                                                                               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
