I&M slashes rate hike request nearly in half in agreement with state utility counselor

David Penticuff, Muncie Star Press
Updated ·4 min read

INDIANAPOLIS — Indiana Michigan Power reached agreement with the Indiana Office of Utility Consumer Counselor and other organizations to lower its pending rate hike request by nearly half.

The deal now must meet the approval of the Indiana Utility Regulatory Commission.

I&M Power has reached agreement with the Indiana Office of Utility Consumer Counselor to dramatically cut its request for a rate hike. But a modified rate increase would take place beginning in 2024, if the agreement is approved by the Indiana Utility Regulatory Commission.
I&M Power has reached agreement with the Indiana Office of Utility Consumer Counselor to dramatically cut its request for a rate hike. But a modified rate increase would take place beginning in 2024, if the agreement is approved by the Indiana Utility Regulatory Commission.

Under the settlement, I&M’s overall rate request of $116.4 million was reduced to $56.9 million plus $4.9 million in rider revenues (a line-item mechanism on bills that tracks specific costs), totaling $61.8 million. The settlement between I&M, the Indiana Office of Utility Consumer and additional parties was filed with the Indiana Utility Regulatory Commission on Wednesday. The commission may approve, modify, or deny any settlement, according to the counselor's office. Settling parties are now required to file testimony showing the agreement is in the public interest.

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Among consumer benefits noted by the Office of Utility Consumer Counselor were:

  • I&M monthly residential customer charge, which does not vary based on power usage, will be $15. The charge was set at $15 in I&M’s last rate case, then reduced to $14.79 under the repeal of the state’s Utility Receipts Tax. In the current rate case, I&M had proposed raising the charge to $17.50.

  • The utility’s authorized return on equity will be set at 9.85%, instead of I&M’s requested 10.5%.

  • A $15.8 million reduction in depreciation expense.

  • Reductions in nuclear decommissioning expenses.

  • Reductions to various line items for operating and maintenance expenses.

  • An annual cap on certain interstate transmission costs.

  • Withdrawal of the utility’s requested Grants Project Rider.

  • Approval of I&M’s proposed prepaid billing option as a pilot program.

  • A $200,000 annual shareholder contribution to the Indiana Community Action Association in 2024 and 2025 for low-income customer assistance.

“This agreement is the result of many hours of negotiations among the wide range of parties in this case,” Indiana Utility Consumer Counselor Bill Fine said in a press release. “I appreciate the efforts of the (Office of Utility Consumer Counselor's) legal and technical staff in building a strong case and negotiating a fair resolution. It will significantly mitigate the impact on customer bills while ensuring the utility has the revenues needed to provide reliable and resilient service."

According to a statement from I&M, the increase will occur in two phases.

In the first phase, a typical residential customer using 1,000 kilowatt hours of electricity would pay $166.36 per month, an increase of $4.20, effective in mid-2024.

In the second phase, a typical resident would pay an additional $4.27 beginning in January 2025, resulting in a bill of $170.63 and a total increase of 5.2%.

Among other aspects of the agreement, I&M also agreed that if it moves forward with a broadband program in Delaware and Grant counties, the costs of the program will not be included in customer rates. The utility is considering offering Internet service providers the ability to use I&M’s broadband infrastructure to greatly expand internet service in the two counties.

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The utility also agreed to work with the Citizens Action Coalition and other interested stakeholders on potential updates to I&M’s interconnection procedures in Indiana to facilitate distributed generation, such as solar panels and wind turbines, while ensuring the safety and reliability of the energy distribution system and compliance with Indiana law and regulation.

“I&M is pleased to reach an agreement that will serve our customers well with enhanced reliability and updated technologies while further controlling costs,” said Steve Baker, I&M president and chief operating officer. “We appreciate working with the organizations that are party to the rate review to reach a middle ground that will enable I&M to better serve customers’ energy needs.”

Specific upgrades planned for Indiana include: replacing more than 2,800 poles and replacing 240 miles of power lines, upgrading 15 substations and inspecting and maintaining trees and other vegetation along more than 5,000 line miles. I&M said that vegetation is the No. 1 cause of customer outages.

Also under the agreement, I&M affirmed that no customers will be disconnected for nonpayment on Fridays, Saturdays, Sundays and key holidays.

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In addition to I&M and the Indiana Office of Utility Consumer Counselor, other groups supporting the settlement agreement were: Citizens Action Coalition of Indiana; Walmart Inc.; I&M Industrial Group; the city of Fort Wayne; the city of Marion and Marion Municipal Utilities; and Wabash Valley Power Association.

I&M said the IURC is expected to review the settlement agreement, with a final ruling expected in mid-2024.

David Penticuff is a reporter with The Star Press. He can be contacted at dpenticuff@gannett.com.

This article originally appeared on Muncie Star Press: I&M chops rate hike request, studies broadband, solar interconnection