NIPSCO Industrial Group v. Northern Indiana Public Service Company, and Office of the Utility Consumer Counselor , 125 N.E.3d 617 ( 2019 )

FILED
Jun 27 2019, 4:11 pm
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
IN THE
Indiana Supreme Court
Supreme Court Case No. 18S-EX-475
NIPSCO Industrial Group,
Appellant (Intervenor below),
–v–
Northern Indiana Public Service Company,
Appellee (Petitioner below),
and
Office of the Utility Consumer Counselor,
Appellee (Statutory Party below).
Argued: November 1, 2018 | Decided: June 27, 2019
Appeal from the Indiana Utility Regulatory Commission
No. 44733-TDSIC-2
On Petition to Transfer from the Indiana Court of Appeals
No. 93A02-1711-EX-2735
Opinion by Justice Goff
Chief Justice Rush and Justice Massa concur.
Justice Slaughter dissents with separate opinion in which Justice David joins.
Goff, Justice.
Everyone reaps a benefit when utilities are allowed to plan for
investments in necessary and reasonable infrastructure projects. The
“TDSIC Statute” at issue in this appeal promotes this beneficial behavior
through a complex, integrated process that aims to protect all sides
involved. On the utilities’ side, the statute allows utilities to seek pre-
approval from the Indiana Utility Regulatory Commission for certain
electric or gas infrastructure projects and to recoup the costs of those
projects through periodic petitions to the Commission for increases to its
rates. On the consumers’ side, the statute requires the Commission to
make determinations regarding the public convenience, necessity, and
reasonableness of planned projects before approving a plan to complete
them. This process protects both suppliers and consumers of electric and
gas services, improves the stability of the provision of these services, and
increases the predictability of costs associated with providing and using
these services.
Here, the process started off well but eventually broke down. The
parties to this appeal agreed to two expansive, multi-year settlements
regarding rates and infrastructure investments under the TDSIC Statute,
and they asked the Commission to approve the agreements, which it did.
These agreements specified how, in the utility’s periodic petitions to the
Commission, rate increases should be calculated and allocated among the
utility’s various rate classes. Despite being a party to the underlying
agreements, a group of some of the utility’s largest industrial customers
opposed the utility’s second periodic petition, arguing that the utility’s
rate calculation and allocation based on the underlying agreements was
contrary to the TDSIC Statute. The Commission rejected this argument,
and the customer group sought judicial review.
This case, at its core, involves a party to and proponent of two complex
administrative settlement agreements raising a challenge to specific parts
of those settlements in a later proceeding. Concluding that the customer
group is estopped from raising this delayed challenge and further
concluding that the Commission’s order contains sufficient findings, we
affirm the Commission.
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Factual and Procedural History
Given the lengthy and interwoven background of this appeal, our
discussion of the factual and procedural history proceeds in three parts.
We begin with a summary of some of the ways in which the Indiana
Utility Regulatory Commission regulates utility rates and an overview of
the specific challenge to the regulatory activity raised here. Then, we
discuss two large-scale regulatory proceedings that provide the basis for
the proceeding below. We conclude with a summary of the proceedings
before the Commission and the Court of Appeals below.
I. Regulation of utility rates generally and the
specific challenge to the rate regulation here
Last year, in litigation between some of the same parties involved in
this appeal, we discussed the general processes by which utility rates are
set and adjusted. See NIPSCO Indus. Grp. v. N. Ind. Pub. Serv. Co. (NIPSCO
2018), 100 N.E.3d 234, 238–39 (Ind. 2018), modified on reh’g. We find a brief
summary of these processes helpful in placing this appeal in the proper
context.
Base utility rates are traditionally set or adjusted through a general
ratemaking case (variously referred to as a general rate case or base rate
case) before the Commission. This is a comprehensive process in which
the Commission “examine[s] every aspect of the utility’s operations and
the economic environment in which the utility functions . . . .” Id. at 238
(quoting U.S. Gypsum, Inc. v. Ind. Gas Co., 735 N.E.2d 790, 798 (Ind. 2000)).
Such a detailed review allows the Commission to ensure that utility rates
are fair to both the utility and its customers. Id.
