OUCC recommends big reduction in I&M rate hike case

Photo Supplied - Indiana Michigan Power

INDIANAPOLIS, Ind. (WOWO): The state’s Office of Utility Consumer Counselor is meeting Indiana Michigan Power’s recent request for a rate increase with a major reduction.

The OUCC is recommending approval of $125.2-million in new revenues, less than half of the $263-million that I&M is seeking from the Indiana Utility Regulatory Commission.

That includes limiting the increase in I&M’s flat, monthly residential customer charge to only $1, as opposed to I&M’s plans to raise it from $7.30 per month to $18.

The Office says I&M’s proposal would have disproportionately affected low-volume customers and violated the rate-making principle of gradualism. They also recommend for the Commission to reduce various line items pertaining to the utility’s operating expenses, denying I&M’s request to shorten its depreciation periods for new meters, and cuts to other parts of the proposal.

Read the full recommendation below. The utility can issue a rebuttal by December 6th, with a Commission ruling on the request expected for Spring 2018.

“Through the use of our technical and legal resources over the last three months, we have calculated recommendations that, if approved, will provide I&M with the revenue it needs to ensure safe, reliable service for its Indiana customers,” said Indiana Utility Consumer Counselor Bill Fine. “Our testimony reflects a careful, thorough review of the evidence and additional information obtained through the discovery process.”

In testimony filed late Tuesday, the OUCC recommends:

  • Limiting the increase in I&M’s flat, monthly residential customer charge to only $1.00. I&M is proposing to raise the monthly residential charge from $7.30 to $18.00. The OUCC’s recommendations would cap that amount at $8.30. In its testimony, the OUCC notes that the utility’s proposed customer charge increases would discourage energy efficiency and disproportionately affect low-volume customers, while violating the ratemaking principle of gradualism.

 

  • Reducing I&M’s authorized return on equity to 8.65 percent. The utility’s current authorized return is 10.2 percent, and it is requesting an increase to 10.6 percent in this case.

 

  • Denial of I&M’s requests to shorten its depreciation periods for new meters and for Unit 1 at the utility’s Rockport Generating Station.

 

  • Reducing various line items pertaining to the utility’s operating expenses including personnel costs, nuclear decommissioning funding, and vegetation management.

 

  • Reducing the number of extra charges through trackers on consumers’ bills while seeking further Commission review of escalating costs related to transmission projects.

 

  • Denying newly proposed trackers and denying the continuation of certain existing trackers, which allow the utility to adjust rates for specific items between general rate cases.

 

The OUCC’s exhibits include written comments from more than 2,700 I&M customers. More than 100 I&M customers spoke at the IURC’s public field hearings in South Bend, Fort Wayne, and Muncie last month.

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