LaPorte Co. questions how ratepayers avoid paying data center bill
NiSource secures approval from the Indiana Utility Regulatory Commission (Cause No. 46183) for NIPSCO Generation (GenCo), a separate entity designed by the utility to serve the unprecedented power needs for the rapidly growing data center market in Northern Indiana.
Barnes & Thornburg LLP attorneys Nicholas K. Kile and Lauren Aguilar explain to firm clients that “The approved structure … is the first of its kind in the U.S. to grant limited regulation to an affiliate of a vertically regulated public utility company. The pioneer model allows NiSource to separate the costs of serving new data center customers from existing NIPSCO retail customers, protecting current customers from any new data center development costs.”
Kile and Aguilar label the IURC assent as marking “a pivotal transformation for the company and the region, unlocking GenCo’s ability to create energy solutions tailored for the data center boom while protecting existing customers. The GenCo structure provides a pathway for risk-adjusted returns outside the standard regulatory returns, enabling prudent investments with predictable cash flows.”
Also of particular interest: this matter proceeded to a contested hearing in an environment in which most cases are settled.
LaPorte attorney Shaw Friedman, who represented the LaPorte County Board of Commissioners in the NIPSCO GenCo case, expressed concern that this would be a largely unregulated subsidiary that could generate not only power for the data centers but “windfall profits” that would not have to be shared “with ratepayers who built this system.” “If this was the best idea since sliced bread,” Friedman muses, “how come NIPSCO couldn’t point to another utility anywhere in the country that had protected ratepayers with this concept?”
Friedman, a long-time NIPSCO antagonist who has now (by our count) cross-examined nine different NIPSCO presidents appearing in front of the IURC, questions why regulators never asked “the tough questions” and held the company’s feet to the fire.
Friedman adds, “NIPSCO has the highest electric rates in the state, yet they told the IURC, ‘just trust us,’ we’ve discovered the ‘secret sauce’ to wall off data center energy costs from existing ratepayers.”
He noted that when he had pressed NIPSCO President Vince Parisi in front of the commission, he couldn’t point to another utility doing anything similar; couldn’t cite any studies; claimed not to read “the industry trade publications”; and failed to “bring in a single industry expert who could testify this was a good idea.” The attorney for the county commissioners suggests “That should’ve set off alarm bells with ANY decent regulator like the ones who used to sit on the utility commission.”
In its decision, commissioners find that the GenCo model “reflects a forward-looking approach to risk mitigation.” While IURC is “highly aware and sensitive to customer concerns surrounding the potential of new megaload customers,” commissioners expect that by “ringfencing the generation assets dedicated to these high-demand users, GenCo will offer the opportunity to ensure that the electric costs tied to data center development and operation do not result in costs to other ratepayers.”
The B&T attorneys observe that NIPSCO “has not disclosed specific investment amounts or timelines for new generation projects that may result from this regulatory approval.”
FYI, “A Bloomberg News analysis of wholesale electricity prices for tens of thousands of locations across the country reveals the effects of the AI boom on the power market with unprecedented granularity. The locations and prices were tracked and aggregated monthly by Grid Status, an energy data analytics platform. Bloomberg analyzed this data in relation to data center locations, from DC Byte, and found that electricity now costs as much as 267% more for a single month than it did five years ago in areas located near significant data center activity.”
And in other NIPSCO news . . . the Indiana Court of Appeals rules in the NIPSCO Industrial Group’s appeal of IURC approval of NIPSCO’s third plan update for its five-year transmission, distribution, and storage system improvement (TDSIC) plan charges. Indus. Grp. v. No. Ind. Pub. Serv. Co., No. 24A-EX-2834.
The utility’s industrial customers alleged that NIPSCO failed to provide “specific justification” for capital expenditure and TDSIC cost increases and the commission failed to provide “specific approval” for some of those cost increases. The appellate panel finds no error in the commission’s findings, and affirms the IURC action.
The U.S. Bureau of Labor Statistics, in one of its final pore-shutdown data releases, details electricity prices in August, which the Wall Street Journal observes “were 31% higher than four years earlier, thanks largely to overdue grid upgrades.”