In addition to the comprehensive process of a base rate case, utility
rates can be adjusted to reflect specific projects and costs through a
“tracker” or “rider” procedure before the Commission. The TDSIC
Statute, at issue in this appeal, provides one such proceeding related to
electric or gas transmission, distribution, and storage system
improvement charges a public utility imposes for certain improvement
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projects. See generally Ind. Code ch. 8-1-39 (2016 Repl.). 1 This statute
provides two distinct, yet related, types of proceedings. First, under
Section 10, a utility can seek approval from the Commission of a multi-
year plan “for eligible transmission, distribution, and storage
improvements.” I.C. § 8-1-39-10(a). See also NIPSCO 2018, 100 N.E.3d at
239. Second, under Section 9 and based on the multi-year plan, the utility
can periodically petition the Commission for “adjustment of [its] basic
rates and charges to provide for timely recovery of eighty percent (80%) of
approved capital expenditures and TDSIC costs.” I.C. § 8-1-39-9(a). See
also NIPSCO 2018, 100 N.E.3d at 239. The utility calculates these rate
adjustments through a multi-step process, and one of the steps in this
process involves allocating eligible TDSIC costs among the utility’s
various rate classes.
One requirement of Section 9 of the TDSIC Statute speaks specifically to
the allocation step of the rate adjustment calculation, and this requirement
lies at the center of this appeal. A Section 9 petition, among other things,
must “use the customer class revenue allocation factor based on firm load
approved in the public utility’s most recent retail base rate case order.”
I.C. § 8-1-39-9(a)(1). The parties agree as to which order from the
Commission qualifies as Northern Indiana Public Service Company’s
(“NIPSCO”) 2 most recent retail base rate case order. Further, the parties
do not dispute the meaning of the term “firm load” in the context of this
1 The legislature has recently amended the TDSIC Statute. See Pub. L. No. 89-2019, §§ 1–9,
2019 Ind. Acts ___. And our NIPSCO 2018 decision analyzed some portions of the TDSIC
Statute that have now been amended. Compare, e.g., NIPSCO 2018, 242–43 (analyzing the
word “designate” included in the then-applicable version of the TDSIC Statute) with Pub. L.
No. 89-2019, §§ 1, 4, 2019 Ind. Acts ___ (removing the word “designate” from the TDSIC
Statute). However, the recent amendments to the TDSIC Statute do not affect the continued
validity of the analysis in NIPSCO 2018 that we cite in this decision and do not impact the
issues raised in this appeal.
2 NIPSCO is a utility that provides gas and electric service to more than 800,000 customers.
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proceeding. 3 However, the NIPSCO Industrial Group (the “Industrial
Group”) 4 argues that the customer class revenue allocation factors
included in NIPSCO’s second Section 9 petition were not based on firm
load, as required by Section 9, but rather on total load.
II. NIPSCO’s most recent base rate case and its
Section 10 proceeding for approval of its multi-
year TDSIC plan
Because the Section 9 proceeding that spawned this appeal drew from
the parties’ settlements and the Commission’s orders resolving NIPSCO’s
most recent base rate case and approving NIPSCO’s multi-year TDSIC
plan, we begin our discussion of the particular facts and history of this
appeal with a discussion of the underlying proceedings.
A. The base rate case
In October 2015, NIPSCO petitioned the Commission to begin a base
rate case to increase its base electric service rates, and it submitted
testimony and exhibits to the Commission. 5 Nine entities intervened and
participated in the case, including the Industrial Group. The Indiana
Office of Utility Consumer Counselor (the “OUCC”), a statutory
representative of “ratepayers, consumers, and the public,” I.C. § 8-1-1.1-
4.1(a), also participated in the case.
3Although “firm load” is not defined for purposes of the TDSIC Statute, the parties referred
to it as utility service provided with a high level of reliability. This contrasts with “non-firm
load” or “interruptible load,” which the parties treated as utility service that can be
interrupted based on the needs of other utility customers and is thus less reliable. Total load,
then, refers to the sum of firm and interruptible loads.
4The Industrial Group is a group consisting of some of NIPSCO’s largest industrial
customers.
