Indiana Michigan Power Co. should have most of its proposed three-step, $172 million rate increase cut, according to Indiana's consumer advocate.
The Indiana Office of Utility Consumer Counselor, or OUCC, filed testimony Aug. 20 with the Indiana Utility Regulatory Commission and called for regulators to approve a rate increase of less than $2 million for the American Electric Power Co. Inc. subsidiary.
Indiana Michigan Power "is a financially sound utility, and the rate increase it received last year appears to be sufficient to cover its needs," Indiana Utility Consumer Counselor Bill Fine said in a news release. In May 2018, the Indiana Utility Regulatory Commission approved a settlement agreement that allowed Indiana Michigan Power to increase rates by $96.8 million.
The utility in May asked state regulators for an 11.75% overall increase in electric retail rates with a 10.5% return on equity.
Among other things, the utility plans to spend more than $600 million annually to "enhance" energy infrastructure through modernizing and strengthening the electric grid, including deploying advanced metering infrastructure or smart meters. In addition, the utility is investing in upgrades mandated by the U.S. Nuclear Regulatory Commission at its 2,278-MW Donald C. Cook nuclear plant in Michigan and environmental upgrades at the 2,600-MW Rockport coal plant in Indiana.
However, the OUCC said Indiana Michigan Power's ROE should be set at 9.1%. The consumer advocate also said Indiana Michigan Power has not offered a sufficient cost-benefit analysis to support charging all customers for automated metering infrastructure deployment. More than 60% of the utility's existing meters are not at the end of their useful lives, the OUCC said.
The consumer advocate further said regulators should not allow cost recovery for proposed environmental upgrades at the Rockport plant. According to the OUCC, the upgrades are not needed to maintain compliance with current federal rules and can be revisited at another time.
Indiana Michigan Power's monthly residential customer charge should remain at $10.50, compared to the utility's request to raise the charge to $15, the OUCC said.
The utility has until Sept. 17 to file rebuttal testimony. The commission is expected to rule on the rate case in March 2020. (IURC Cause No. 45235)
