|01 ||What is NIPSCO’s Infrastructure Modernization Plan?
Similar to the focus on addressing the nation’s aging roads, bridges and transportation infrastructure, NIPSCO is embarking on a plan to modernize and replace essential parts of its energy infrastructure over the next decade and beyond.
NIPSCO’s comprehensive, seven-year plan to invest in its infrastructure will provide a number of direct benefits to homes and businesses across northern Indiana. Planned projects will range from the elimination of remaining bare steel natural gas lines, to the installation of 80 miles of transmission lines and the construction of new service to customers in rural areas.
|02 ||Why is NIPSCO making these improvements now?
Vast portions of the nation’s electric and natural gas systems – including NIPSCO’s – were built in the post-World War II era. After more than 50 years, portions of the energy system are nearing the limits of its original design. NIPSCO’s plan proactively addresses these critical areas before they become problematic.
|03 ||What types of improvements will be made?
The first part of NIPSCO’s Infrastructure Modernization Plan will address the electric system. The plans will include new or replacement electric transmission and distribution projects for purposes of safety, reliability, system modernization, or economic development.
Sample Electric Modernization Projects:
1. Replacing 450 miles of underground electric cable that is unjacketed and prone to failure. $140 million
2. Rebuild 500 miles of electric lines/circuits.
3. Replace 75 substation transformers and 900 breakers. $290 million
While some investments in the natural gas system are expected in mid-2014, the bulk of project activity will increase in the following years. Plans will include new or replacement gas transmission and distribution projects for purposes of safety, reliability, system modernization, or economic development.
Example Natural Gas System Modernization Projects:
1. Replace 80 miles of transmission pipeline, add automated valves. $280 million
2. Eliminate bare steel gas mains, replace low pressure systems. $61 million
3. Construct natural gas service to underserved areas. $99 million
4. Retrofit lines for in-line inspection. $46 million
|04 ||How will customers and communities benefit from these investments?
> Help to ensure a continued safe and reliable system for the future offered at a low cost
> Identify and eliminate potential recurring outages caused by aging electrical system failures
> Attract new businesses and allow existing businesses to expand in this area with a more modern energy system
> Support the equivalent of 1,200 direct and indirect jobs – including local trades – associated with these projects throughout the decade
> Boost the local economy with an investment of nearly $2 billion through 2020
> Protect consumers from spending limits and external review/oversight to ensure the necessity of these investments
> Gradual and minimal bill impact over time
|05 ||Do the electrical upgrades have anything to do with a “smart grid” system?
No, the projects included in the plan will address things such as electric substations, underground electric cables, transformers and more; the plan does not entail any sort of smart grid or smart meter system.
|06 ||What’s the process for determining a project?
NIPSCO’s Infrastructure Modernization Plan includes investments in every county where we currently provide service and will take place through 2020. To select what electrical system equipment will be replaced, NIPSCO is working with Black & Veatch – a global engineering, consulting and construction company – to develop a model to help prioritize NIPSCO’s investments for the plan. For NIPSCO's natural gas system, NIPSCO is working with EN Engineering in a similar capacity to create a model for prioritization.
The models review every piece of equipment on NIPSCO’s systems to assign each item an individual risk score. These risk scores were based on the likelihood of the system failing because of its age and the impact to NIPSCO’s customers and the larger electric and natural gas systems, if the equipment were to fail.
By assigning the risk score for each item, NIPSCO was able to identify which equipment poses the highest risk to the system. Rather than just replacing assets based on a single factor like age or location, the engineering models help us select which equipment will add the greatest benefit to the overall respective systems and the customer, if replaced.
|07 ||How much will NIPSCO be investing?
Below is a breakdown of the $1 billion in electric investments and the $713 million in natural gas investments NIPSCO is planning through 2020, which will be reviewed and approved semi-annually by the Indiana Utility Regulatory Commission prior to any dollars being spent or allocated.
