Indiana Michigan Power rate increase could fund Innovate Indiana

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By Doug LeDuc
dleduc@kpcmedia.com

Indiana Michigan Power has proposed increasing monthly bills by $21.11, or 11.75%, for the average residential customer using 1,000 kilowatt hours, saying that would cover innovative strides it has in mind to prepare for tomorrow’s energy needs.

The American Electric Power subsidiary named the program Innovate Indiana and filed the rate case for it with the Indiana Utility Regulatory Commission in mid-May. If approved, the increase would be phased in with two steps of that taking place in the first half of 2020 and the final step early in 2021.

I&M received approval last year for a monthly rate increase of $9.41, or 7.26%, for the average residential customer using 1,000 kilowatt hours.

That included increasing a customer charge portion of the bill — which had been $7.30 — to $10.50. The company had sought unsuccessfully to raise that portion of the monthly bill to $18.

As part of its latest rate increase proposal, northeast Indiana’s primary power supplier would raise that charge to $15. It says at $10.50 the charge is the second lowest of major Indiana electric utilities.

“Electric utilities must install, maintain, upgrade and replace the infrastructure that brings energy to customers: poles, wires and much more,” Tracy Warner, corporate communications manager, said in an email.

The company faces higher constant costs associated with providing energy to the customer. These types of costs “do not change based on the amount of energy used,” Warner said. “Yet, most of a customer’s bill is based on the volume of electricity used.

“I&M is seeking adjustments in the service charge to more accurately reflect the true cost of a residential customer’s connection to the grid,” he said. “This proposed change in the service charge is included in — not an addition to — the new rates.”

The company described Innovate Indiana as a program to modernize and strengthen the energy grid with more high-tech equipment in a way that would reduce the number of power outages as well as their extent and duration. It would include an annual average for infrastructure exceeding $600 million.

Smart meter technology is a key element in developing a smarter energy grid, and provides customers much more information on their energy use, the company said.

Currently, “customers can see on their statement the amount of energy they used the previous month,” Warner said. “Smart meters give customers the ability to see their use by every hour of the day 24 hours later.

“Smart meters will also aid in quicker restoration during outages because I&M will have capability to immediately learn when an outage occurred and the precise customers that were affected. There are other advantages as well.”

About 10,000 I&M customers have smart meters now, but it plans to install about 450,000 of them for Indiana customers from 2020 to 2022.

“The smart meters are included in I&M’s cost of doing business and will be a minor factor in I&M’s overall rates; customers are not billed for them,” Warner said.

More than 85 million electric utility customers across the country have this type of meter, the company said.

“Technology offers I&M a number of ways to improve the reliability and value of service to our customers,” Toby Thomas, I&M’s president and chief operating officer, said in a statement on the program.

“From high-tech equipment on power lines and substations to availability of electric car charging to further diversifying the sources of energy, Innovate Indiana helps I&M take another big step toward better serving our customers and meeting their energy needs,” he said. “I&M will also continue its commitment to customers by continuously focusing on greater efficiency and controlling costs.”

Other elements of Innovate Indiana outlined in the statement included:

• Incentives to expand electric vehicle charging, supporting the electric grid and benefitting all customers. Innovate Indiana offers rebates and special rates for charging electric cars overnight along with incentives for businesses and fleet vehicles.

• Helping our customers by enhancing job opportunities through reimbursing employers for qualifying apprenticeships and training.

• A new Building Development Program creating a fund to help construct spec buildings that are important for job-creators seeking quickly available locations.

• Continuing to offer programs to assist low-income customers having difficulty paying their utility bills.

The apprenticeships covered must have a structured, on-the-job training program of at least a year and meet other qualifications. Participating businesses must meet thresholds for capital investment or the number of new employees hired, Warner said.

The types of businesses that can apply for the program include those in manufacturing, information technology, specialty insurance, health care and professional, scientific and technical services, he said.

“Both the job training and spec building programs are intended to spur economic development,” he said.

“I&M’s local economic development professionals have close relations with LEDOs (local economic development organizations) as well as local governments and developers and will work closely with them to choose effective locations.”

The company will seek partnerships with customers to support solar generation and those interested in supporting green energy will see an improved option for that, it said.

I&M also is updating its Cook Nuclear Plant, which it said generates enough emission-free energy to power more than 1.5 million homes.

“In 2018, 60 percent of I&M’s overall amount of energy generated was from Cook. Cook is a major reason that I&M’s generation has been two-thirds emissions-free over the past two years,” Warner said.

“Because all energy goes onto the grid, it is impossible to say exactly how much of the energy used in northeast Indiana is from Cook, but it is fair to say a large amount of the electricity used in our area is from Cook.”

Updating Cook’s two units as part of extending their licenses will allow them to continue generating low-cost, emission free power through the mid-2030s, 20 years beyond their original licensing periods, the company said.