Indiana Rate Settlement Agreement

Indiana Michigan Power’s customers and the communities it serves rely on reliable energy to power our lives, now more than ever. From remote work and school, to heating and cooling our homes, cooking dinner and charging the technology we use, I&M is there ensuring the safe and reliable delivery of service. Increasingly, I&M is looking for ways to add value to your daily life through our essential service.

I&M has filed with the Indiana Utility Regulatory Commission (IURC) a rate settlement agreement that will reduce base rates for Indiana residential customers while enhancing reliability. Under the settlement, I&M will reduce its base rates for Indiana residential customers by about 5% over two phases. At the same time, I&M will continue to increase its investments for enhancing reliability by upgrading aging infrastructure in Indiana. As part of I&M’s Powering the Next plan, I&M will invest more than $350 million in reliability and grid resiliency improvements to the electric distribution system.

Enhancing Reliability

I&M is strengthening the Indiana electric grid to reduce the number and duration of power outages for customers and the communities it serves. That’s why we are Powering the Next in reliability.

I&M maintains more than 15,000 miles of distribution power lines and 193 substations in Indiana. Much of the system was built in the 1960s and 1970s and continued investments are needed to replace aging infrastructure and provide safe, reliable service.

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The settlement agreement preserves I&M’s plans to enhance reliability of service to our customers by updating and replacing aging infrastructure. The rate agreement will support I&M’s plans to continue strengthening the electric grid in Indiana to reduce the number and duration of power outages. Specific Indiana plans of this $350 million investment include:

• Replacing more than 2,500 poles and replacing 120 miles of power lines.
• Upgrading 16 substations.
• Inspecting and maintaining vegetation along 4,000 line miles. Vegetation is the No. 1 cause of customer outages.

These enhancements will build on projects approved in previous I&M rate reviews, which have resulted in reduced vegetation-related and equipment-related outages.

Projects approved in previous rate reviews have resulted in improved Service Average Interruption Duration Index (SAIDI) scores, which is how the energy industry measures the average length of outages, due to transmission, station, vegetation and equipment failures. From 2019 to the end of 2020, we saw an 18.6% overall reduction.

• Equipment Failure SAIDI is at a 3-year low
• Transmission SAIDI at is a 5-year low
• Station SAIDI is at a 4-year low
• Tree/Vegetation SAIDI is at a 5-year low
  • Our current 4-year tree trim cycle, approved in a prior rate review, is responsible for the substantial decrease in tree and vegetation outages.
    • There has been close to a 30% reduction in tree and vegetation-related SAIDI since the beginning of the trim cycle in 2017.
  • The pending proposal would build on this success by starting a new 4-year trim cycle in 2022.

Our reliability successes indicate that a continuation of these efforts will continue to improve service to our customers.

In addition to these upgrades, we plan to perform additional risk mitigation work, including:

• Inspecting more than 30,000 wooden poles
• Inspecting more than 2,400 miles of overhead power lines
• Inspecting four downtown city underground networks (South Bend, Elkhart, Fort Wayne and Muncie)

We also continue to invest in our generation sources to ensure reliable energy for our customers.

New Technologies

Indiana Michigan Power (I&M) is Powering the Next in technological advancements and cybersecurity protection. Cyber threats continue to be a growing risk for all companies and we want to make these investments to benefit our customers and the overall security of the electric grid.

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Enhancing the Grid

• We are installing new self-healing technology, using sensors and smart reclosers, to monitor power lines and equipment 24/7 and provide real-time performance data. New technology can detect power outages and reroute electricity to customers.
• Cybersecurity is a growing, ongoing threat, especially as technology evolves. Part of our proposal includes IT upgrades that will help protect our computer systems and the grid from cyber threats.
• We are also planning to enhance overall business operations with new technology, like artificial intelligence, robotic process automation and other tools to automate processes.
• These investments all work together to help build a grid that will be stronger and more responsive, helping improve our energy delivery to the people and communities we serve.

Increasing Customer Control with Smart Meters

I&M is Powering the Next in customer experience as it continues investing in distribution infrastructure and newer technologies. Smart meters will improve reliability and provide more value to customers through a variety of services and programs to help customers make better choices and potentially save money.

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Smart meters use advanced technology to monitor energy use and provide two-way communication with the energy company, which aids with outages and restorations, and provides the platform for enhanced customer controls and programs.

I&M plans to install more than 580,000 smart meters by 2024. With smart meters, I&M customers will have access to more timely energy usage information, 24 hours a day, 7 days a week so they can use the information to make adjustments in when and how they use electricity.

As part of the Indiana settlement agreement, I&M will enhance the customers’ experience by continuing to replace older-technology meters with new smart meters. Smart meters provide I&M insight into the distribution system to detect any issues or outages on the system and respond in a more efficient manner.

The new smart meters also enable customers to gain more control over their energy use by using the I&M website to monitor their energy usage. I&M will also be rolling out a number of new optional programs that customers can choose from based on their individual preferences.

Learn more about smart meters at IndianaMichiganPower.com/SmartMeters.