Court Opinion

ID: 4161412
Source: CourtListenerOpinion
Date Created: 2017-04-19 15:07:22.954286+00
Date Added: 2024-06-11T07:46:47.522012
License: Public Domain

FILED
                                                             Apr 19 2017, 9:25 am

                                                                  CLERK
                                                              Indiana Supreme Court
                                                                 Court of Appeals
                                                                   and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEYS FOR APPELLEE –
Jennifer A. Washburn                                       NORTHERN INDIANA PUBLIC
Citizens Action Coalition                                  SERVICE COMPANY
of Indiana, Inc.                                           Peter J. Rusthoven
Indianapolis, Indiana                                      Nicholas K. Kile
                                                           Barnes & Thornburg LLP
                                                           Indianapolis, Indiana
                                                           Claudia J. Earls
                                                           Christopher C. Earle
                                                           Northern Indiana
                                                           Public Service Company
                                                           Indianapolis, Indiana
                                                           ATTORNEYS FOR APPELLEE –
                                                           NIPSCO INDUSTRIAL GROUP
                                                           Todd A. Richardson
                                                           Bette J. Dodd
                                                           Jennifer W. Terry
                                                           Joseph P. Rompala
                                                           Lewis Kappes, P.C.
                                                           Indianapolis, Indiana
                                                           ATTORNEYS FOR APPELLEE –
                                                           UNITED STATES STEEL
                                                           CORPORATION
                                                           Nikki G. Shoultz
                                                           Bryan H. Babb
                                                           Bose McKinney & Evans LLP
                                                           Indianapolis, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017             Page 1 of 25
      Citizens Action Coalition of                               April 19, 2017
      Indiana, Inc.,                                             Court of Appeals Case No.
      Appellant-Intervenor,                                      93A02-1608-EX-1854
                                                                 Appeal from the Indiana Utility
              v.                                                 Regulatory Commission
                                                                 The Honorable David Veleta,
      Northern Indiana Public Service                            Administrative Law Judge
      Company; NIPSCO Industrial                                 The Honorable Carol Stephan,
      Group; and United States Steel                             Chair
      Corporation,                                               Cause No.
      Appellees-Petitioners                                      44688

      Baker, Judge.

[1]   Northern Indiana Public Service Company (NIPSCO) filed a petition with the

      Indiana Utility Regulatory Commission (IURC) seeking to implement a new

      rate design, pursuant to which certain rates would increase. NIPSCO and other

      entities, including NIPSCO Industrial Group (Industrial Group) and United

      States Steel Corporation (US Steel), engaged in settlement negotiations and

      reached an agreement. Citizens Action Coalition of Indiana, Inc. (CAC), had

      intervened in the proceeding and objected to the agreement. The IURC

      ultimately approved the settlement agreement, and CAC now appeals, arguing

      that there is not substantial evidence supporting the IURC’s order and that the

      IURC should have required the inclusion of a low-income payment assistance

      plan and the collection and reporting of customer data by NIPSCO. Finding

      substantial evidence and no other error, we affirm.

      Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017              Page 2 of 25
                                                       Facts
[2]   NIPSCO is a public utility that provides electric service in all or parts of twenty

      northern Indiana counties. Its customers’ electric bills generally consist of a

      fixed monthly charge (the “fixed charge”) plus a variable energy charge (the

      “energy charge”) based on the amount of energy used by the customer, and any

      additional riders. The customers pay the fixed charge even if they consume no

      energy in a month; the energy charge equals the approved rate multiplied by the

      number of kilowatt hours consumed by the consumer in a month.

[3]   In October 2015, NIPSCO filed a petition with the IURC seeking authority to

      increase its rates and charges for providing electric utility service. A number of

      entities intervened in the legal proceeding, including CAC, the Industrial

      Group, and US Steel. The Office of Utility Consumer Counselor (OUCC),

      which represents ratepayers, consumers, and the public, was also a party to the

      proceeding. NIPSCO sought the rate increase based on a cost of service

      analysis, which caused NIPSCO to conclude that a fixed rate increase would

      improve recovery of its fixed costs.

