I&M Seeks Base Rate Regulatory Review of Building the Future Plan

FORT WAYNE, Ind. – Indiana Michigan Power (I&M), an operating unit of American Electric Power (NYSE: AEP), is asking the Michigan Public Service Commission to approve I&M’s Building the Future proposal in a review of base rates, the first requested since 2011.

The Building the Future plan calls for investments to enhance customer reliability and service by reducing outages, as well as maintaining the emission-free Cook Nuclear Plant as the anchor of I&M’s generation fleet for many years to come. Building the Future would also help diminish I&M’s No. 1 source of customer outages – trees and other vegetation – by accelerating trimming and clearing near power lines. The systematic trimming is within accepted industry guidelines and a major step in addressing the issue.

I&M’s proposal also includes an important new economic incentive to help attract and retain a wide array of new business and industry to I&M’s service area in Michigan, as well as eliminating a fee for customers who use a credit card to pay their bill.

“I&M’s goal is to improve reliability, reduce outages and provide adequate resources while being mindful of the cost impacts on our customers,” said Toby Thomas, President and Chief Operating Officer of I&M. “The reality is that much of our system is decades old, and we need to serve our communities by renovating aging equipment and modernizing the delivery system to meet customers’ expectations into the future.”

Though I&M began the Life Cycle Management project at Cook six years ago, the $1.2 billion project has not yet been reflected in Michigan rates. The project will enable Cook’s two units to continue operating through their extended license lives of 2034 and 2037, respectively. New rates would also reflect the cost of upgrades and modifications required by the Nuclear Regulatory Commission as well as enhanced cyber security.

The Building the Future plan includes systematically updating I&M’s aging energy delivery system, using stronger poles and wires as well as expanded technology to make the system more resilient to weather events and reduce the impact of weather-related outages. Over five years, I&M expects to replace more than 2,000 poles, more than 50 miles of overhead lines and more than 20 miles of underground lines in southwest Michigan.

I&M seeks to keep its rates at levels that are reasonable and compare favorably to other utilities. I&M is asking the Michigan Public Service Commission to approve a rate that would be less than an additional $1 a day for a residential customer using 1,000 kilowatt hours of electricity per month. The overall increase would be about $51.7 million, or about 17 percent.

Much has changed in the areas of technology, generation and more since I&M filed its last rate case six years ago. I&M is Building the Future by updating several financial factors to more accurately reflect today’s costs:

• Though much of a customer’s electric bill goes toward fixed costs such as poles and transformers and wires, I&M’s fixed charge for residential customers is just $7.25, below state average. I&M is proposing an increase in the service charge to $18 to more fairly and accurately reflect true costs.

• I&M proposes a fixed charge of $9 for low-income and senior-citizens customers – half of the regular residential fixed charge.

 • 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.

• As the nation moves more rapidly toward renewables, I&M will be Building the Future by preparing for transition away from coal-fueled plants. I&M proposes to adjust the depreciation of Unit 1 of its Rockport plant to prepare for its eventual retirement; the sooner depreciation costs are adjusted, the less impact on customers.

Other highlights of the plan include:

• Offering a new rate to qualifying industrial and commercial users of energy to help attract and keep businesses and industries in southwest Michigan. In addition to helping develop the economies of the areas where they are located, new and growing businesses assist state and local governments by bringing in additional tax revenues. They also help other I&M customers by spreading the company’s fixed costs over a larger customer base.

• As part of I&M’s ongoing commitment to enhance our interactions with customers, I&M proposes to eliminate the fee for charging a bill payment on a credit card. Customers are also encouraged to sign up for electronic billing and payment options at www.IndianaMichiganPower.com/account.

Customers can learn more about Building the Future and the regulatory rate review process at www.IndianaMichiganPower.com/BuildingTheFutureMichigan.

# # #

Indiana Michigan Power (I&M) is headquartered in Fort Wayne, and its 2,450 employees serve more than 589,000 customers. More than half of its generation is emission-free, including 2,160 MW of nuclear generation in Michigan, 450 MW of purchased wind generation from Indiana, 22 MW of hydro generation in both states and approximately 15 MW of large-scale solar generation in both states. The company’s generation portfolio also includes 2,600 MW of coal-fueled generation in Indiana.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity and custom energy solutions to nearly 5.4 million customers in 11 states. AEP owns the nation’s largest electricity transmission system, a more than 40,000-mile network that includes more 765-kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP also operates 224,000 miles of distribution lines. AEP ranks among the nation’s largest generators of electricity, owning approximately 26,000 megawatts of generating capacity in the U.S. AEP supplies 3,200 megawatts of renewable energy to customers. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.

Tracy Warner
Indiana Michigan Power Communications
(260) 408-3420

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