Case Title: NIPSCO Industrial Group v. Northern Indiana Public Service Co.

Citation: 

Docket Number: 

State: indiana

Court: Indiana Supreme Court

Date: 2018-09-25T00:00:00Z

Document:
I N  T H E  
Indiana Supreme Court 
Supreme Court Case No. 18S-EX-334 
NIPSCO Industrial Group, 
Appellant (Intervenor), 
 –v– 
Northern Indiana Public Service Company, 
Appellee (Petitioner). 
Argued: November 21, 2017 | Originally Decided: June 20, 2018 
Modified on Rehearing: September 25, 2018 
Appeal from the Indiana Utility Regulatory Commission 
No. 44403-TDSIC-4 
On Petition to Transfer from the Indiana Court of Appeals 
No. 93A02-1607-EX-1644 
Opinion on Rehearing by Justice Slaughter 
Chief Justice Rush and Justices David, Massa, and Goff concur 
 
 
 
FILED
C L E R K
Indiana Supreme Court
Court of Appeals
and Tax Court
Sep 25 2018, 3:51 pm
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 2 of 17 
Slaughter, Justice. 
Under traditional rate regulation, an energy utility must first make 
improvements to its infrastructure before it can recover their cost through 
regulator-approved rate increases to customers. The process for recouping 
these costs, sometimes not until years after they were incurred, is an 
expensive, onerous ratemaking case, which involves a comprehensive 
review of the utility’s entire business operations. 
In 2013 the legislature authorized utilities to obtain regulatory 
preapproval for “designated” improvements to their infrastructure. 
Under the so-called “TDSIC” Statute—which provides for more prompt 
reimbursement of specified transmission, distribution and storage system 
improvements—a utility can seek regulatory approval of a seven-year 
plan that designates eligible improvements, followed by periodic petitions 
to adjust rates automatically as approved investments are completed.  
At issue here is the Indiana Utility Regulatory Commission’s 
preapproval of approximately $20 million in infrastructure investments 
for which the Commission authorized increases to NIPSCO’s natural-gas 
rates under the TDSIC mechanism. NIPSCO is an energy utility with more 
than 800,000 customers in northern Indiana. Some of NIPSCO’s largest 
industrial customers—represented here by the NIPSCO Industrial 
Group—oppose NIPSCO’s entitlement to favorable rate treatment under 
the TDSIC Statute, contending the disputed projects do not comply with 
the Statute’s requirements. 
The Commission’s holding below, which divided our Court of Appeals, 
approved various categories of improvements—referred to variously as 
“project categories”, “multiple-unit-project categories”, and “multiple-
unit projects”—that describe broad parameters for identifying future 
improvements but do not designate those improvements with specificity. 
NIPSCO defends these categorical designations by arguing it does not, 
and cannot, know in advance which specific segments of natural-gas pipes 
throughout its system will fail each year. But it does know, based on 
historical performance, that a certain percentage of its system will need to 
be replaced annually. NIPSCO contends the TDSIC Statute permits the 
Commission to approve a seven-year plan that describes future 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 3 of 17 
investments in terms of ascertainable planning criteria, although when its 
plan was approved, NIPSCO did not know which specific segments of its 
system would need to be replaced. 
The Industrial Group, in contrast, interprets the TDSIC Statute more 
narrowly. It argues the Statute requires the utility and the Commission to 
designate specific projects upfront, rather than to rely on categories of 
projects not identified with specificity until later years. For the Industrial 
Group, the traditional ratemaking case is still the primary process for 
seeking reimbursement, subject to occasional use of the TDSIC procedure 
in the limited band of investments to which it applies. 
The stakes are much larger than just the roughly $20 million at issue 
between NIPSCO and the Industrial Group. The Commission, we are told, 
has approved billions of dollars of utility-infrastructure investments 
through the TDSIC process. Given the favorable regulatory treatment, 
utilities are likely to funnel increasing amounts of infrastructure 
investments through this reimbursement mechanism. How we resolve 
these competing visions of the TDSIC Statute will likely have enormous 
financial consequences for utilities and their customers. 