[4]   Initially, NIPSCO proposed an increase in the fixed charge for residential and

      small commercial customers from $11 to $20 and from $20 to $30 per month,

      respectively. At some point, a subset of entities involved in the proceeding,

      including the appellees and the OUCC but excluding CAC, engaged in

      settlement negotiations. On February 19, 2016, those entities jointly submitted

      to the IURC a Settlement Agreement. Among other things, the Settlement

      Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 3 of 25
      Agreement provided that the increase in the fixed charges for residential and

      small commercial customers would be from $11 to $14 and from $20 to $24 per

      month, respectively.1

[5]   CAC and other entities2 opposed the Settlement Agreement. Throughout the

      process, the parties filed settlement testimony and evidence, filed rebuttal

      testimony and evidence, and engaged in voluminous discovery. Relevant to

      this appeal are CAC’s arguments related to the fixed charge increase, the low-

      income payment assistance program, and a request that NIPSCO be required to

      collect and report certain consumer data. First, as to the fixed charge increase

      in the Settlement Agreement, CAC offered two basic arguments:

                 (1)       the fixed charge increase was unreasonable and not in the
                           public interest because it would erect barriers to energy
                           conservation and energy efficiency investments; and

                 (2)       the fixed charge increase was unjust because it would
                           disproportionately impact low income, elderly, and Black
                           consumers, who CAC contends use less energy on
                           average.

      CAC advocated for a different rate design, such that NIPSCO would collect its

      needed revenue based on an increase in the energy charge rather than the fixed

      charge.

      1
          The Settlement Agreement also increases the energy charge, but that increase is not at issue in this appeal.
      2
          The other entities are not parties to this appeal.

      Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017                            Page 4 of 25
[6]   Second, in its initial petition, NIPSCO proposed a low-income payment

      assistance program wherein qualified residential customers would receive a $50

      credit on their June bills each year. OUCC opposed this proposal because

      NIPSCO would benefit from the program by reducing expenses and lowering

      uncollected revenue but would not lower its charges to reflect those reduced

      costs. OUCC advocated for a voluntary donation program targeted at

      ratepayers, shareholders, and employees with a donation match from NIPSCO.

      CAC disliked both of those proposed plans, recommending a plan that includes

      a low-income rate class and an arrearage program to help low-income

      ratepayers pay down balances over time. CAC’s program would be funded by

      mandatory surcharges on other customers. In response to OUCC’s opposition,

      NIPSCO withdrew its proposed low-income assistance program; the Settlement

      Agreement does not contain such a program at all. In opposing the Settlement

      Agreement, CAC argued that its own low-income assistance program should be

      included in the settlement.

[7]   Third, CAC asked that the IURC require NIPSCO to collect and report the

      following data: number of general residential and low-income customer

      accounts, bills, receipts, arrearages, notices of disconnections, bill payment

      agreements, disconnections of service for nonpayment, reconnections of service

      after disconnection for non-payment, accounts written off as uncollectible, and

      accounts sent to collection agencies. According to CAC, this data is critical for

      the ability of NIPSCO, service organizations, ratepayers, and the general public

      to understand affordability issues. CAC testified that without timely trend data,

      Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 5 of 25
      it is not possible to appropriately respond to the payment troubles experienced

      within the low-income population. Moreover, the IURC has stated in the past

      that it will not force the adoption of a low-income payment assistance program

      without sufficient data to determine what is appropriate, but CAC is unable to

      obtain that data absent a requirement that NIPSCO collect and report it.

[8]   The IURC held an evidentiary hearing on April 13, 2016, and on July 18, 2016,

      it approved the Settlement Agreement without modification in a ninety-six-page

      order. In relevant part, the order notes as follows:

              Dr. Gaske[, a NIPSCO witness,] determined that the proposed
              rate levels and structure establish rates that are just, reasonable,
              and not unreasonably preferential or discriminatory. Dr. Gaske
              opined that the proposed rate structure and rates should provide
              NIPSCO a reasonable opportunity to earn a reasonable return on
              its invested capital and recover its necessary and reasonable
              operating expenses.

                                                        ***

              Mr. Shambo[, a NIPSCO witness,] testified that NIPSCO’s
              policy objectives with respect to this proceeding are to achieve
              rates that are reasonable and just—rates that better align with the
              recovery of costs from the customers that drive those costs, as
              well as afford NIPSCO a reasonable opportunity to recover its
              expenses and earn an appropriate return on its used and useful
              assets. . . . He emphasized that establishing rates that will allow
              NIPSCO to recover both its prudently incurred costs to serve
              customers and a fair return to investors is necessary for NIPSCO
              to continue to provide safe and reliable electric service to its
              customers.

      Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 6 of 25
                                                  ***

        . . . With respect to fixed charges, Mr. Shambo explained that
        NIPSCO proposed to take a relatively small step toward further
        fixed-variable alignment, by increasing the customer charge
        applicable to residential and small commercial customers, albeit
        not to the full cost of service level for the customer costs (let
        alone full fixed costs). Mr. Shambo testified that this increased
        customer charge would not disproportionately impact low-
        income customers because NIPSCO’s data indicates that the
        average monthly usage for low-income customers is actually
        higher than the normal customer population’s average monthly
        usage.