5 The case proceeded under Cause Number 44688 before the Commission.
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In February 2016, NIPSCO, the OUCC, and most of the intervenors—
including the Industrial Group—submitted a settlement agreement (the
“Base Rate Case Settlement”) to the Commission, along with supporting
testimony. As relevant here, the settling parties stated, “For purposes of
establishing any rate schedules allowing for the recovery of 80% of
NIPSCO’s approved capital TDSIC expenditures and costs pursuant to
I.C. 8-1-39-9(a), the parties agree that Joint Exhibit D reflects the customer
class revenue allocation factors that should be applied to firm load.”
Appellant’s App. Vol. II, p. 223. Joint Exhibit D then provided allocation
factor percentages for each of NIPSCO’s electric rate classes. 6 Id. at 246.
On July 18, 2016, the Commission approved the Base Rate Case
Settlement and entered an order generally in line with the settlement (the
“Base Rate Case Order”). Specific to the issues raised in this appeal, the
Commission “approve[d] the customer class revenue allocation factors
shown in Joint Exhibit D” for use in subsequent TDSIC proceedings. Id. at
177. In coming to this conclusion, it noted that Joint Exhibit D to the Base
Rate Case Settlement resolved a “significant issue [regarding] the
allocation of costs recovered through [r]iders” and was “not opposed by
any party.” Id. at 154, 177.
B. The TDSIC multi-year plan
In December 2015, while its base rate case was pending, NIPSCO
petitioned the Commission for approval of a multi-year TDSIC plan
pursuant to Section 10 of the TDSIC Statute. Five entities—one of which
was the Industrial Group—intervened, and they, along with the OUCC,
participated in the proceeding.
In March 2016, NIPSCO, the OUCC, and four of the five intervenors—
including the Industrial Group—submitted a settlement agreement (the
6Joint Exhibit D provided two allocation factor percentages for each rate class to differentiate
between costs specific to NIPSCO’s transmission system and its distribution system. The
parties on appeal do not challenge this method of allocating between transmission and
distribution costs.
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“TDSIC Plan Settlement”) to the Commission, along with supporting
testimony. The settling parties specified that “[t]he allocation factors for
NIPSCO’s TDSIC rider shall be those from NIPSCO’s 2016 base rate case
in Cause No. 44688.” Appellant’s App. Vol. III, p. 142. They further
“agree[d] that using such factors complies with the TDSIC statute.” Id.
The agreement on the TDSIC allocation factors was so important to the
settling parties that they expressly based their assent to the terms of the
settlement on “the Commission’s approval of the application of the
allocation factors for TDSIC expenditures reflected in Joint Exhibit D to
the [Base Rate Case] Settlement.” Id. at 144.
On July 12, 2016, the Commission approved the TDSIC Plan Settlement
and entered an order in accordance with the settlement (the “TDSIC Plan
Order”). The Commission noted that, in “resolv[ing] a number of
previously contested issues in a manner consistent with the TDSIC
statute,” the TDSIC Plan Settlement “provides clarity and predictability in
a manner consistent with the public interest and administrative
efficiency.” Id. at 133. It further concluded that compromises as to the
implementation of TDSIC allocation factors were “evident” and that these
compromises were “consistent with the applicable statutory provisions
and [were] reasonable and in the public interest.” Id.
As discussed above, the Commission entered its Base Rate Case Order
shortly after entering its TDSIC Plan Order. With these two orders
entered, the parties to this appeal—NIPSCO, the Industrial Group, and the
OUCC—and others had established a thorough, agreed-upon procedure
under which NIPSCO would seek recovery of its TDSIC costs.
III. NIPSCO’s Section 9 petitions and this appeal
NIPSCO’s first Section 9 petition was approved by the Commission in
January 2017. 7 In this petition, NIPSCO conducted the multi-step
calculation of its rate adjustments using, among other things, the customer
7 We refer to this proceeding generally as TDSIC-1.
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class revenue allocation factors contained in Joint Exhibit D to the Base
Rate Case Settlement and approved in the Base Rate Case Order. Neither
the Industrial Group nor the OUCC objected to this calculation.
NIPSCO filed its second Section 9 petition—the subject of this appeal—
in June 2017. 8 In this petition, NIPSCO made some changes to its
calculation and allocation from TDSIC-1, but, relevant here, it continued
to use the same allocation factors from the Base Rate Case Settlement as it
had used in TDSIC-1. Subject to a few suggested alterations to the petition
not relevant to this appeal, the OUCC recommended that the Commission
approve NIPSCO’s TDSIC-2 petition.