We conclude the TDSIC Statute permits periodic rate increases only for 
specific projects a utility designates, and the Commission approves, in the 
threshold proceeding and not for multiple-unit projects using 
ascertainable planning criteria. In other words, a utility must specifically 
identify the projects or improvements at the outset in its seven-year plan 
and not in later proceedings involving periodic updates. There is an 
appreciable difference between designating specific “projects” and 
“improvements” up front, which the Statute requires, and describing the 
criteria for selecting them later, which the Commission approved. We 
agree with the Court of Appeals’ dissenting opinion that Commission 
approval of “broad categories of unspecified projects defeats the purpose 
of having a ‘plan’.” NIPSCO Indus. Grp. v. N. Ind. Pub. Serv. Co., 78 N.E.3d 
730, 740 (Ind. Ct. App. 2017) (Barnes, J., dissenting).  
Because we find that preclusion principles do not bar our consideration 
of this important legal issue of first impression, we grant transfer, reverse 
the Commission’s order in part, and remand. 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 4 of 17 
Factual and Procedural History 
A. Traditional utility regulation 
Utility regulation is premised on a “regulatory compact” in which the 
State sanctions a utility’s monopoly within a defined service area and 
subjects the utility to various regulatory restrictions and responsibilities. 
As a quid pro quo for being granted a monopoly in a 
geographical area for the provision of a particular good or 
service, the utility is subject to regulation by the state to ensure 
that it is prudently investing its revenues in order to provide 
the best and most efficient service possible to the consumer.  
United States Gypsum, Inc. v. Ind. Gas Co., 735 N.E.2d 790, 797 (Ind. 2000) 
(quotation and citations omitted). 
The State regulates utilities through the Commission, which is 
authorized by statute to act with “technical expertise to administer the 
regulatory scheme designed by the legislature … to insure that public 
utilities provide constant, reliable, and efficient service to the citizens of 
Indiana.” N. Ind. Pub. Serv. Co. v. United States Steel Corp., 907 N.E.2d 1012, 
1015 (Ind. 2009) (citation omitted). See Ind. Code §§ 8-1-1-1 to 8-1-1-15. 
When exercising this authority, the Commission balances the public’s 
need for adequate, efficient, and reasonable service with the public 
utility’s need for sufficient revenue to meet the cost of furnishing service 
and to earn a reasonable profit. United States Gypsum, 735 N.E.2d at 797-98. 
“Proper rates are those which produce a fair and nonconfiscatory return, 
and such as will enable the company, under efficient management, to 
maintain its utility property and service to the public, and provide a 
reasonable return upon the fair value of its used and useful property.” 
Pub. Serv. Comm'n of Ind. v. Ind. Bell Tel. Co., 235 Ind. 1, 15, 130 N.E.2d 467, 
473 (1955) (citations omitted). 
Traditionally, utility rates are adjusted through general ratemaking 
cases. General ratemaking is a “comprehensive” process, requiring the 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 5 of 17 
Commission to “examine every aspect of the utility’s operations and the 
economic environment in which the utility functions to ensure that the 
data [the Commission] has received are representative of operating 
conditions that will, or should, prevail in future years.” United States 
Gypsum, 735 N.E.2d at 798 (citation omitted). 