                                                  ***

        . . . Mr. Rábago[, a CAC witness,] testified that NIPSCO’s
        proposed fixed customer charges would create significant barriers
        and impediments to energy efficiency, conservation, and
        renewables that would result in improper discrimination against
        customers investing in these options. . . .

        Mr. Rábago argued that the proposed increases in fixed customer
        charges have a larger impact on some customers over others with
        the largest burden on low use customers without regard for why
        they are low users, and minimize impacts on high use customers.
        . . . He further contended that increasing fixed charges have a
        disproportionate impact on low usage customers and those that
        have pursued energy efficiency. He noted that NIPSCO did
        provide a measure to mitigate the impact on low-income
        customers, namely, a single bill credit of $50 to be applied to the
        June bills of [qualified customers]. Mr. Rábago stated that he
        was not satisfied with a one-time $50 credit offset, an amount
        that is less than half of the proposed fixed customer charge
        increase, and the credit will not encourage energy efficiency, and

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 7 of 25
        will not address high bills in other months. . . . Mr. Rábago noted
        that using volumetric rates instead of fixed customer charges
        would be more beneficial, noting policy and being less
        burdensome to low-income customers.

        . . . [Mr. Howat, a CAC witness,] recommend[ed] that the
        Commission direct NIPSCO to implement a comprehensive low-
        income bill payment assistance program that targets current bill
        benefits to [eligible customers] and includes an arrearage
        management design component. Mr. Howat’s proposed program
        would provide fixed credits and a 25% discounted rate for . . .
        eligible customers. He also recommended that NIPSCO report
        monthly to the Commission and stakeholders data regarding
        general residential and low-income customer accounts . . . .

        Mr. Howat further argued that increasing utility cost recovery
        from the volumetric to the monthly customer charge portion of
        bills disproportionately harms low volume consumers within a
        rate class. He argued that low-income households, households
        headed by an African American, and seniors use less electricity
        than their counterparts. Therefore, he claimed that increased
        monthly fixed or customer charges cause disproportionate harm.
        Lastly, he argued that higher fixed charges discourage energy
        efficiency. . . .

                                                  ***

        . . . [In rebuttal,] Mr. Shambo stated that there are better ways to
        address energy efficiency and renewable energy than to subsidize
        it implicitly through rate design. Mr. Shambo also does not
        believe that the higher customer charge has a negative impact on
        low-income customers. He provided data that showed that
        NIPSCO’s 18,000 low-income customers show higher usage than
        NIPSCO’s average customer.

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 8 of 25
        . . . He explained that a specific low-income rate [for a payment
        assistance program] should not be established, as it sends a
        negative price signal. He also stated that there should not be an
        arrears program, as that is currently available through assistance
        agencies and programs and added that NIPSCO’s current billing
        system is not set up to administer such a program so a great deal
        of time and expense would be needed to make necessary
        modifications.

                                                  ***

        Mr. Shambo also addressed NIPSCO’s initial proposed low-
        income program. He noted that both the OUCC and CAC
        opposed the program as proposed. Accordingly the Settlement
        Agreement does not provide for such a program and NIPSCO is
        no longer proposing such a program in this case. However, he
        emphasized that NIPSCO will agree to meet with the OUCC and
        any other interested parties, independent of this rate case, to
        discuss the parameters of a similar program that could be
        requested in the Company’s next base rate case.

        . . . He noted that the Settlement Agreement is consistent with
        the public interest by providing all customer segments with a
        reasonable outcome and providing NIPSCO with a solid
        foundation from which it can invest in northern Indiana’s energy
        infrastructure, help fuel job creation and economic growth, and
        provide customers with means to manage their energy
        consumption and bills. . . .

                                                  ***

        . . . [T]he OUCC, as the statutory representative of all ratepayers,
        believes the Settlement Agreement is a fair resolution, supported
        by evidence and should be approved.

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017    Page 9 of 25
                                                  ***

        . . . Mr. Rábago argued that the compromise between NIPSCO
        and the OUCC is an inadequate foundation for the approval of
        the fixed customer charge increase. . . . He recommended that
        the Commission disapprove any proposed increase in a fixed
        customer charge, and adopt [CAC’s payment assistance]
        proposal.

                                                  ***

        . . . Mr. Shambo pointed out that the evidence in this case
        establishes that NIPSCO’s fixed customer and distribution costs
        for each residential customer are greater than $14.00 per month,
        and that a $3.00 customer charge increase, from $11.00 to
        $14.00, is reasonable. . . .

        . . . He further noted that [CAC’s] low-income proposal is
        burdensome, including the adverse impact on industrial
        customers who would see no benefit from the program. . . .

                                                  ***

        Commission Discussion and Findings. . . .