Proposed Electric Infrastructure Modernization Investments (Through 2020)
2014 $75.2 million
2015 $66.5 million
2016 $158.9 million
2017 $114.5 million
2018 $181.7 million
2019 $238.1 million
2020 $237.9 million
Proposed Natural Gas Infrastructure Modernization Investments (Through 2020)
2014 $55.3 million
2015 $89.2 million
2016 $109.4 million
2017 $113.6 million
2018 $117.8 million
2019 $113.7 million
2020 $116.1 million
|08 ||How will this affect customer bills?
One of the key focus areas of this plan is to make the necessary improvements while minimizing the impact on customer bills. It is important to not only maintain competitive electric and natural gas rates for businesses, but it’s equally important to maintain affordable rates for our residential customers. Rather than making these investments at one time, NIPSCO is spreading out the work to help eliminate sudden spikes in customer bills.
Electric customers will experience minimal bill impacts, with little-to-no change in their bills for the first two years of the plan. For example, residential bills will see a 0% annual increase in 2014 and a 0.48% annual increase in 2015. As we approach 2016, electric bills are projected to see a gradual average increase of approximately 1% annually through 2020.
Residential natural gas bills are projected to see a gradual average increase of approximately 1.4% annually through 2020, with no change in 2014 and a 1% annual increase in 2015.
In addition to the other consumer protections in place, NIPSCO’s plan will receive regular oversight and review by the IURC and other external stakeholders.
|09 ||How do NIPSCO electric rates compare with other utilities?
Indiana is fortunate to have some competitive electric and natural gas rates compared to other states. NIPSCO’s electric rates are below the national average and below the average electric rates for neighboring states across the Midwest. For nearly two years, NIPSCO’s natural gas costs have been the lowest in Indiana (Source: IURC Natural Gas Residential Bill Survey).
|10 ||Aren't costs from investments already part of what customers pay today?
No, while existing rates include some costs associated with the maintenance of NIPSCO’s system, they do not include costs associated with the types of investments and upgrades necessary to modernize its infrastructure.
|11 ||Who is providing oversight for these projects? Are there protections for customers?
The process for reviewing and approving NIPSCO’s Infrastructure Modernization Plan includes both regulatory oversight from the Indiana Utility Regulatory Commission as well as customer-represented organizations like the Indiana Office of Utility Consumer Counselor and other external stakeholders.
There are caps in place to limit the amount that customer bills can increase and there are also consumer protections if NIPSCO spends more than their originally estimated amounts.
|12 ||When will the project begin?
The plan and associated benefits must first be reviewed and approved by the Indiana Utility Regulatory Commission before investments can be made. Depending on these factors, it is possible that investments may begin in mid-2014.
|13 ||Who will conduct the work?
The Infrastructure Modernization Plan will require support from a combination of internal NIPSCO workforce and external contracted resources to complete through the end of the decade.
As we have done with our recent large-scale projects, we intend to utilize the current expertise of our internal employees whenever possible. When contracting external resources is necessary, we will look to hire Indiana-based represented workforce resources whenever possible.
We estimate the electric and gas plans will support nearly 2,000 direct and indirect jobs through the end of the decade. Much of that work isn’t expected to ramp up until 2016, and plans for determining the allocation of internal vs. external resources are being finalized.
|14 ||How reliable is NIPSCO's electric system?
NIPSCO continues to take a proactive approach to minimizing the time customers are without power, including tree trimming, regular system inspections and maintenance work. In recent years, the amount of time customers spend without power has continued to improve each year. This plan will help to ensure reliable service for the future.
|15 ||How do customers sign up for new natural gas service?
For residents and businesses that don’t currently receive natural gas service, but are within NIPSCO’s natural gas service territory, they can follow the existing process for requesting new service by calling 1-800-464-7726.
Requests for gas service in rural areas will be prioritized based on a number of factors, including payback periods, economic benefits and more. A NIPSCO representative will be able to walk customers through the process and their expectations.