B. The TDSIC process 
Over the years, the legislature has supplemented traditional 
ratemaking with various “tracker” procedures that allow utilities to ask 
the Commission to adjust their rates to reflect various costs without 
having to undergo a full ratemaking case. The TDSIC Statute, I.C. ch. 8-1-
39, enacted in 2013, is one such procedure. It encourages energy utilities to 
replace their aging infrastructure by modernizing electric or gas 
transmission, distribution, and storage projects. This TDSIC procedure, 
pronounced “tee-DEE-zick”, is a process for utilities to assess a distinct 
charge—a Transmission, Distribution, and Storage System Improvement 
Charge—for completed projects deemed eligible improvements under the 
Statute. In contrast to traditional ratemaking, the TDSIC procedure 
permits a utility to seek preapproval of designated capital improvements 
to the utility’s infrastructure and then to recover the costs of those 
improvements every few months as they are completed. Eligible 
improvements are certain new or replacement utility projects that:  
(1) a public utility undertakes for purposes of safety, reliability, 
system modernization, or economic development . . . ; (2) were 
not included in the public utility’s rate base in its most recent 
general rate case; and (3) [were] designated in the public 
utility’s seven (7) year plan and approved by the commission 
under section 10 of this chapter as eligible for TDSIC 
treatment”.   
I.C. § 8-1-39-2. 
The TDSIC Statute contemplates two distinct types of proceedings. 
First, under Section 10, the utility may seek regulatory approval of a 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 6 of 17 
seven-year plan for designated improvements to transmission, 
distribution, and storage systems. See Id. § 8-1-39-10. The Commission 
shall then approve the plan and designate the planned improvements as 
eligible for TDSIC treatment if it finds the plan is reasonable. Id. § 8-1-39-
10(b). When determining that a plan is reasonable, the Commission’s 
order must include (1) “[a] finding of the best estimate of the cost of the 
eligible improvements”, (2) “[a] determination whether public 
convenience and necessity require or will require the eligible 
improvements”, and (3) “[a] determination whether the estimated costs of 
the eligible improvements … are justified by the incremental benefits 
attributable to the plan”. Id. 
Second, under Section 9, once the Commission has approved a seven-
year plan, the utility may petition every few months for periodic rate 
adjustments to recover “eighty percent (80%) of approved capital 
expenditures and TDSIC costs” for the system improvements designated 
as eligible and actually completed. Id. §§ 8-1-39-9(a), (c), (e). The 
remaining twenty percent can be recovered only “as part of the next 
general rate case that the public utility files with the commission.” Id. § 8-
1-39-9(b). The utility must “update [its] seven (7) year plan under 
subdivision (2) with each petition [it] files under this section.” Id. § 8-1-39-
9(a). Before a utility may recover additional costs above approved 
estimates, it must specifically justify the additional costs, and the 
Commission must specifically approve them. Id. § 8-1-39-9(f). 
C. NIPSCO’s TDSIC litigation 
1. Designated vs. described 
The parties dispute what qualifies as an eligible project under Section 2, 
which requires both designation and approval of the project in a seven-
year plan the Commission approves under Section 10. I.C. § 8-1-39-2(3)(A). 
The Industrial Group claims the Commission can designate and approve 
projects identified only during the initial Section 10 process, and not 
during subsequent Section 9 petitions. It also claims that the TDSIC 
process is an extraordinary mechanism, applicable only in limited 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 7 of 17 
circumstances, and that the general ratemaking case remains the 
presumptive process for utilities to recover their investment costs.  
NIPSCO, in contrast, argues the Commission can properly designate 
and approve multiple-unit projects, described using ascertainable 
planning criteria, as TDSIC-eligible. NIPSCO characterizes these multiple-
unit projects, generally, as planned undertakings that include component 
parts that need to be improved, but without knowing in advance which 
specific parts will require replacement. Here, the United States 
Department of Transportation mandates that NIPSCO annually inspect 
thousands of units of natural-gas pipelines throughout its system. 
NIPSCO does not know in advance which specific pipeline segments 
within its system it will need to update. But based on historical 
performance, NIPSCO expects a certain percentage of its system will fail 
each year and require replacement. Depending on the inspection results, 
NIPSCO then develops a schedule to replace worn assets. This 
information enables NIPSCO to identify the specific units of work 
completed within the multiple-unit projects for which it received 
Commission approval. 
