Frequently Asked Questions

What does it mean that Indiana Michigan Power is seeking a review of its base rates?

I&M has asked the Indiana Utility Regulatory Commission – an independent, bipartisan state board created by the legislature and appointed by the governor – for approval to adjust our rates to reflect up-to-date costs and to help improve service to our customers. The commission will hear evidence from I&M as well as other organizations in reaching its decision. The commission’s role is to make sure that regulated utilities such as I&M provide reliable service at reasonable rates. See how the regulatory review process works.

Why do rates need to change?

This is the first time in six years, and only the third time in the past 25 years, I&M has asked for a review of its base rates in Indiana. Costs are going up – especially as we work to replace and enhance aging infrastructure. With much of our system many decades old, I&M is focusing on improving reliability with new poles, new transformers, upgraded substations and better technology.

I&M is also making significant investments in its generation as we transition toward a more diverse, lower emission energy mix. I&M is investing in the vital Cook Nuclear Plant to meet a number of new federal guidelines established since the last rate case. And we are proposing to adjust the depreciation of our Rockport coal-fueled plant to provide more flexibility as our generation transitions to other energy sources such as solar, wind and natural gas. See the energy mix in transition.

I have seen my bill go up at times in the last six years. Haven’t you had rate increases since then?

I&M last sought an increase in base rates in 2011. The base rate reflects the overall cost of bringing energy to your home or business. But some of I&M’s costs separately listed on your bills as “riders” or “trackers” reflect and track the true cost of a certain, specific segment of your service and are adjusted periodically. For example, the Fuel Cost Adjustment is based primarily on the cost of buying fuel for our generation plants. The trackers can be a charge or a credit and exist primarily for costs and credits that fluctuate in amount. Some fluctuations are due to the amount of work being done over the time period on a specific project, such as the $1.2 billion project to replace and update equipment at the Cook Nuclear Plant.

So how much has my bill changed over the last 10 years?

Adjusted for inflation, the average residential bill has increased approximately 3 percent per year over the past decade. Historically, I&M rates have been below state and national averages.

Will these new rates mean better reliability?

One element of the Building the Future plan is to systematically trim and clear trees near power lines every four years. Trees, branches and limbs are the No. 1 cause of customer outages, and a shorter cycle for tree trimming is expected to reduce outages.

In 2018 alone, I&M plans to replace an estimated 1,400 poles, more than 20 miles of overhead lines and more than 12 miles of underground lines in the Indiana service territory. New and better poles, wires, transformers and other equipment will help make the I&M system more resilient to outages, particularly those related to weather events. Underground networks in downtown Fort Wayne, Muncie, South Bend and Elkhart are being rebuilt. See projects in your area.

What may be less obvious – but just as important – is the additional technology I&M will employ to help reduce the outages and shorten the length of time such outages last.
For example, the Building the Future plan includes “sectionalizing” more circuits. When the wind blows a tree into a line, it often knocks out energy to all customers served by that circuit – sometimes hundreds of homes. By sectionalizing circuits into shorter distances, fewer customers will lose service if that tree falls.

Are there any other technological considerations beyond the wires, poles, transformers and other equipment that deliver electricity?

Advances in technology increasingly give customers the capability to better measure and control their electric use with advanced new smart meters. These meters also can help identify the precise location of outages much faster. To prepare for the future deployment of new metering technology, I&M proposes to adjust the timing of the retirement of the older metering technology.

Are there additional ways this plan will help customers?

I&M is working to better serve our customers, proposing to eliminate the third-party fee when customers charge their bill to a credit card and making accounting changes to allow for future deployment of smart meters that give customers more control over their energy use.

The Building the Future plan also gives customers the opportunity to support renewable energy by attributing a percentage of usage to wind and solar power. This is just one of the ways I&M is working to help serve customers in the ways they want to be served. See Serving Our Customers and Communities.

How much does the proposed filing request my rates to be adjusted?

For a residential customer using 1,000 kilowatt hours (kWh) per month, your monthly bill would increase less than $1 a day.

Why is I&M proposing an increase in the minimum customer charge (sometimes referred to as fixed charge)?

I&M’s fixed-cost residential service charge is just $7.30 per month – the lowest among Indiana’s investor-owned electric utilities. I&M proposes to adjust the fixed cost to $18 to more closely reflect the true costs for a customer to be connected to the system. Many economists believe it is most efficient to reflect variable costs such as amount of energy used with a variable charge, and to reflect fixed costs with a fixed charge.

Is I&M doing anything to control costs?

I&M and its employees strive to work safely and efficiently as possible and to use the bulk purchasing power of I&M and parent company AEP. I&M constantly aims to improve reliability while holding the line on costs. Much of I&M’s request in the rate review is for Building the Future plans, including infrastructure improvements, tree trimming and transitioning to a more diverse energy mix.

When would these new rates take effect?

I&M has proposed a phased-in increase over two steps. The first would occur in summer 2018; the new rate will be fully implemented at the beginning of 2019.

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