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Indiana Office of Utility Consumer Counselor

OUCC > Featured Topics > Indiana Michigan Power (I&M) Rates Indiana Michigan Power (I&M) Rates

Base Rates7-Year Infrastructure Plan/Recovery | Cook LCM | Rockport | Trackers

In the most recent IURC survey of residential electric utility rates, Indiana Michigan Power (I&M) ranked tenth-highest among the 14 electric utilities under the IURC’s jurisdiction.

As of July 2014, approximately 94 percent of a typical I&M residential customer’s bill paid the base rate (which traditionally covers most infrastructure and operating/maintenance costs) with the remaining six percent being recovered through rate adjustment “trackers,” as described below.*

Base Rates

I&M was granted permission to increase its annual operating revenues by approximately $85 million in a February 13, 2013 IURC order. In a March 14, 2013 order on reconsideration, the IURC raised the increase to $92 million.

The utility requested an additional $170.1 million in its proposed order, while the OUCC recommended limiting the proposed increase to $30.7 million.

The OUCC appealed the Commission's order to the Indiana Court of Appeals. The court upheld the order on March 11, 2014.

I&M’s previous base rates – which cover operating, maintenance and capital costs – were approved in March 2009.

The IURC held public field hearings in the rate case during the week of April 23, 2012 in Fort Wayne, South Bend and Muncie, in addition to evidentiary hearings.

More details are available at www.in.gov/oucc/2667.htm.

Transmission, Distribution and Storage System Improvement Plan

In cases initiated under a 2013 law, I&M is requesting approval of a 7-year plan for infrastructure improvements, along with incremental rate increases as the projects proceed. Project costs in the plan total about $787 million. To learn more about these cases, please visit www.in.gov/oucc/2804.htm.

Cook Nuclear Plant Life Cycle Management (LCM) Project

I&M received IURC approval for its Life Cycle Management (LCM) project at its D.C. Cook Nuclear Plant in Bridgman, Michigan on July 17, 2013, including rate recovery of approximately $1.146 billion over the long term. I&M will be allowed to recover these costs through a new "tracker," with the first recovery request now pending.

Approximately 65 percent of Cook’s energy is dedicated to Indiana customers. For more information on this case, visit www.in.gov/oucc/2710.htm.

Rockport Generating Station Emissions Controls

I&M has received IURC approval to install new pollution control equipment (for sulfur dioxide and nitrogen oxide) at its Rockport Generating Facility in southwestern Indiana as required by a federal consent decree. The utility will also be allowed to incrementally recover the project’s costs through rates, starting at least 6 months after construction begins.

The Commission's order approved a settlement agreement among the OUCC, the I&M Industrial Group, and I&M. For more information, visit www.in.gov/oucc/2673.htm.

Trackers

In addition to base rates, I&M and other electric utilities recover and credit separate, specific costs through rate adjustment mechanisms known as "trackers." Rate adjustments via trackers are reviewed by the OUCC and approved by the IURC on a semi-annual or annual basis.

Clean Energy Solar Project

In IURC Cause No. 44511, I&M is seeking IURC permission to build, own and operate five solar generating facilities totaling about 16 megawatts. I&M is requesting approval of a new Solar Power Rider through which it would recover costs for the solar projects. In testimony, I&M estimates an impact of about $38 million on ratepayers. I&M is also requesting approval of a separate Green Power Rider, through which customers could voluntarily support additional solar development.

I&M's testimony and exhibits are available by visiting the IURC's Electronic Document System and entering Docket Number 44511. The OUCC is reviewing the request and will file testimony on a future date to be determined.

New Capacity Settlement Tracker

In I&M’s last base rate case (Cause No. 44075), the IURC authorized the creation of a new Capacity Settlement Rider (CSR). This new tracker, to be updated annually, is designed to allow I&M to recover variances in costs relating to a generation capacity pooling agreement among American Electric Power (AEP) utilities in various states.

I&M received IURC permission to implement this new tracker (IURC Cause No. 44422) on July 9, 2014.

In this case, I&M’s testimony and exhibits stated that because of the recent termination of the generation capacity pooling agreement, the new tracker will raise a residential customer’s monthly bill for 1,000 kilowatt hours (kWh) by 4.7 percent.

The OUCC, in its testimony, requested a gradual “phase-in” of the proposed increase.

I&M uses the following trackers:

Tracker Recovers Costs for Frequency IURC Cause No.
Fuel Adjustment Clause (FAC) Coal, nuclear and other fuel costs Quarterly 38702
Environmental Cost Recovery (ECR) Emissions control equipment (including operations & maintenance)  Quarterly 43636
Demand Side Management (DSM) Energy efficiency programs Semi-Annual 43827
Off-System Sales (OSS) Power sales to the wholesale market Semi-Annual 43775
PJM Interconnection (PJM) Regional transmission costs Semi-Annual 43774
Life Cycle Management (LCM) Construction costs for pre-approved Cook nuclear plant projects Semi-Annual 44182
Capacity Settlement Rider (CSR) Cost variances relating to an AEP capacity pooling agreement  Annual 44422

All publicly filed documents can be reviewed by visiting the IURC's electronic document system and entering the appropriate docket number.

* Rankings and examples refer to monthly usage of 1,000 kWh in the IURC’s 2014 Residential Bill Survey, based on July 1, 2014 billings.

10-17-14