2. Current procedural posture 
Shortly after the TDSIC Statute was enacted, NIPSCO filed two Section 
10 petitions, seeking approval of separate, but substantially similar, seven-
year plans: one each for its electric system and its gas system. The 
Commission approved NIPSCO’s Electric Plan in February 2014 and, in a 
separate proceeding, approved its Gas Plan in April 2014. The plans 
identified specific projects for the first year and described “project 
categories” for years two through seven. NIPSCO subsequently filed 
periodic Section 9 tracker petitions, seeking rate increases associated with 
completed matters referenced in the approved seven-year plans. 
In 2015, the Court of Appeals reversed in part the Commission’s order 
approving NIPSCO’s Electric Plan. NIPSCO Indus. Grp. v. N. Ind. Pub. Serv. 
Co., 31 N.E.3d 1 (Ind. Ct. App. 2015). The Electric Plan lacked sufficient 
detail for the Commission to determine whether the plan was reasonable 
and whether it included a best estimate of the cost of improvements under 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 8 of 17 
Section 10. Id. at 8. By identifying only the first year of improvements, the 
Plan presumed that future proposed projects identified in subsequent 
Section 9 “update” proceedings would be eligible for TDSIC treatment. Id. 
at 8-9. Thus, the Court held, the Plan unlawfully relieved NIPSCO of its 
burden to show the proposed projects were TDSIC-eligible. Id. at 9. 
When the Electric Plan appeal was decided, NIPSCO had already 
completed its first Gas Plan Section 9 tracker petition, TDSIC-1, and the 
second, TDSIC-2, was pending. Given the legal problems with its Electric 
Plan, NIPSCO voluntarily dismissed its TDSIC-2 Gas Plan petition with 
the understanding that its next Section 9 tracker petition, TDSIC-3, would 
seek TDSIC-2 reimbursement and modification of its Gas Plan to comply 
with the appellate ruling. 
In TDSIC-3, NIPSCO again sought approval of an “updated” seven-
year Gas Plan. Although NIPSCO provided additional information for the 
proposed projects for all seven years of its revised seven-year Gas Plan, its 
TDSIC-3 petition continued to include projects identified with specificity 
as well as yet-to-be-identified projects. NIPSCO said it would identify 
specific instances of completed improvements within certain project-
group categories in subsequent Section 9 plan updates. The Commission 
found that TDSIC-3 presented “a unique situation” because it had already 
approved NIPSCO’s initial Section 10 Gas Plan in a final order. And it 
generally endorsed NIPSCO’s proposal to establish objective ascertainable 
criteria for selecting specific projects within “project group” categories. 
The Industrial Group did not challenge the Commission’s TDSIC-3 order 
approving NIPSCO’s petition. 
In February 2016, NIPSCO filed its fourth Section 9 petition—TDSIC-
4—the subject of this appeal. This filing included another update to the 
Gas Plan, seeking an increase of approximately $20 million in the 
previously approved “Inspect & Mitigate” category. This category 
included both additional distinct projects and an increased number of 
projects within previously approved categories. NIPSCO referred to these 
Inspect & Mitigate project groups as “multiple-unit projects”.  
The Industrial Group intervened at the Commission and opposed this 
petition for $20 million in rate relief. Particularly, the Industrial Group 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 9 of 17 
objected to NIPSCO’s multiple-unit-projects approach, arguing that 
project groups described using objective ascertainable-standard criteria 
are not permitted under the TDSIC Statute. Despite this challenge, the 
Commission approved NIPSCO’s TDSIC-4 petition. Relying on its TDSIC-
3 order, the Commission found NIPSCO’s multiple-unit-project categories 
were supported by sufficient ascertainable planning criteria for later 
identifying eligible improvements, and the roughly $20 million increase 
was based on “further identification of the specific projects or asset 
replacements within the approved project groups.”  