The Industrial Group intervened in opposition to NIPSCO’s TDSIC-2
petition. The Industrial Group argued that the customer class revenue
allocation factors NIPSCO used in TDSIC-2 were not based on firm load as
required by Section 9 of the TDSIC Statute but rather were based on total
load. To correct the alleged deficiencies in TDSIC-2, the Industrial Group
suggested that NIPSCO could follow the same calculation and allocation
methodology it used in TDSIC-1 or it could revise the allocation factors.
The Commission rejected the Industrial Group’s arguments and largely
approved NIPSCO’s TDSIC-2 petition. In its order, the Commission
summarized testimony submitted by NIPSCO, the Industrial Group, and
the OUCC, noting issues on which the parties’ experts disagreed. It
recited the requirement from Section 9 of the TDSIC Statute that “the
Petition must use the customer class revenue allocation factor based on
firm load approved in the public utility’s most recent retail base rate case
order.” Appellant’s App. Vol. II, p. 15 (citing I.C. § 8-1-39-9(a)(1)). It then
stated, “Specific to the evidence of this proceeding, the Parties explicitly
agreed to and the Commission approved the allocation factors established
in the [Base] Rate Case Settlement and the [TDSIC Plan] Settlement. Those
agreements leave no question as to what factors would be applied . . . .”
Id. Thus, the Commission concluded that “NIPSCO is authorized to
allocate transmission and distribution revenue requirements by using the
8 We refer to this proceeding generally as TDSIC-2.
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allocation percentages contained on Joint Exhibit D as previously
approved in Cause No. 44688.” Id. at 19.
The Industrial Group sought review of the Commission’s TDSIC-2
order before the Court of Appeals 9 and raised two broad issues. In line
with its contentions before the Commission, the Industrial Group
primarily argued that the Commission’s TDSIC-2 order allowed NIPSCO
to use allocation factors based on total load contrary to the TDSIC
Statute’s requirement that the allocation factors be based on firm load.
Additionally, the Industrial Group argued that the TDSIC-2 order lacked
sufficient findings. In a joint appellees’ brief, NIPSCO and the OUCC
responded that the Industrial Group was estopped from challenging the
terms of the underlying settlements, that the Commission’s decision to
approve the TDSIC-2 petition was owed strong deference, and that the
TDSIC-2 order contained sufficient findings.
The Court of Appeals reversed the Commission. NIPSCO Indus. Grp. v.
N. Ind. Pub. Serv. Co., 104 N.E.3d 603 (Ind. Ct. App. 2018). It found that the
customer class revenue allocation factors included in Joint Exhibit D to the
Base Rate Case Settlement “were determined based on total load” despite
the requirement that they be based on firm load. Id. at 610. Thus, it
“conclude[d] that the Commission exceeded its statutory authority by
allowing a rate adjustment based on allocation factors computed on total
load.” Id. at 611.
We granted the joint petition to transfer filed by NIPSCO and the
OUCC, thereby vacating the Court of Appeals opinion. See Ind. Appellate
Rule 58(A).
9Review of Commission final orders takes place in the Court of Appeals rather than a circuit
or superior court. I.C. § 8-1-3-1; Hamilton Se. Utils., Inc. v. Ind. Util. Regulatory Comm’n, 101
N.E.3d 229, 232 (Ind. 2018).
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Standard of Review
Indiana Code section 8-1-3-1 supplies the basis for our review of the
Commission’s TDSIC-2 order. See N. Ind. Pub. Serv. Co. v. U.S. Steel Corp.
(U.S. Steel), 907 N.E.2d 1012, 1015 (Ind. 2009) (citing I.C. § 8-1-3-1 (2008)).
It provides:
An assignment of errors that the decision, ruling, or order of
the commission is contrary to law shall be sufficient to present
both the sufficiency of the facts found to sustain the decision,
ruling, or order, and the sufficiency of the evidence to sustain
the finding of facts upon which it was rendered.
I.C. § 8-1-3-1 (2018). When presented with an appeal under this section,
we apply three levels of review: “one for factual findings; another for
mixed questions of law and fact; and a third for questions of law.”
