

resulting from its existing rate design that would require raising

fixed charges for all residential and small commercial customers.

NIPSCO has further failed to demonstrate that it faces any

financial harm due to current fixed cost recovery mechanisms

that would justify its attempt to guarantee earnings through fixed

charges.

Appellant’s Br. p. 25. According to the CAC, the IURC’s Order “advances the

common, but flawed, ratemaking premise that fixed costs should be collected

through fixed charges. Yet, NIPSCO offered no evidence to support the concept

that the nature of a cost, as either fixed or variable, should dictate the form of

the charge used to recover such a cost.” Id. at 25-26 (emphases original). CAC

3

CAC also argues that the IURC improperly relied upon a 2016 Order from a different case in reaching its

conclusions in this case. We agree with CAC that it would be problematic if the IURC had considered a

separate case with different parties and different issues to be binding on this case, but it is apparent that it did

not. Instead, IURC simply cited to its analysis in that case, finding its reasoning and rationales to be equally

applicable here. We see no problem with this approach. Additionally, we note that another panel of this

Court just affirmed the IURC’s order in that case. Citizens Action Coalition of Ind., Inc. v. Indianapolis Power &

Light Co., --- N.E.3d ---, 93A02-1604-EX-804 (Ind. Ct. App. Apr. 5, 2017).

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017 Page 15 of 25

argues that NIPSCO did not prove that raising the fixed charge is preferable to

the many other alternative rate designs available to it.

[16] Whether or not there is another rate design that is preferable, however, is not

our inquiry. Our inquiry is limited to whether there is substantial evidence

supporting the IURC’s acceptance of the Settlement Agreement. The record

reveals the following evidence supporting the rate design contained in the

agreement:

 A NIPSCO witness attested that “recovering fixed costs in a fixed

customer charge, and variable costs in a variable energy charge, gives

consumers appropriate price signals that allow them to efficiently

determine whether the marginal cost justifies the marginal benefit of

additional consumption.” Tr. Ex. Vol. 11 p. 114.

 Another NIPSCO witness testified that with this rate design, NIPSCO

sought “rates that better align with the recovery of costs from the

customers that drive those costs[.]” Appellant’s App. Vol. II p. 45.

 The increase in the fixed charge would “reduce subsidies between and

among customer classes” (in other words, reducing the degree to which

larger customer rates subsidized lower rates for residential and small

commercial customers), but “moderate any rate shock by incorporating

gradualism” (in other words, refraining from increasing the fixed charge

to an amount that fully reflects NIPSCO’s fixed costs). Id.

 This rate design is not a true “straight fixed variable” structure, because

while there is a small increase in the fixed charge, “a substantial amount

of fixed costs would continue to be recovered in the [usage-based] energy

charge[.]” Tr. Ex. Vol. 11 p. 124.

 Furthermore, the increase in the fixed charge will “significantly reduce

the percentage increase in the [usage-based] energy charges that would

otherwise be required” to meet NIPSCO’s revenue requirement. Id. at

129.

 This rate design, including the increase in the fixed charge, is

“commensurate with other electric utilities in the state.” Id. at 130.

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Moreover, this rate design will recover “only a small minority of

[NIPSCO’s] fixed costs[.]” Id. at 125.

 CAC’s proposal—that NIPSCO recover its revenue with an increase in

the energy charge as opposed to the fixed charge—provides “inefficient

price signals that distort consumers’ consumption decisions by setting the

marginal price far above the marginal cost of either consuming, or

foregoing consumption of, additional kilowatt-hours of electricity.” Id. at

113. This proposed structure, therefore, would “discourage[]

consumption that would be efficient in the sense that the marginal benefit

of consuming additional units of electricity exceed[s] the marginal cost of

the energy required to produce that electricity.” Id. at 115.

 OUCC engaged in robust negotiations with NIPSCO that ultimately

resulted in an increase in the fixed charge of 27%, as opposed to the 82%

increase originally proposed by NIPSCO. OUCC, which represents all

ratepayers, testified that this compromise “is a fair resolution, supported

by evidence, and should be approved.” Appellant’s App. Vol. II p. 92.

CAC may genuinely believe that a different rate design is preferable, and some

reasonable ratepayers may agree with that belief, but the evidence in the record

readily supports the IURC’s decision to accept the Settlement Agreement. The

IURC has the expertise to analyze and weigh the complex competing evidence

on this issue, and we can only conclude that there is substantial evidence

supporting its decision to accept the proposed rate design, including the

increase in the fixed charge.

B. Energy Conservation

[17] Next, CAC argues that the IURC failed to make specific findings of fact or an

ultimate finding of reasonableness with respect to CAC’s argument that the

fixed charge increase would discourage energy conservation and efficiency.