The Industrial Group appealed the Commission’s TDSIC-4 order, and a 
divided Court of Appeals affirmed. The majority held that NIPSCO’s 
updated seven-year plan was lawful “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.” 78 N.E.3d at 739. The dissent 
believed the TDSIC Statute requires that a “specific plan” be established in 
the initial Section 10 proceedings, and that merely describing multiple-
unit-project categories does not sufficiently designate which specific 
projects are eligible for reimbursement through later Section 9 
proceedings. Id. at 740. 
Standard of Review 
When reviewing Commission decisions, we conduct three levels of 
review: one for factual findings; another for mixed questions of law and 
fact; and a third for questions of law. At issue here is the last category. 
This case does not implicate the Commission’s ratemaking expertise but 
presents a pure question of law: Does the TDSIC Statute authorize the 
Commission to approve “project categories” or “multiple-unit projects” 
described using ascertainable planning criteria? 
We review questions of law de novo, Ind. Bell Tel. Co.  v. Ind. Util. 
Regulatory Comm'n, 715 N.E.2d 351, 354 (Ind. 1999) (citation omitted), and 
accord the administrative tribunal below no deference. To do otherwise 
would abdicate our duty to say what the law is. See, e.g., Marbury v. 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 10 of 17 
Madison, 5 U.S. (1 Cranch) 137, 176 (1803). Such plenary review is 
“constitutionally preserved” for the judiciary, United States Steel, 907 
N.E.2d at 1016, and considers whether the disputed “decision, ruling or 
order is contrary to law.” Citizens Action Coal. of Ind., Inc. v. N. Ind. Pub. 
Serv. Co., 485 N.E.2d 610, 613 (1985) (citation omitted). Such legal 
questions are for the courts to resolve and turn on “whether the 
Commission stayed within its jurisdiction and conformed to the statutory 
standards and legal principles involved in producing its decision, ruling, 
or order.” United States Steel, 907 N.E.2d at 1016.  
Separation-of-powers principles do not contemplate a “tie-goes-to-the-
agency” standard for reviewing administrative decisions on questions of 
law. In discharging our constitutional duty, we pronounce the statutory 
interpretation that is best and do not acquiesce in the interpretations of 
others. Deciding the scope of the Commission’s authority under the 
TDSIC Statute falls squarely within our institutional charge. Crafting our 
State’s utility law is for the legislature; implementing it is for the executive 
acting through the Commission; and interpreting it is for the courts. 
Discussion and Decision 
I. 
Multiple-unit projects described using 
ascertainable criteria are not eligible for TDSIC 
treatment. 
We conclude the TDSIC Statute does not apply to project categories or 
multiple-unit projects described using ascertainable criteria. The Statute 
requires the Commission to “designate” eligible projects in a threshold 
seven-year plan under Section 10. The only interpretation of “designate” 
that satisfies the dual statutory requirements of particularity and cost 
justification is one requiring projects to be identified with specificity from 
the outset. In addition, Section 9 “update” petitions enable the utility to 
obtain rate adjustments as it completes the approved projects and incurs 
the additional budgeted costs. The only projects consistent with Section 
10’s preapproval requirement are those the utility specified at the 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 11 of 17 
beginning of the plan, and not “new” projects or those requiring the 
passage of time to specify later. The Commission erred when it authorized 
multiple-unit-project categories in a Section 10 proceeding and approved 
NIPSCO’s later specification of projects under Section 9.  
A. The TDSIC Statute requires the Commission to 
“designate” eligible projects in a threshold seven-year 
plan. 
A utility seeking favorable rate treatment under the TDSIC Statute for 
eligible infrastructure improvements must file with the Commission a 
proposed seven-year plan that designates the planned projects. I.C. §§ 8-1-
39-2(3)(A), 8-1-39-10(a). The Commission must approve the plan if it is 
reasonable. Id. § 8-1-39-10(b). What is reasonable turns on three statutory 
guideposts: (i) the best-estimated cost of the improvements, (ii) their 
public convenience and necessity, and (iii) their cost-justified benefits. Id. 