                                                  ***

        . . . Mr. Rábago was the only witness in opposition to the
        proposed Settlement Agreement increase to the customer charge,
        suggesting that it is inconsistent with “sound ratemaking
        principles.” We disagree with Mr. Rábago. . . . [T]he
        Commission finds that the increase in the monthly customer
        charge from $11.00 to $14.00 for residential customers and from
        $20.00 to $24.00 for small commercial customers is cost-based
Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 10 of 25
        based upon the evidence presented, consistent with gradualism,
        and is reasonable and should be approved.

                                                  ***

        In its case-in-chief, NIPSCO proposed a low-income program.
        However, the OUCC and CAC both opposed the program as
        proposed by NIPSCO, and offered their own proposals for
        alternative programs. NIPSCO withdrew its request for approval
        of a low-income program in this case. NIPSCO stated it may
        present a similar program in the future and indicated its
        willingness to continue discussing such a program with its
        stakeholders. No other party supported the form of program
        proposed by CAC, which was actively opposed by several
        parties. . . . [In a prior rate case,] we recognized the importance
        of the issue raised by the CAC, but found that there are
        numerous implementation and policy related concerns and
        declined to adopt the CAC’s program in that case. The CAC
        provided us with no better record or rationale in this case as to
        why we should adopt such a program . . . . The OUCC filed
        testimony in this case opposing NIPSCO’s proposed low-income
        program and . . . provided testimony concerning certain utilities’
        voluntary “Round Up” programs that might be more appropriate
        from the OUCC’s perspective. . . .

        Notwithstanding, the Commission is perplexed over the sequence
        of events that led to NIPSCO’s decision to ultimately not offer a
        low-income proposal. NIPSCO, not the CAC, was the first to
        propose a low-income program. The CAC offered an alternative
        program in response. It would have made sense for NIPSCO to
        engage the CAC and other parties to discuss alternatives and to
        reach a consensus on an alternative. The evidence points to the
        CAC being left out of any settlement discussion. . . . It is
        confounding to understand the exclusion of parties with mutually
        held goals. Few initial proposals are accepted by all parties at the
        onset. When offering a proposal, the expectation would be for
Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 11 of 25
               the utility to act in good faith and afford all the parties the
               opportunity to dialogue, with the goal of reaching consensus.

               Further, as for CAC’s recommendation that NIPSCO collect and
               report on trend data on arrearages, disconnections, and related
               data points, as we noted in [an earlier order in a different case],
               “we decline to order such collection and reporting solely on the
               basis of the evidence before us. We believe that any such effort is
               best pursued by the utility and interested stakeholders outside the
               regulatory constraints of a specific Commission directive.”
               Indianapolis Power & Light, 2016 WL 1118795, at *72.

[9]    Appealed Order p. 13, 27, 28, 45-46, 58, 71-72, 74, 78-80, 88, 90-91. CAC now

       appeals.

                                     Discussion and Decision

                                       I. Standard of Review
[10]   The General Assembly created the IURC “primarily as a fact-finding body with

       the technical expertise to administer the regulatory scheme devised by the

       legislature.” Ind. Gas Co. v. Ind. Fin. Auth., 999 N.E.2d 63, 65 (Ind. 2013)

       (internal quotation removed). Because the “complicated process of

       ratemaking” is “a legislative rather than judicial function,” it “is more properly

       left to the experienced and expert opinion present in the Commission.” Office of

       Util. Consumer Counselor v. Pub. Serv. Co. of Ind., 463 N.E.2d 499, 503 (Ind. Ct.

       App. 1984).

[11]   An order from the IURC is presumed valid unless the contrary is clearly

       apparent. Citizens Action Coalition of Ind., Inc. v. S. Ind. Gas and Elec. Co., 70

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017    Page 12 of 25
       N.E.3d 429, 438 (Ind. Ct. App. 2017). More specifically, “[o]n matters within

       its jurisdiction, the IURC enjoys wide discretion and its findings and decision

       will not be lightly overridden simply because we might reach a different

       decision on the same evidence.” Id. at 439. Essentially, “so long as there is any

       substantial evidence to support the rates as fixed by the Commission as

       reasonable, the judicial branch of the government will not interfere with such

       legislative functions” and has “no power or authority to substitute [its] personal

       judgment for what [it] might think is fair or reasonable in lieu of the [IURC’s]

       administrative judgment.” Boone Cty. Rural Elec. Membership Corp. v. Pub. Serv.

       Comm’n, 239 Ind. 525, 532, 159 N.E.2d 121, 124 (1959) (emphasis added).

[12]   In reviewing an IURC decision, we apply a multi-tiered standard of review.

