NIPSCO's request for an 11.5 percent hike in residential electric rates filed recently with state regulators comes at a critical juncture for the utility industry in Indiana and nationwide.
New technology, such as solar and improved cogeneration, promises to disrupt utilities in traditionally regulated states like Indiana, said Adrian Moore, a vice president at the Reason Foundation.
In addition, industrial utility customers in Indiana are revolting against higher rates, and residential advocates want to see increased use of home generation and more energy conservation.
"You can't keep the world just as it was in the 1950s," Moore said, who has written on deregulation and disruptive forces like Uber ride-share. "If we took the same approach to other things as we take with utilities, we would still be using Betamax tapes in our VCRs and driving around in VW Beetles."
Effectively, a second wave of utility deregulation is underway in the United States, Moore said. It's not wholesale deregulation as in the 1990s, but incremental as lawmakers, regulators and utilities struggle to adapt.
Utilities are reminding everyone that someone must pay the cost of the electric generating plants, poles and wires that back up the new generating technologies and in some cases connect them to one another.
Joseph Hamrock, CEO of NiSource Inc., parent company for NIPSCO and utilities in six other states, said every new source of electricity generation has to be examined in light of the obligation of regulated utilities to serve all customers.
Whether it is a large cogeneration plant at a major industrial supplier or a home's rooftop solar array, NIPSCO must provide backup, a connection to the grid, and capacity in case those customers decide to come back full-time to the utility, Hamrock said.
"You come back to that question of who is making the long-term commitments to the state and what is the price of long-term stability, for all customers," Hamrock said.
The NiSource CEO, on the job for about three month, said an interruptible power rate NIPSCO provides for large industrial customers is a good example of how utilities are adapting in the interest of all parties.
That rate provides for a discount on electricity if large users voluntarily agree a portion of their power can essentially be switched off during periods of peak demand, such a sweltering summer day when air conditioners are running in homes, offices and stores.
"We recognize first-hand some of our industrial customers are in a very, very competitive global marketplace; this isn't a lack of empathy or concern for them, and we want to do for them what we can," Hamrock said.
NIPSCO also operates programs for net-metering, a feed-in tariff, and cogeneration that allow customers with alternative energy sources to stay connected to the grid and get remunerated for any power they supply back into the grid.
The Indiana Energy Association, which represents the state's five, large investor-owned utilities, has warned about going down "a path that even partially, or slightly hints at deregulation." It has pointed out some of the horror stories that occurred in other states during the deregulation wave of the 1990s.
But there are signs legislators no longer may be buying the pitch put out by utilities and their advocates, said Kerwin Olson, executive director of Citizens Action Coalition.
Consumer groups and environmental groups in Indiana won a major victory last legislative session when a bill they contend would have allowed utilities to charge more for roof-top solar owners to connect to the grid was pulled from consideration.
Industrial and residential customers are calling for essentially the same thing in Indiana when it comes to distributed generation -- whether it be a large cogeneration plant of a 100 megawatts at a factory, or a single solar panel on someone's home, Olson said.
"It's a reality that all customer classes are facing right now, with the changing dynamics of the energy market," Olson said. "And Indiana is resistant to instituting that change."