A meaningful cost-benefit analysis requires the Commission to determine 
whether the estimated costs of the designated improvements are justified 
by their incremental benefits. Id. § 8-1-39-10(b)(3). 
If the Commission finds the plan reasonable considering the cost-
benefit analysis, it must designate and approve projects as TDSIC-eligible. 
Id. §§ 8-1-39-2(3)(A), 8-1-39-10(b). In this context, TDSIC-eligible projects 
are “new or replacement electric or gas transmission, distribution, or 
storage utility projects” that:  
(1) a “utility undertakes for purposes of safety, reliability, system 
modernization, or economic development”; 
(2) “were not included in the utility’s rate base in its most recent 
general rate case”; and  
(3) were “designated” in the utility’s seven-year plan that the 
Commission approved under Section 10. 
Id. § 8-1-39-2. Thus, both the utility’s proposed plan and the Commission-
approved plan under Section 10 must “designate” the eligible 
improvements. A project or improvement not “designated” in the seven-
year plan is not “eligible for TDSIC treatment” under Section 2. 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 12 of 17 
“Designate” is an undefined statutory term. When interpreting a 
statute, we presume the legislature uses undefined terms in their common 
and ordinary meaning. In re S.H., 984 N.E.2d 630, 635 (Ind. 2013). As a 
verb, “designate” means, among other things, “to appoint and set apart 
for a specific purpose” or to “specify”. Designate, MERRIAM-WEBSTER’S 
DICTIONARY AND THESAURUS (2007). In TDSIC-3, the Commission 
approved a project category reciting ascertainable planning criteria that 
NIPSCO later used to select specific improvements identified in TDSIC-4. 
For example, NIPSCO’s Section 10 petition identified two project 
categories—“storage” and “inspect and mitigate”—that described future 
asset replacements with reference to annual inspections mandated by the 
United States Department of Transportation. These categories necessarily 
were generic descriptions of NIPSCO’s forthcoming projects—and not 
specific designations of them—because NIPSCO had not yet performed 
the inspections that would reveal which parts of NIPSCO’s system would 
require replacement. That isn’t NIPSCO’s fault; it’s not gifted with 
prevision. But it does mean that NIPSCO’s Section 10 plan could only 
describe the projects it would undertake in the future and could not 
specifically identify them at the outset when it first sought and obtained 
approval for its plan. It is also why NIPSCO’s specific identification of its 
projects did not occur until it later filed plan “updates” under Section 9. In 
other words, only after the Commission found the Section 10 plan 
reasonable was NIPSCO able to identify and prioritize specific work to be 
done based on a preset list of proposed replacement categories.  
We conclude that “designate” in Sections 2 and 10 requires both the 
utility and the Commission to identify the TDSIC-eligible projects with 
particularity in the threshold proceeding and does not allow the approval 
of project categories that require a later specification based on 
ascertainable planning criteria. This interpretation is consistent with the 
further requirement that the Commission meaningfully apply the Statute’s 
cost-benefit guideposts during the Section 10 proceeding and approve the 
project(s) submitted in the seven-year plan. Because Section 2 requires the 
Commission to designate and approve TDSIC-eligible projects only after 
finding a plan reasonable under Section 10, the Commission’s 
reasonableness determination necessarily sets the budget and defines the 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 13 of 17 
scope of a seven-year plan to what the Commission considered and 
approved in the threshold proceeding. Thus, the Commission order 
approving the Section 10 plan must define the plan’s scope with 
particularity and establish a best-estimate budget for effectuating the plan. 
The Commission’s order does not satisfy these statutory requirements. 