       Citizens Action Coalition of Ind., Inc. v. S. Ind. Gas and Elec. Co., 45 N.E.3d 483,

       491 (Ind. Ct. App. 2015). First, we must determine whether specific findings

       exist as to all factual determinations material to the ultimate conclusions. Id.;

       see also Capital Improvement Bd. of Mgrs. v. Pub. Serv. Comm’n, 176 Ind. App. 240,

       260, 375 N.E.2d 616, 631 (1978) (holding that the findings “must be specific

       enough to enable the court to review intelligently the Commission’s decision”).

       Second, we must consider whether substantial evidence supports the IURC’s

       findings of fact. Citizens Action, 45 N.E.3d at 491; see also N. Ind. Pub. Serv. Co. v.

       U.S. Steel Corp., 907 N.E.2d 1012, 1016 (Ind. 2009) (observing that the IURC’s

       order will stand “unless no substantial evidence supports it”) (emphasis added).

       Finally, we must determine whether the decision is contrary to law. Citizens

       Action, 45 N.E.3d at 491. In conducting our review, we neither reweigh the

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017    Page 13 of 25
       evidence nor assess witness credibility and will focus solely on the evidence

       most favorable to the IURC’s findings. Ind. Gas, 999 N.E.2d at 66.

[13]   Furthermore, where, as here, we are considering the IURC’s approval of a

       settlement contract, substantial deference is required. Because approval of

       settlement agreements is intrinsic to the IURC’s supervision and regulation of

       utility rates, “substantial deference [is] owed to the Commission in supervising

       settlements and even modifying or revoking orders entered attendant thereto.”

       U.S. Gypsum, Inc. v. Ind. Gas Co., 735 N.E.2d 790, 803-04 (Ind. 2000). This is

       especially true when, as here, the OUCC—which represents ratepayers,

       consumers, and the public—has joined the settlement agreement. See Citizens

       Action Coalition of Ind., Inc. v. N. Ind. Pub. Serv. Co., 796 N.E.2d 1264, 1268 (Ind.

       Ct. App. 2003) (rejecting CAC challenge to settlement agreement, including

       CAC claim that an IURC-approved settlement should be subject to the more

       rigorous inspection of a settlement in class action cases).

                                              II. Rate Design
[14]   Any change to a utility charge “shall be reasonable and just, and every unjust or

       unreasonable charge for such service is prohibited and declared unlawful.” Ind.

       Code § 8-1-2-4. Here, CAC contends that the rate design included in the

       Settlement Agreement (and the IURC Order), which incorporates an increase

       in the fixed charge for residential and small commercial consumers, is unjust

       and unreasonable. CAC has three primary reasons for this position: first, CAC

       contends that NIPSCO did not produce substantial evidence to support the

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 14 of 25
       increase to the fixed charge; second, CAC argues that this rate design

       discourages energy efficiency and conservation; and third, it contends that this

       rate design will have a disparate, deleterious impact on low-income, Black, and

       elderly populations.3

                                        A. Substantial Evidence
[15]   CAC insists that NIPSCO has failed to produce evidence proving that its

       proposal is just and reasonable:

                it produced no evidence of actual cost shifts or “cross subsidies”
                resulting from its existing rate design that would require raising
                fixed charges for all residential and small commercial customers.
                NIPSCO has further failed to demonstrate that it faces any
                financial harm due to current fixed cost recovery mechanisms
                that would justify its attempt to guarantee earnings through fixed
                charges.

       Appellant’s Br. p. 25. According to the CAC, the IURC’s Order “advances the

       common, but flawed, ratemaking premise that fixed costs should be collected

       through fixed charges. Yet, NIPSCO offered no evidence to support the concept

       that the nature of a cost, as either fixed or variable, should dictate the form of

       the charge used to recover such a cost.” Id. at 25-26 (emphases original). CAC

       3
         CAC also argues that the IURC improperly relied upon a 2016 Order from a different case in reaching its
       conclusions in this case. We agree with CAC that it would be problematic if the IURC had considered a
       separate case with different parties and different issues to be binding on this case, but it is apparent that it did
       not. Instead, IURC simply cited to its analysis in that case, finding its reasoning and rationales to be equally
       applicable here. We see no problem with this approach. Additionally, we note that another panel of this
       Court just affirmed the IURC’s order in that case. Citizens Action Coalition of Ind., Inc. v. Indianapolis Power &
       Light Co., --- N.E.3d ---, 93A02-1604-EX-804 (Ind. Ct. App. Apr. 5, 2017).

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017                             Page 15 of 25
       argues that NIPSCO did not prove that raising the fixed charge is preferable to

       the many other alternative rate designs available to it.

