Overview: Indiana has one pilot unbundling program for residential gas customers, which is operated by Northern Indiana Public Service Company (NIPSCO)--the largest local distribution company (LDC) in the State. The program, called "NIPSCO Choice," has been in existence since April 1998 and is open to the approximately 650,000 customers in the company’s service territory, although enrollment caps limit participation to 150,000 residential customers and 20,000 business customers. Participation had dropped substantially between 2000 and 2002, with more than 12,000 residential customers enrolled in July 2000 but only 4,766 residential customers in September 2002 after the only active supplier stopped enrolling new customers. However, the company made a concerted effort to revitalize the program in late 2002, which led to three new suppliers entering the program. As of December 2007, about 63,467 residential customers were enrolled and nine suppliers were participating. Interstate Gas Supply (IGS) Energy was added to the program in 2007.

NIPSCO’s pilot choice program was scheduled to end on March 31, 2005, but was extended through April 30, 2010, under an agreement between NIPSCO and the Indiana Office of Utility Consumer Counselor, which was approved by the Indiana Utility Regulatory Commission (IURC) in January 2006. The agreement includes a reduction in the interstate transportation costs charged to residential and small business customers. NIPSCO’s alternative regulatory plan includes the choice program as well as a price protection service (PPS) in which customers have a choice of a 1-year fixed or capped rate set by the company that includes a price premium. Customers who cancel a PPS agreement before the year is up are subject to a cancellation penalty. The company also offers a “DependaBill” payment plan in which monthly prices are fixed without an end-of-year adjustment, but include a monthly fee of up to 10 percent. Early termination penalties also apply. Neither the PPS nor the DependaBill option is regulated by the State.

Citizens Gas and Coke Utility (Citizens) filed a request for an alternative regulatory plan in November 1999, to be phased in over a 6-year period with choice available to residential customers in years 4 through 6. In an order issued December 12, 2002, the IURC approved a settlement agreement, which along with numerous other items included more options for commercial and industrial customers. The settlement included redesigned tariffs and bills to facilitate customer choice in the future for commercial and industrial customers, but there was no provision for customer choice for the residential sector. On June 1, 2003, choice was extended to business and industrial customers with annual usage greater than 50,000 therms, and to all remaining business and commercial customers on June 1, 2004. . The largest industrial customers have been able to buy natural gas from third-party suppliers for several years.

Legislation approved in March 2006 allows public schools to pool their purchasing power for natural gas and to choose their own natural gas marketer. Schools in the NIPSCO and Citizens territories were already eligible to choose their own natural gas marketer under the above-mentioned programs, and Vectren Corporation's (Indiana Gas Company and Southern Indiana Gas and Electric Company) tariffs allowed any educational institution to choose an alternative gas supplier. According to the IURC, the other LDCs in the State have either modifed their tariffs to comply with the 2006 legislation, submitted proposals, are currently working on proposals, or are unable to provide this service to schools because of system limitations.