NIPSCO 2018, 100 N.E.3d at 241. See also U.S. Steel, 907 N.E.2d at 1015–18
(describing the levels of review). The Industrial Group’s arguments
addressed below involve only the second level of review.
Appeals involving claims of insufficient findings to sustain the ultimate
conclusions contained in the order present questions of ultimate fact—or
mixed questions of law and fact. See Ind. Gas Co. v. Ind. Fin. Auth., 999
N.E.2d 63, 66 (Ind. 2013). In these cases, we review the Commission’s
conclusions for reasonableness, deferring to the Commission “based on
the amount of expertise exercised by [it].” U.S. Steel, 907 N.E.2d at 1016
(citation omitted). Thus, we give more deference to orders on subjects
within the Commission’s expertise and less deference to orders dealing
with matters outside its expertise. Id. “In either case, courts may examine
the logic of inferences drawn and any rule of law that may drive the
result.” Id.
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Discussion and Decision
The TDSIC Statute “encourages energy utilities to replace their aging
infrastructure by modernizing electric or gas transmission, distribution,
and storage” systems. NIPSCO 2018, 100 N.E.3d at 238. Presumably
understanding that these modernization projects require significant
investments of time and money, the legislature drafted the TDSIC Statute
to allow utilities to first petition the Commission for approval of a multi-
year TDSIC plan and then petition the Commission for periodic rate
adjustments based on its progress. See generally I.C. §§ 8-1-39-9, -10 (2016).
This complex, long-term process allows for some stability and
predictability on both sides of the utility transaction: utilities can count on
recouping their investment in upgraded infrastructure, and individuals
and businesses in Indiana can count on the efficient and reliable provision
of much-needed gas and electric services.
The primary issue in this appeal is whether the Commission
improperly approved of the use of customer class revenue allocation
factors based on total load rather than firm load as required by the TDSIC
Statute. See I.C. § 8-1-39-9(a)(1) (requiring that Section 9 petitions “use the
customer class revenue allocation factor based on firm load approved in
the public utility’s most recent retail base rate case order”). The Industrial
Group also presents us with a secondary argument challenging whether
the Commission’s TDSIC-2 order contained specific findings supporting
its ultimate conclusion in approving the TDSIC-2 petition. We address
both issues in turn below.
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I. The Industrial Group’s primary argument against
the TDSIC-2 order is, in reality, an attack on the
underlying settlements and orders, and the
Industrial Group is estopped from bringing this
challenge now.
A. The Industrial Group’s argument challenges the
customer class revenue allocation factors contained in
the Base Rate Case Settlement rather than any unique
feature of the TDSIC-2 order.
The Industrial Group’s principal argument, weaved throughout its
briefing, is that Section 9 of the TDSIC Statute requires customer class
revenue allocation factors to be based on firm load, but the allocation
factors here were based on total load instead. Resp. in Opposition to
Transfer, pp. 8–9; see also id. at 8, 10, 12, 17 (referring to the alleged
statutory violation in every top-level heading of the argument); Br. of
Appellant NIPSCO Industrial Group, p. 18 (beginning its summary of the
argument by describing the alleged statutory violation). The Industrial
Group frames this argument in terms of only the TDSIC-2 order, but it is
not based on any unique feature of the order. The TDSIC-2 order merely
pointed NIPSCO to the allocation factors in the Base Rate Case Settlement
for use in this and future Section 9 petitions. Appellant’s App. Vol. II, p.
19. This instruction follows the overall TDSIC procedure—agreed to in
the TDSIC Plan Settlement and approved in the TDSIC Plan Order—that
Section 9 petitions would use the allocation factors from the Base Rate
Case Settlement. Appellant’s App. Vol. III, p. 131 (directing in the order
that “[t]he allocation factors to be used in NIPSCO TDSIC tracker filings
will be those from Cause No. 44688”); id. at 142 (agreeing in the settlement
that “[t]he allocation factors for NIPSCO’s TDSIC rider shall be those from
NIPSCO’s 2016 base rate case in Cause No. 44688”). Indeed, the Industrial
Group’s witness testified that NIPSCO relied on the allocation factors
from Joint Exhibit D to the Base Rate Case Settlement in both TDSIC-1 and
TDSIC-2. Non-Conf. Ex. Vol. 2, pp. 185–86. Thus, while the Industrial
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Group frames its argument as challenging the Commission’s approval of
the TDSIC-2 petition, the substance of its argument centers on the
allocation factors contained in Joint Exhibit D to the Base Rate Case
Settlement, approved in the Base Rate Case Order, and referenced in the
TDSIC Plan Settlement and TDSIC Plan Order. As a result, we will
consider this argument for what it really is: a challenge to the terms of the
Base Rate Case Settlement and the related order.