[16]   Whether or not there is another rate design that is preferable, however, is not

       our inquiry. Our inquiry is limited to whether there is substantial evidence

       supporting the IURC’s acceptance of the Settlement Agreement. The record

       reveals the following evidence supporting the rate design contained in the

       agreement:

            A NIPSCO witness attested that “recovering fixed costs in a fixed
             customer charge, and variable costs in a variable energy charge, gives
             consumers appropriate price signals that allow them to efficiently
             determine whether the marginal cost justifies the marginal benefit of
             additional consumption.” Tr. Ex. Vol. 11 p. 114.
            Another NIPSCO witness testified that with this rate design, NIPSCO
             sought “rates that better align with the recovery of costs from the
             customers that drive those costs[.]” Appellant’s App. Vol. II p. 45.
            The increase in the fixed charge would “reduce subsidies between and
             among customer classes” (in other words, reducing the degree to which
             larger customer rates subsidized lower rates for residential and small
             commercial customers), but “moderate any rate shock by incorporating
             gradualism” (in other words, refraining from increasing the fixed charge
             to an amount that fully reflects NIPSCO’s fixed costs). Id.
            This rate design is not a true “straight fixed variable” structure, because
             while there is a small increase in the fixed charge, “a substantial amount
             of fixed costs would continue to be recovered in the [usage-based] energy
             charge[.]” Tr. Ex. Vol. 11 p. 124.
            Furthermore, the increase in the fixed charge will “significantly reduce
             the percentage increase in the [usage-based] energy charges that would
             otherwise be required” to meet NIPSCO’s revenue requirement. Id. at
             129.
            This rate design, including the increase in the fixed charge, is
             “commensurate with other electric utilities in the state.” Id. at 130.

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 16 of 25
             Moreover, this rate design will recover “only a small minority of
             [NIPSCO’s] fixed costs[.]” Id. at 125.
            CAC’s proposal—that NIPSCO recover its revenue with an increase in
             the energy charge as opposed to the fixed charge—provides “inefficient
             price signals that distort consumers’ consumption decisions by setting the
             marginal price far above the marginal cost of either consuming, or
             foregoing consumption of, additional kilowatt-hours of electricity.” Id. at
             113. This proposed structure, therefore, would “discourage[]
             consumption that would be efficient in the sense that the marginal benefit
             of consuming additional units of electricity exceed[s] the marginal cost of
             the energy required to produce that electricity.” Id. at 115.
            OUCC engaged in robust negotiations with NIPSCO that ultimately
             resulted in an increase in the fixed charge of 27%, as opposed to the 82%
             increase originally proposed by NIPSCO. OUCC, which represents all
             ratepayers, testified that this compromise “is a fair resolution, supported
             by evidence, and should be approved.” Appellant’s App. Vol. II p. 92.

       CAC may genuinely believe that a different rate design is preferable, and some

       reasonable ratepayers may agree with that belief, but the evidence in the record

       readily supports the IURC’s decision to accept the Settlement Agreement. The

       IURC has the expertise to analyze and weigh the complex competing evidence

       on this issue, and we can only conclude that there is substantial evidence

       supporting its decision to accept the proposed rate design, including the

       increase in the fixed charge.

                                     B. Energy Conservation
[17]   Next, CAC argues that the IURC failed to make specific findings of fact or an

       ultimate finding of reasonableness with respect to CAC’s argument that the

       fixed charge increase would discourage energy conservation and efficiency.

       Specifically, this rate design “allows NIPSCO to shift cost recovery more to the

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 17 of 25
       flat fee for all customers which limits a customer’s ability to reduce his bill by

       reducing consumption and discourages energy conservation by reducing the

       economic incentive for efficiency.” Appellant’s Br. p. 28. According to CAC,

       the IURC failed to adequately address this contention.

[18]   We find the analysis of this Court on this precise issue in a very recent case to

       be instructive. In Citizens Action Coalition of Ind., Inc. v. Indianapolis Power & Light

       Co., --- N.E.3d ---, 93A02-1604-EX-804 (Ind. Ct. App. Apr. 5, 2017), CAC

       argued that the IURC had failed to make sufficient findings as to whether the

       rate design in that case discouraged energy conservation and efficiency, asking

       that this Court remand for specific findings on the issue. We disagreed:

               We do not find this particular relief warranted. Joint Intervenors
               did not bring a declaratory judgment action; rather, they
               intervened in a rate case. Rate-making is a legislative as opposed
               to a judicial function, and our Indiana Legislature has seen fit to
               establish a commission for the express purpose of hearing
               evidence and balancing and weighing the many complicated
               factors which must be taken into consideration in setting utility
               rates. State ex rel. Indianapolis Water Co. v. Boone Circuit Court, 261
               Ind. 583, 586-87, 307 N.E.2d 870, 872 (1974). The enabling act
               does not authorize the Commission to issue declaratory rulings.
               See U.S. Steel Corp. v. No. Ind. Public Serv. Co., Inc., 482 N.E.2d
               501, 506 (Ind. Ct. App. 1985), trans. denied.