Our view of what “designate” means in the TDSIC Statute is illustrated 
by Major League Baseball’s designated-hitter rule. The rule, which was 
first implemented in the American League in 1973, allows a team to add a 
tenth player to the traditional nine-player lineup who will bat for the 
pitcher, typically the weakest hitter on the field. Before a game, each 
manager’s lineup card must “designate” which player is to serve as the 
designated hitter. Major League Baseball, OFFICIAL BASEBALL RULES, Rule 
4.03(c) & 5.11 (2018). The rule requires naming a specific player as the DH 
from the team’s 25-man roster. Anything less than a player-specific 
identification at the outset of the game will not suffice. It is inadequate, for 
example, for the lineup card to describe the DH anonymously or 
generically as one of the fifteen (or so) remaining players on the roster. 
Waiting until the DH’s turn at bat to identify a player doesn’t comport 
with the rule. Such “player-to-be-named-later” designations in the lineup 
card don’t work in baseball. And neither do “project-to-be-named-later” 
designations suffice under the TDSIC Statute. 
B. Section 9 update petitions cannot add new projects 
beyond those initially approved under Section 10 and 
cannot revise the seven-year-plan’s budget. 
After the Commission has approved the foundational seven-year plan 
under Section 10, the utility may file petitions every few months under 
Section 9 to obtain “automatic” rate adjustments for approved costs and 
expenditures as it completes these improvements and puts them into 
service. I.C. §§ 8-1-39-9(a), (c), (e). These periodic Section 9 petitions allow 
the utility to recoup eighty percent of such approved costs and 
expenditures. Id. § 8-1-39-9(a). The remaining twenty percent is 
recoverable during the general ratemaking case required before the end of 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 14 of 17 
the plan. Id. § 8-1-39-9(b), (d). The Statute thus fixes the approved budget 
recoverable throughout the duration of the seven-year plan.  
With each Section 9 petition a utility files, it must also “update” its 
seven-year plan. Id. § 8-1-39-9(a). “Update” also is undefined in the 
Statute. The best reading of “update” requires the utility to keep records 
and supply progress reports necessary for the lawful administration of the 
previously designated and approved TDSIC projects. Considering Section 
2’s definition of eligible improvements and Section 10’s reasonableness 
inquiry, we conclude that a Section 9 “update” requires the utility to 
“identif[y] projected effects of the [seven-year plan] on retail rates and 
charges” and to cross-reference that progress with the approved seven-
year plan. Id. § 8-1-39-9(a). Thus, each Section 9 petition enables the 
Commission to track when preapproved projects are put into service; to 
authorize the “timely recovery of eighty percent (80%) of approved capital 
expenditures and TDSIC costs”, id.; and to prepare for the mandated 
general ratemaking case. Id. § 8-1-39-9(d). To be clear, Section 9 updates do 
not authorize the Commission to designate or approve new projects at the 
unit level. Rather, they should merely document changes to and 
developments in the administration of the previously approved Section 10 
plan. 
Because the Statute neither explicitly nor implicitly authorizes the 
Commission to approve multiple-unit projects as eligible for TDSIC 
treatment, NIPSCO cannot use the TDSIC mechanism to recover the 
multiple-unit-project portions of its Section 10 plan that either were 
identified with particularity for the first time in its TDSIC-4 petition or 
remain unspecified. 
II. 
Preclusion principles do not bar the Industrial 
Group’s appeal. 
Finally, we reject NIPSCO’s argument that principles of claim and issue 
preclusion bar the Industrial Group from challenging the Commission’s 
TDSIC-4 order. Merely because the Industrial Group could have 
challenged the TDSIC-3 order, but did not, does not mean the legal 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 15 of 17 
methodology that order embraced is immune from legal challenge 
thereafter. 
We look to the Restatement (Second) of Judgments to guide our 
preclusion analysis. See Sullivan v. Am. Cas. Co. of Reading, Pa., 605 N.E.2d 
134, 138 (Ind. 1992) (discussing Sections 28 & 29’s adoption of the modern 
rule that mutuality and identity of parties are no longer required for 
defensive use of collateral estoppel); Miller Brewing Co. v. Ind. Dep't of State 
Revenue, 903 N.E.2d 64, 68 (Ind. 2009) (citing Section 28 for proposition 
that “preclusion may not apply where there are new facts or where a 
change in the law or legal climate would dictate a different outcome”). A 
noteworthy exception to general preclusion principles applies here and 
counsels in favor of our addressing the important legal issues presented. 