When the Industrial Group’s arguments are viewed in the proper
context of coming from a challenger that was a party to—and, before the
Commission, an advocate of—settlements of both a base rate case and a
petition for approval of a multi-year TDSIC plan, NIPSCO and the
OUCC’s estoppel argument becomes more compelling. See Br. of
Appellees NIPSCO and OUCC, pp. 22–23 (raising estoppel as a bar to the
Industrial Group’s challenge).
B. The Industrial Group is estopped from challenging the
terms of the Base Rate Case Settlement.
In a general sense, estoppel forces a party to follow through on what it
says or otherwise represents it will do. More specifically, we have said it
“is a concept by which one’s own acts or conduct prevents the claiming of
a right to the detriment of another party who was entitled to and did rely
on the conduct.” Ashby v. Bar Plan Mut. Ins. Co., 949 N.E.2d 307, 313 (Ind.
2011) (quoting Brown v. Branch, 758 N.E.2d 48, 51–52 (Ind. 2001)). See also
Estoppel, BLACK’S LAW DICTIONARY (10th ed. 2014) (defining estoppel
as “[a] bar that prevents one from asserting a claim or right that
contradicts what one has said or done before . . .”). It is based on
principles of equity and “aid[s] the law in the administration of justice
where, without its aid, injustice might result.” First Nat’l Bank of
Logansport v. Logan Mfg. Co., 577 N.E.2d 949, 954 (Ind. 1991). While
estoppel comes in many different forms, all its forms “are based on the
same underlying principle: one who by deed or conduct has induced
another to act in a particular manner will not be permitted to adopt an
inconsistent position, attitude, or course of conduct that causes injury to
such other.” Brown, 758 N.E.2d at 52. With these foundational principles
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of estoppel guiding our analysis, we conclude that the Industrial Group is
estopped from challenging the use of the customer class revenue
allocation factors from the Base Rate Case Settlement and related order at
this time.
In both the base rate case and the TDSIC multi-year plan proceeding,
the Industrial Group supported the use of the allocation factors from the
Base Rate Case Settlement and related order—a position NIPSCO relied
on in later TDSIC proceedings. Not only did the Industrial Group join the
Base Rate Case Settlement that provides the allocation factors it now
challenges but it also offered testimony before the Commission in support
of the settlement. See Non-Conf. Ex. Vol. 4, p. 7 (characterizing, in its
witness’s testimony, the settlement as a “comprehensive agreement that
resolve[d] both revenue and the complex allocation and rate mitigation
issues in this rate case”). Specifically regarding the allocation factors, the
Industrial Group’s witness testified that they “provide a comprehensive
method for allocating NIPSCO’s base rates as well as tracked expenses,
which is reasonable and in the public interest.” Id. at 11. Later, the
Industrial Group doubled down on its support for the allocation factors
included in the Base Rate Case Settlement when it joined in the TDSIC
Plan Settlement that was “expressly predicated upon . . . the
Commission’s approval of the application of the allocation factors for
TDSIC expenditures reflected in Joint Exhibit D to the [Base Rate Case]
Settlement . . . .” Appellant’s App. Vol. III, p. 144. Relying on these
agreements fully supported by the Industrial Group, NIPSCO began filing
periodic rate adjustment petitions pursuant to Section 9 of the TDSIC
Statute. When NIPSCO filed its TDSIC-1 petition that used the allocation
factors from the Base Rate Case Settlement, the Industrial Group did not
object. Only when NIPSCO filed its TDSIC-2 petition—which used the
same allocation factors as the TDSIC-1 petition used and as the TDSIC
Plan Settlement and the Base Rate Case Settlement provided—did the
Industrial Group object. Thus, up until TDSIC-2, the Industrial Group
approved using the allocation factors from the Base Rate Case Settlement,
and NIPSCO relied on that approval in moving forward with its TDSIC
multi-year plan.