               In their insistence upon particular language, Joint Intervenors
               attempt to shift the focus from the reasonableness of the order
               approving the rate change as a whole to one component. . . .

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017    Page 18 of 25
Slip op. p. 17-18. Here, likewise, the IURC was not required to make specific

findings on this particular argument raised by CAC. Instead, it was required to

consider NIPSCO’s rate design scheme as a whole, making specific findings as

to all factual determinations material to the ultimate conclusions. Citizens

Action, 45 N.E.3d at 491. The IURC made specific findings about the rate

design, including the increase in the fixed rate charge:

        As we found recently in [another] rate case . . . , the increase in
        the [fixed] customer charge was a “move toward a more fixed
        and variable rate design consistent with traditional causation
        principles,” while being “demonstratively short of [straight fixed
        variable] rates.” We further found that, “[c]ost recovery design
        alignment with cost causation principles sends efficient price
        signals to customers, allowing customers to make informed
        decisions regarding their consumption of the service being
        provided.” Lastly, we note that, “this structure does not violate
        principles of gradualism, because gradualism is best considered in
        the context of the entire customer bill and not discrete charges
        within the bill.” For these same reasons, the Commission finds
        that the increase in the [fixed] monthly customer charge . . . is
        cost-based upon the evidence presented, consistent with
        gradualism, and is reasonable and should be approved.

Appealed Order p. 88 (internal citations omitted). These findings are specific to

the factual determinations material to the ultimate conclusions, and we have

already found that there is sufficient evidence supporting these findings. We

disagree with CAC that it was incumbent upon IURC to address its specific

argument regarding energy conservation.

Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 19 of 25
[19]   Here, as in the recent case quoted above, CAC also argues that the approval of

       this rate design “despite its deleterious effect on conservation and energy-

       efficiency is contrary to federal law and state rule.” Appellant’s Br. p. 32.

       Again, we find the analysis of this Court helpful and on point:

               . . . The parties do not dispute the proposition that public policy,
               federal and State, favors and encourages conservation.

               Nonetheless, encouragement is not a mandate. Joint Intervenors
               direct us to no statutory requirement that each individual
               component of a rate scheme reflect the most environmentally
               conservative approach or that abandonment of older
               methodology be immediate and total. At bottom, Joint
               Intervenors suggest a reweighing of evidence, with conservation
               – based upon their interpretation of customer usage signals –
               being paramount. They do not demonstrate the unreasonableness
               of the rate increase as a whole.

       Citizens Action, No. 93A02-1604-EX-804, at slip op. p. 19. Here, likewise, CAC

       has not directed our attention to any federal law or state rule mandating a

       different result in this case. Again, reasonable people may, and likely do, agree

       with CAC that this rate design scheme is less than ideal with respect to the

       important issues of energy conservation and efficiency. But that is immaterial

       to our review of the IURC’s decision, which contains sufficient findings and is

       supported by substantial evidence.

                            C. Impact on Certain Populations
[20]   Similar to its energy conservation argument, CAC contends that the IURC

       failed to make specific findings or an ultimate finding of reasonableness
       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 20 of 25
       regarding its allegation that the fixed rate increase will have a disproportionate

       impact on low-income, elderly, and Black consumers. CAC insists that

       NIPSCO’s “presentation of data [on this issue] was very misleading,

       incomplete, and was effectively rebutted by CAC. Regardless, the Commission

       failed to make a basic finding of fact or conclusion of law on the material issue

       raised of how an increased fixed charge affects low volume users of electricity,

       who in NIPSCO’s service territory are low income customers, elderly

       customers, and African American customers.” Appellant’s Br. p. 31. CAC

       asks us to remand so that the IURC can make specific findings on this issue.

[21]   As noted above, however, this is not a declaratory judgment action, and the

       IURC is required to make specific findings only on factual determinations that

       are material to the ultimate issue, which is the justness and reasonableness of

       the rate design and its effect on ratepayers as a whole. As this Court recently

       held,

               [e]ven assuming that [the proposed rate design] has a
               disproportionate negative impact upon certain groups of
               customers, the Commission is required by statute to approve
               rates that are fair and reasonable inclusive of the entire customer
               base. There is no statutory requirement that the impact upon
               particular sub-groups be separately addressed. Joint Intervenors
               have not demonstrated that the Commission failed to conform to
               statutory standards.

