Northern Indiana Public Service Co. (NIPSCO), the largest natural gas distribution company in Indiana, blamed the recession for a decision to cut 2% of its workforce in the state and the postponement of some “major” projects.

NIPSCO said Monday it had launched a comprehensive strategic review of its infrastructure and business processes, which will include reducing its 2,568-member workforce by 30-40 positions.

“The impact of the recession has prompted us to implement a number of measures to reduce costs without directly impacting employees,” said Eileen O’Neill Odum, CEO of Northern Indiana Energy (NIE). “Those measures include postponing major projects, reducing contractor costs and leaving vacancies unfilled. However, it is apparent that we need to identify additional cost savings as the economic downturn continues and negatively impacts industrial, commercial and residential customer demand for energy.”

Odum did not detail what major projects would be affected.

Just a few months ago Merrillville, IN-based NIPSCO said its 2Q2009 industrial demand fell 25% from the year-ago period, which resulted in a $21 million revenue loss for the quarter. The news was no better in the first three months of 2009, and NiSource CEO Robert Skaggs said the NIPSCO team was “closely monitoring” the company’s northern Indiana service territory because industrial production was impacted by the regional economy (see Daily GPI, May 4). Subsidiary NiSource Gas Transmission & Storage in March also said it would cut up to 380 positions across its 16-state operating territory in 2009 (see Daily GPI, March 2).

NIPSCO is one of the 10 energy distribution companies of NiSource Inc., which serves more than 712,000 natural gas customers and 457,000 electric customers across the northern third of Indiana. NiSource distribution companies serve 3.8 million natural gas and electric customers primarily in seven states.

Besides cutting its Indiana workforce, a voluntary furlough program through the rest of this year is being offered to NIE employees who choose to take time off without pay. However, beginning in 2010, “a mandatory furlough program will require management employees to take two weeks off without pay,” NIE said. Merit increases for 2008 performance, which had been delayed, also were canceled.

“This is a very difficult decision, because we know the impact this will have on employees who will be leaving the company,” Odum said. “But after all other options had been exhausted, this was a necessary step to balance our costs with our revenues.”

Ongoing business needs and skill sets will be used to determine which employees will be impacted by the workforce adjustment, which is to be completed in October. Bargaining unit employees are not affected by the job reductions or furloughs.

“To the extent possible, we will be reducing positions that do not have a direct impact on service to customers,” Odum said. “This difficult economy does not change our commitment to provide safe and reliable service to our customers.”

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