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Allowing the Industrial Group to reverse course now and object to the
use of the allocation factors at this late stage would harm NIPSCO and the
broader utility regulatory and infrastructure systems involved in this case.
The TDSIC Statute contemplates many related proceedings over the
course of several years with an underlying base rate case and a TDSIC
multi-year plan providing the foundation for periodic rate adjustment
petitions. The Industrial Group’s argument challenging the allocation
factors provided in the underlying Base Rate Case Settlement seeks to
undermine the foundation on which the later TDSIC proceedings have
been built. With the Base Rate Case Settlement in question, NIPSCO—not
to mention the other parties to the Base Rate Case Settlement and the
TDSIC Plan Settlement—would then need to spend considerable resources
adjusting the plans laid out in the settlements, striking entirely new
settlement agreements, or proceeding with contested cases before the
Commission. And, in light of the equitable underpinnings of the estoppel
doctrine, we cannot lose sight of the fact that the injury would spread
beyond NIPSCO. The OUCC, a statutory representative of “ratepayers,
consumers, and the public,” I.C. § 8-1-1.1-4.1(a) (2016 Repl.), has joined
NIPSCO in opposing the Industrial Group’s appeal. Allowing the
Industrial Group’s delayed attacks against the Base Rate Case Settlement
would risk disrupting the public’s interest in stable and modern electric
and gas transmission, distribution, and storage infrastructure systems by
hindering long-approved efforts at modernization. Further, permitting
these tardy attacks would reduce parties’ and the public’s confidence in
the durability of long-term regulatory settlements and orders. In light of
the long-term, integrated procedures contemplated by the TDSIC Statute,
allowing the Industrial Group to belatedly challenge the underlying
settlement in NIPSCO’s base rate case would harm NIPSCO and the
broader systems involved in utility regulation and supply.
Because the Industrial Group’s support for the Base Rate Case
Settlement induced NIPSCO to rely on that settlement and the related
order in subsequent TDSIC proceedings and because allowing the
Industrial Group to change its position and raise this challenge would
injure NIPSCO, the Industrial Group is estopped from challenging the use
of the customer class revenue allocation factors now. This conclusion is in
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line with the “general proposition” laid out by the Supreme Court of the
United States long ago that, if a party takes “a certain position in a legal
proceeding, and succeeds in maintaining that position, he may not
thereafter, simply because his interests have changed, assume a contrary
position, especially if it be to the prejudice of the party who has
acquiesced in the position formerly taken by him.” Davis v. Wakelee, 156
U.S. 680, 689 (1895). It is also in line with prior decisions of this Court in
which we rejected parties’ attempts to change course from earlier
positions taken. See, e.g., Speckman v. City of Indianapolis, 540 N.E.2d 1189,
1191 (Ind. 1989) (finding the city was estopped from arguing that a
contract was not binding on it when the contract stipulated that the city’s
counsel had reviewed the contract and found it to be proper); United States
v. Fletcher Sav. & Tr. Co., 197 Ind. 527, 537–38, 151 N.E. 420, 423 (1926)
(rejecting an argument by the United States that a prior payment did not
strictly comply with a contract when the United States had previously
concluded that the contract was not a valid contract). The Industrial
Group’s delay in challenging the allocation factors contained in the Base
Rate Case Settlement and related order understandably caused NIPSCO to
rely on the Industrial Group’s support for those allocation factors in later
TDSIC proceedings, and allowing this delayed challenge now would
harm NIPSCO and the larger systems used to regulate utilities and to
provide utility service to the public. As a result, the Industrial Group is
estopped from now challenging NIPSCO’s use of the allocation factors.
II. The Commission’s TDSIC-2 order contains
specific findings supporting its conclusion.
