Benzinga | Nov 17, 2021 10:03AM EST

Indiana Michigan Power Enters Rate Settlement Agreement That Provides Significant Customer Benefits; Agreement Will Reduce Base Rates For Indiana Residential Customers By ~5% Over 2 Years

Indiana Michigan Power (I&M), an American Electric Power (NASDAQ:AEP) company, has filed with the Indiana Utility Regulatory Commission (IURC) a rate settlement agreement that will reduce base rates for Hoosier 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, with a slight decrease of about 1% in May 2022 and an additional, larger decrease in January 2023. 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.

"Indiana Michigan Power constantly strives to serve customers with safe, reliable and affordable power," said Steve Baker, president and chief operating officer of I&M. "I&M's plan will pave the way for I&M's transition to renewable energy, enhance reliability and make our service more affordable. We are pleased to collaborate with the Indiana Office of Utility Consumer Counselor (OUCC) and a number of other groups to reach an agreement that best serves customers by lowering their base rates while supporting I&M's program to sustain and enhance service."

Although I&M originally requested an increase in rates, the company has the ability to decrease its base rates as a result of a separate settlement agreement reached in September, after the original rate case was filed. That agreement removes the Unit 2 portion of I&M's coal-fueled generation plant in Rockport from customer rates, beginning in January 2023.

I&M and nine stakeholder groups representing various customer interests agreed to the terms of the settlement agreement, which is subject to approval by the IURC.

Enhancing reliability with investment of more than $350 million

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 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.

Improved Customer Experience

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.