Specifically, this rate design “allows NIPSCO to shift cost recovery more to the

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flat fee for all customers which limits a customer’s ability to reduce his bill by

reducing consumption and discourages energy conservation by reducing the

economic incentive for efficiency.” Appellant’s Br. p. 28. According to CAC,

the IURC failed to adequately address this contention.

[18] We find the analysis of this Court on this precise issue in a very recent case to

be instructive. In Citizens Action Coalition of Ind., Inc. v. Indianapolis Power & Light

Co., --- N.E.3d ---, 93A02-1604-EX-804 (Ind. Ct. App. Apr. 5, 2017), CAC

argued that the IURC had failed to make sufficient findings as to whether the

rate design in that case discouraged energy conservation and efficiency, asking

that this Court remand for specific findings on the issue. We disagreed:

We do not find this particular relief warranted. Joint Intervenors

did not bring a declaratory judgment action; rather, they

intervened in a rate case. Rate-making is a legislative as opposed

to a judicial function, and our Indiana Legislature has seen fit to

establish a commission for the express purpose of hearing

evidence and balancing and weighing the many complicated

factors which must be taken into consideration in setting utility

rates. State ex rel. Indianapolis Water Co. v. Boone Circuit Court, 261

Ind. 583, 586-87, 307 N.E.2d 870, 872 (1974). The enabling act

does not authorize the Commission to issue declaratory rulings.

See U.S. Steel Corp. v. No. Ind. Public Serv. Co., Inc., 482 N.E.2d

501, 506 (Ind. Ct. App. 1985), trans. denied.

In their insistence upon particular language, Joint Intervenors

attempt to shift the focus from the reasonableness of the order

approving the rate change as a whole to one component. . . .

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Slip op. p. 17-18. Here, likewise, the IURC was not required to make specific

findings on this particular argument raised by CAC. Instead, it was required to

consider NIPSCO’s rate design scheme as a whole, making specific findings as

to all factual determinations material to the ultimate conclusions. Citizens

Action, 45 N.E.3d at 491. The IURC made specific findings about the rate

design, including the increase in the fixed rate charge:

As we found recently in [another] rate case . . . , the increase in

the [fixed] customer charge was a “move toward a more fixed

and variable rate design consistent with traditional causation

principles,” while being “demonstratively short of [straight fixed

variable] rates.” We further found that, “[c]ost recovery design

alignment with cost causation principles sends efficient price

signals to customers, allowing customers to make informed

decisions regarding their consumption of the service being

provided.” Lastly, we note that, “this structure does not violate

principles of gradualism, because gradualism is best considered in

the context of the entire customer bill and not discrete charges

within the bill.” For these same reasons, the Commission finds

that the increase in the [fixed] monthly customer charge . . . is

cost-based upon the evidence presented, consistent with

gradualism, and is reasonable and should be approved.

Appealed Order p. 88 (internal citations omitted). These findings are specific to

the factual determinations material to the ultimate conclusions, and we have

already found that there is sufficient evidence supporting these findings. We

disagree with CAC that it was incumbent upon IURC to address its specific

argument regarding energy conservation.

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[19] Here, as in the recent case quoted above, CAC also argues that the approval of

this rate design “despite its deleterious effect on conservation and energy-

efficiency is contrary to federal law and state rule.” Appellant’s Br. p. 32.

Again, we find the analysis of this Court helpful and on point:

. . . The parties do not dispute the proposition that public policy,

federal and State, favors and encourages conservation.

Nonetheless, encouragement is not a mandate. Joint Intervenors

direct us to no statutory requirement that each individual

component of a rate scheme reflect the most environmentally

conservative approach or that abandonment of older

methodology be immediate and total. At bottom, Joint

Intervenors suggest a reweighing of evidence, with conservation

– based upon their interpretation of customer usage signals –

being paramount. They do not demonstrate the unreasonableness

of the rate increase as a whole.

Citizens Action, No. 93A02-1604-EX-804, at slip op. p. 19. Here, likewise, CAC

has not directed our attention to any federal law or state rule mandating a

different result in this case. Again, reasonable people may, and likely do, agree

with CAC that this rate design scheme is less than ideal with respect to the

important issues of energy conservation and efficiency. But that is immaterial

to our review of the IURC’s decision, which contains sufficient findings and is

supported by substantial evidence.

C. Impact on Certain Populations

[20] Similar to its energy conservation argument, CAC contends that the IURC

failed to make specific findings or an ultimate finding of reasonableness

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regarding its allegation that the fixed rate increase will have a disproportionate

impact on low-income, elderly, and Black consumers. CAC insists that

NIPSCO’s “presentation of data [on this issue] was very misleading,

incomplete, and was effectively rebutted by CAC. Regardless, the Commission

failed to make a basic finding of fact or conclusion of law on the material issue

raised of how an increased fixed charge affects low volume users of electricity,

who in NIPSCO’s service territory are low income customers, elderly

customers, and African American customers.” Appellant’s Br. p. 31. CAC

asks us to remand so that the IURC can make specific findings on this issue.