An issue is not precluded if “[t]he issue is one of law and … a new 
determination is warranted … to avoid inequitable administration of the 
laws”, RESTATEMENT (SECOND) OF JUDGMENTS § 28(2) (1982). Nor is an issue 
precluded if it is “one of law and treating it as conclusively determined 
would inappropriately foreclose opportunities for obtaining 
reconsideration of the legal rule upon which it was based”. Id. § 29(7). 
Our Court will not foreclose review of a legal issue of first impression 
“when other litigants are free to urge that the rule should be rejected. Such 
preclusion might unduly delay needed changes in the law and might 
deprive a litigant of a right that the court was prepared to recognize for 
other litigants in the same position.” Id. § 28 cmt. b.  If we were to apply 
preclusion principles here, that determination would foreclose ”an 
opportunity to reconsider the applicable rule, and thus to perform [our] 
function of developing the law.” Id. § 29 cmt. i. This consideration is 
“especially pertinent ... when the issue is of general interest and has not 
been resolved by the highest appellate court that can resolve it.” Id. 
To be sure, the Industrial Group’s failure to appeal the TDSIC-3 order 
does mean, as the Group acknowledges, that specific projects identified 
and approved in TDSIC-3 are beyond challenge. But the Group’s failure to 
challenge TDSIC-3 does not bar the Group from challenging previously 
undesignated and unapproved projects for which NIPSCO sought and 
obtained rate adjustments from the Commission in TDSIC-4. 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 16 of 17 
The Commission’s legal methodology of approving multiple-unit-
project categories described using ascertainable planning criteria is a pure 
issue of law, of general interest, that we have not previously resolved. 
And we conclude its methodology remains subject to challenge here. 
Indiana courts have long held that agencies remain free to correct their 
own erroneous interpretations of statutes in later proceedings. Adkins v. 
City of Tell City, 625 N.E.2d 1298, 1302 (Ind. Ct. App. 1993); State ex rel. 
ANR Pipeline Co. v. Ind. Dep't of State Revenue, 672 N.E.2d 91, 94 (Ind. Tax 
Ct. 1996). We decline to adopt a preclusion theory that prevents litigants 
from urging such a course correction. 
Conclusion 
We hold that periodic rate increases are available only for specific 
projects a utility designates in the threshold TDSIC proceeding and not for 
multiple-unit-project categories it describes using ascertainable planning 
criteria. The Commission thus erred in approving various proposed 
categories of unspecified improvements that NIPSCO did not identify 
with particularity until it filed subsequent periodic Section 9 petitions. For 
these reasons, we grant the Industrial Group’s petition to transfer. We 
reverse the portions of the Commission’s TDSIC-4 Order that approved 
previously unspecified improvements. And we remand to the 
Commission with instructions to identify such project categories that were 
not identified with specificity in TDSIC-3. The costs for all multiple-unit 
projects as to which particular improvements were identified for the first 
time in TDSIC-4 are disallowed for TDSIC recovery to the extent those 
projects were not properly designated in the previously approved seven-
year plan. 
Rush, C.J., and David, Massa, and Goff, JJ., concur. 
 
 
Indiana Supreme Court | Case No. 18S-EX-334 | September 25, 2018 
Page 17 of 17 
A TT O R N E YS F O R  AP P EL L A N T 
Todd A. Richardson 
Joseph P. Rompala 
Lewis Kappes, P.C. 
Indianapolis, Indiana 
A TT O R N E YS F O R  AP P EL L E E 
Brian J. Paul 
Daniel E. Pulliam 
Faegre Baker Daniels LLP 
Indianapolis, Indiana 
Claudia J. Earls 
Christopher C. Earle 
NiSource Corporate Services – Legal 
Indianapolis, Indiana