       Citizens Action, No. 93A02-1604-EX-804, at slip op. p. 20. Here, likewise, there

       was no requirement that the IURC make specific findings related to particular

       sub-groups of ratepayers. It found the rate design to be just and reasonable as a

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 21 of 25
       whole as related to all ratepayers, see Appealed Order p. 87, and given our

       standard of review, we are compelled to defer to that conclusion as there is

       substantial evidence supporting it.

         III. Payment Assistance Program and Data Collection
[22]   Finally, CAC argues that the IURC erred because it did not require NIPSCO to

       include a low-income payment assistance program as part of the rate design or

       to collect and report data on its customers. At the beginning of the settlement

       negotiations, NIPSCO had included a payment assistance program as part of its

       rate design, but OUCC objected to that particular program. Consequently,

       NIPSCO withdrew its proposed payment assistance program from the final

       Settlement Agreement. CAC proposed its own version of a payment assistance

       program, but none of the other involved entities approved of its proposal. In

       the end, therefore, the IURC’s order does not contain a payment assistance

       program at all.

[23]   Initially, we note that we share in the IURC’s concern and perplexment as to

       how and why CAC was left out of the settlement negotiations. Had CAC been

       included, it is entirely possible, if not likely, that a compromise could have been

       reached such that a payment assistance program would have been included in

       the Settlement Agreement. It seems as though all agree that it would be

       preferable to have such a program included. We echo the IURC’s strong

       encouragement that, in future cases, the utilities will act in good faith by

       including all parties in the negotiations.

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 22 of 25
[24]   That said, the IURC dedicated a lengthy paragraph in its order explaining why

       it declined to order the adoption of CAC’s proposed payment assistance plan:

               No other party supported the form of program proposed by CAC,
               which was actively opposed by several parties. Mr. Rábago
               addressed the elimination of NIPSCO’s proposed low-income
               program of an annual credit of $50 applied to the June bill in his
               opposition to the Settlement Agreement. He noted that the
               residential customers face an annual fixed customer charge
               increase of $36, but stated there are also increases in volumetric
               rates. . . . [In a prior rate case], we recognized the importance of
               the issue raised by the CAC, but found that there are numerous
               implementation and policy related concerns and declined to
               adopt the CAC’s program design in that case. The CAC
               provided us with no better record or rationale in this case as to
               why we should adopt such a program . . . The implications and
               policy concerns expressed in [the other case] persist in this Cause.

       Appealed Order p. 90. The IURC, which is the entity statutorily charged with

       negotiating these complex regulatory waters, found that there are “numerous

       implementation and policy related concerns” with respect to the program

       proposed by CAC. We will not second-guess the IURC’s assessment in that

       regard.

[25]   NIPSCO elected to withdraw its own proposed payment assistance plan when

       it faced resistance from OUCC, the entity charged with representing all

       ratepayers.4 We think it best for the General Assembly to address legislatively

       4
        CAC argues that NIPSCO’s payment assistance plan was included (by mistake) in the final Settlement
       Agreement as approved by the IURC. It is apparent, however, that NIPSCO explicitly withdrew this plan

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017                  Page 23 of 25
       whether and how utilities should be required to collect and report such data on

       a statewide basis. The IURC was certainly not required to force NIPSCO to re-

       insert its proposal. It is extremely regrettable that the result of this process is a

       rate design including rate increases with no assistance available for low-income

       consumers. But under these circumstances, we cannot say that the IURC erred

       in entering the order without such a program included.

[26]   CAC also contends that NIPSCO should be required to collect and report data

       about its consumers so that, in the future, CAC would be able to provide the

       evidence on these matters that the IURC has found to be lacking. The IURC,

       however, concluded that “any such effort is best pursued by the utility and

       interested stakeholders outside the regulatory constraints of a specific

       Commission directive.” Id. at 91. In addition to the IURC’s conclusion, we

       would also point out that the cost of undertaking the collection and reporting of

       this sought-after data would certainly be passed onto the consumers whose rate

       increases CAC is attempting to minimize. Furthermore, the type of sensitive

       data that CAC believes should be collected would potentially intrude on the

       privacy of ratepayers. Under these circumstances, we decline to reverse the

       IURC’s order on the basis that it did not order the collection and reporting of

       this information.

       during the proceedings. To force its inclusion under these circumstances would be to countenance the
       “gotcha” litigation of which we disapprove. We decline to do so.

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017                     Page 24 of 25
[27]   The judgment of the IURC is affirmed.

       Barnes, J., and Crone, J., concur.

       Court of Appeals of Indiana | Opinion 93A02-1608-EX-1854 | April 19, 2017   Page 25 of 25