[21] As noted above, however, this is not a declaratory judgment action, and the

IURC is required to make specific findings only on factual determinations that

are material to the ultimate issue, which is the justness and reasonableness of

the rate design and its effect on ratepayers as a whole. As this Court recently

held,

[e]ven assuming that [the proposed rate design] has a

disproportionate negative impact upon certain groups of

customers, the Commission is required by statute to approve

rates that are fair and reasonable inclusive of the entire customer

base. There is no statutory requirement that the impact upon

particular sub-groups be separately addressed. Joint Intervenors

have not demonstrated that the Commission failed to conform to

statutory standards.

Citizens Action, No. 93A02-1604-EX-804, at slip op. p. 20. Here, likewise, there

was no requirement that the IURC make specific findings related to particular

sub-groups of ratepayers. It found the rate design to be just and reasonable as a

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whole as related to all ratepayers, see Appealed Order p. 87, and given our

standard of review, we are compelled to defer to that conclusion as there is

substantial evidence supporting it.

III. Payment Assistance Program and Data Collection

[22] Finally, CAC argues that the IURC erred because it did not require NIPSCO to

include a low-income payment assistance program as part of the rate design or

to collect and report data on its customers. At the beginning of the settlement

negotiations, NIPSCO had included a payment assistance program as part of its

rate design, but OUCC objected to that particular program. Consequently,

NIPSCO withdrew its proposed payment assistance program from the final

Settlement Agreement. CAC proposed its own version of a payment assistance

program, but none of the other involved entities approved of its proposal. In

the end, therefore, the IURC’s order does not contain a payment assistance

program at all.

[23] Initially, we note that we share in the IURC’s concern and perplexment as to

how and why CAC was left out of the settlement negotiations. Had CAC been

included, it is entirely possible, if not likely, that a compromise could have been

reached such that a payment assistance program would have been included in

the Settlement Agreement. It seems as though all agree that it would be

preferable to have such a program included. We echo the IURC’s strong

encouragement that, in future cases, the utilities will act in good faith by

including all parties in the negotiations.

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[24] That said, the IURC dedicated a lengthy paragraph in its order explaining why

it declined to order the adoption of CAC’s proposed payment assistance plan:

No other party supported the form of program proposed by CAC,

which was actively opposed by several parties. Mr. Rábago

addressed the elimination of NIPSCO’s proposed low-income

program of an annual credit of $50 applied to the June bill in his

opposition to the Settlement Agreement. He noted that the

residential customers face an annual fixed customer charge

increase of $36, but stated there are also increases in volumetric

rates. . . . [In a prior rate case], we recognized the importance of

the issue raised by the CAC, but found that there are numerous

implementation and policy related concerns and declined to

adopt the CAC’s program design in that case. The CAC

provided us with no better record or rationale in this case as to

why we should adopt such a program . . . The implications and

policy concerns expressed in [the other case] persist in this Cause.

Appealed Order p. 90. The IURC, which is the entity statutorily charged with

negotiating these complex regulatory waters, found that there are “numerous

implementation and policy related concerns” with respect to the program

proposed by CAC. We will not second-guess the IURC’s assessment in that

regard.

[25] NIPSCO elected to withdraw its own proposed payment assistance plan when

it faced resistance from OUCC, the entity charged with representing all

ratepayers.4 We think it best for the General Assembly to address legislatively

4

CAC argues that NIPSCO’s payment assistance plan was included (by mistake) in the final Settlement

Agreement as approved by the IURC. It is apparent, however, that NIPSCO explicitly withdrew this plan

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whether and how utilities should be required to collect and report such data on

a statewide basis. The IURC was certainly not required to force NIPSCO to re-

insert its proposal. It is extremely regrettable that the result of this process is a

rate design including rate increases with no assistance available for low-income

consumers. But under these circumstances, we cannot say that the IURC erred

in entering the order without such a program included.

[26] CAC also contends that NIPSCO should be required to collect and report data

about its consumers so that, in the future, CAC would be able to provide the

evidence on these matters that the IURC has found to be lacking. The IURC,

however, concluded that “any such effort is best pursued by the utility and

interested stakeholders outside the regulatory constraints of a specific

Commission directive.” Id. at 91. In addition to the IURC’s conclusion, we

would also point out that the cost of undertaking the collection and reporting of

this sought-after data would certainly be passed onto the consumers whose rate

increases CAC is attempting to minimize. Furthermore, the type of sensitive

data that CAC believes should be collected would potentially intrude on the

privacy of ratepayers. Under these circumstances, we decline to reverse the

IURC’s order on the basis that it did not order the collection and reporting of

this information.

during the proceedings. To force its inclusion under these circumstances would be to countenance the

“gotcha” litigation of which we disapprove. We decline to do so.

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[27] The judgment of the IURC is affirmed.

Barnes, J., and Crone, J., concur.

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