State agency concludes I&M’s rate hike request too high

Office of Utility Consumer Counselor_294570

The Indiana Office of Utility Consumer Counselor (OUCC) is recommending approval of less than half of Indiana Michigan Power’s (I&M’s) requested rate increase.  The following information regarding the OUCC’s recommendation was emailed to NewsChannel 15 Wednesday morning.

In a pending case before the Indiana Utility Regulatory Commission (IURC), I&M is seeking more than $263 million in new annual operating revenues from its Indiana customers. The OUCC, which represents consumer interests in IURC cases, has filed testimony recommending that the increase be limited to approximately $125.2 million.

“Through the use of our technical and legal resources over the last three months, we have calculated recommendations that, if approved, will provide I&M with the revenue it needs to ensure safe, reliable service for its Indiana customers,” said Indiana Utility Consumer Counselor Bill Fine. “Our testimony reflects a careful, thorough review of the evidence and additional information obtained through the discovery process.”

In testimony filed late Tuesday, the OUCC recommends:

Limiting the increase in I&M’s flat, monthly residential customer charge to only $1.00. I&M is proposing to raise the monthly residential charge from $7.30 to $18.00. The OUCC’s recommendations would cap that amount at $8.30. In its testimony, the OUCC notes that the utility’s proposed customer charge increases would discourage energy efficiency and disproportionately affect low-volume customers, while violating the ratemaking principle of gradualism.

  • Reducing I&M’s authorized return on equity to 8.65 percent. The utility’s current authorized return is 10.2 percent, and it is requesting an increase to 10.6 percent in this case.
  • Denial of I&M’s requests to shorten its depreciation periods for new meters and for Unit 1 at the utility’s Rockport Generating Station.
  • Reducing various line items pertaining to the utility’s operating expenses including personnel costs, nuclear decommissioning funding, and vegetation management.
  • Reducing the number of extra charges through trackers on consumers’ bills while seeking further Commission review of escalating costs related to transmission projects.
  • Denying newly proposed trackers and denying the continuation of certain existing trackers, which allow the utility to adjust rates for specific items between general rate cases.

The OUCC’s exhibits include written comments from more than 2,700 I&M customers. More than 100 I&M customers spoke at the IURC’s public field hearings in South Bend, Fort Wayne, and Muncie last month.

The utility’s rebuttal testimony is due December 6, 2017 with an IURC evidentiary hearing scheduled to start on January 16, 2018 in Indianapolis. While evidentiary hearings are open to the public, participation is typically limited to attorney and Commission questioning of technical witnesses who have filed testimony on behalf of the case’s formal parties. The Commission’s order is expected in spring 2018.

While I&M’s rebuttal testimony isn’t scheduled until next month, the utility issued this statement Wednesday morning regarding the OUCC’s recommendation:

Indiana Michigan Power has begun the process of reviewing the proposals of the Office of Utility Consumer Counselor (OUCC) and the other parties filed recently regarding the company’s Building the Future plan and associated regulatory rate review.

I&M respects the open rate review process that provides for the OUCC, the government agency responsible for representing the public, and other stakeholders, such as municipalities, commercial customers and the public in general to make their positions known regarding the rate review.

As the rate review process continues, I&M will have the opportunity to more formally present its case in evidentiary proceedings before the Indiana Utility Regulatory Commission. I&M is committed to the importance of its Building the Future plan, which aims to strengthen infrastructure, reduce outages, allow for diversifying the sources of energy generation, and accomplish other important goals to better serve our customers.

I&M provides electric utility service to approximately 460,000 customers in 24 northern, northeastern, and east-central Indiana counties.

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