The Industrial Group also argues that the TDSIC-2 order lacks specific
findings supporting the Commission’s ultimate conclusions. Br. of
Appellant, p. 36 (citing L.S. Ayers & Co. v. Indianapolis Power & Light Co.,
169 Ind. App. 652, 662, 351 N.E.2d 814, 822 (1976)). In issuing its orders,
the Commission must include “specific findings on all the factual
determinations material to its ultimate conclusions.” U.S. Steel, 907 N.E.2d
at 1016. An appeal based on an alleged lack of specific findings presents a
mixed question of law and fact. Ind. Fin. Auth., 999 N.E.2d at 66. In these
Indiana Supreme Court | Case No. 18S-EX-475 | June 27, 2019 Page 16 of 18
situations, we review the Commission’s conclusions for reasonableness,
deferring to the Commission “based on the amount of expertise exercised
by [it].” U.S. Steel, 907 N.E.2d at 1016 (citation omitted).
In line with our analysis above, the Commission recognized that the
Industrial Group’s challenge centered on the Base Rate Case Settlement
and the TDSIC Plan Settlement, along with their related orders. See
Appellant’s App. Vol. II, pp. 13, 15 (discussing the settlements and
orders). “Approving such [settlements] and resolving disputes revolving
around them [are] intrinsic to the Commission’s regulation of utility
rates.” U.S. Steel, 907 N.E.2d at 1018. And, in resolving disputes over
settlement agreements it has previously approved, the Commission
deploys its expertise of both the terms of the settlement and the regulation
of utility rates. Id. at 1017–18. Thus, in reviewing the Industrial Group’s
challenge to the sufficiency of the Commission’s findings involving a
previously-approved settlement concerning utility rate regulation, we
give the Commission greater deference.
Despite the Industrial Group’s arguments to the contrary, the
Commission supported its conclusion to approve the TDSIC-2 petition
with specific findings. The Commission began its discussion of the
allocation factors by summarizing the conflicting testimony presented to it
in TDSIC-2 by NIPSCO and the Industrial Group. Appellant’s App. Vol.
II, p. 13. It noted that the allocation factors in NIPSCO’s TDSIC-2 petition
came from the Base Rate Case Settlement and were approved in the Base
Rate Case Order. Id. It also noted that the parties to the TDSIC Plan
Settlement provided that the allocation factors from the Base Rate Case
Settlement should be used in TDSIC proceedings based on the multi-year
TDSIC plan, and they “agree[d] that using such factors complies with the
TDSIC Statute.” Id. (citation omitted). Based on these findings, the
Commission concluded, “Specific to the evidence of this proceeding, the
[p]arties explicitly agreed to and the Commission approved the allocation
factors established in the [Base] Rate Case Settlement and the [TDSIC
Plan] Settlement. Those agreements leave no question as to what factors
would be applied . . . .” Id. at 15. In light of the findings in this case and
the Commission’s expertise in this area, the Commission’s conclusion was
reasonable and properly supported by specific findings.
Indiana Supreme Court | Case No. 18S-EX-475 | June 27, 2019 Page 17 of 18
Conclusion
For these reasons, we affirm the order of the Commission.
Rush, C.J., and Massa, J., concur.
Slaughter, J., dissents with separate opinion in which David, J., joins.
ATTORNEYS FOR APPELLANT
Todd A. Richardson
Bette J. Dodd
Joseph P. Rompala
Lewis & Kappes, P.C.
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE NORTHERN INDIANA PUBLIC
SERVICE COMPANY
Brian J. Paul
Daniel E. Pulliam
Faegre Baker Daniels LLP
Indianapolis, Indiana
Claudia J. Earls
M. Bryan Little
NiSource Corporate Services – Legal
Indianapolis, Indiana
ATTORNEYS FOR APPELLEE OFFICE OF THE UTILITY
CONSUMER COUNSELOR
Jeffrey M. Reed
William I. Fine
Randall C. Helmen
Tiffany T. Murray
Office of the Utility Consumer Counselor
Indianapolis, Indiana
Indiana Supreme Court | Case No. 18S-EX-475 | June 27, 2019 Page 18 of 18
Slaughter, J., dissenting.
I respectfully dissent, believing that this case concerns an issue of law
the court of appeals decided correctly, and not a matter of regulatory
discretion warranting agency deference. On the merits, I agree with the
court of appeals that the utility regulatory commission exceeded its
statutory authority by approving a rate adjustment based on allocation
factors computed on total load rather than firm load. I would either deny
transfer or summarily affirm the court of appeals’ opinion.
David, J., joins.