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Indiana Michigan Power Co. (I&M) is poised to invest more funds into its ongoing work to enhance the reliability and resiliency of the electric grid, thanks to a recent order issued by Michigan regulators.
The Michigan Public Service Commission (PSC) on July 2 approved a rate increase request by I&M as part of the company’s Powering Our Future plan, which outlines the utility’s goals for improving service.
“Our goal is to provide an exceptional customer experience as we work to create grid resiliency and prepare for the demand of our growing communities,” said I&M President and Chief Operation Officer Steve Baker on Wednesday.
In September 2023, I&M filed a request to increase rates by $34 million, but the Michigan PSC approved a rate increase of $17.3 million for I&M, which serves 30 counties and 164 cities as one of seven operating companies owned by American Electric Power.
The utility had proposed a return on equity of 10.5 percent, an overall rate of return of 6.42 percent, and a permanent capital structure of approximately 50.6 percent equity and 49.4 percent debt.
However, the PSC’s order adopts a 52 percent debt to 48 percent equity capital structure, an authorized rate of return on common equity of almost 9.9 percent, and an overall rate of return of just more than 6 percent.
The PSC’s order means that for residential customers using 500 kilowatt-hours (kWh) per month, rates will increase by $3.66 (4.13 percent) starting on July 15. The commission approved I&M’s last base rate increase in Michigan in January 2020 for $36.4 million.
I&M said that the rate increase will support its ongoing work to enhance reliability, improve resilience during severe weather events, and update infrastructure.
“I&M is committed to providing our customers with reliable, safe, and affordable service now and in years to come,” Baker said.
The company plans to replace poles, wires, and other aging equipment and will rebuild roughly 50 miles of lines per year. Off-road distribution lines also will be replaced and relocated closer to main roads, where they can be restored much more quickly. And I&M will speed up its tree-trimming program to better protect overhead power lines.
The PSC’s order also provides I&M approval of capital investments to maintain its existing power plants and renewable projects, which will help the company transition to cleaner energy resources.
The order also allows I&M to take the initial step in determining whether to seek approval for a 20-year license extension of the Cook Nuclear Plant, which is capable of powering more than 1.5 million average homes annually. Its two units that separately generate power are licensed through 2034 and 2037, respectively.
Additionally, the PSC directed I&M to file a transportation electrification plan, including the utility’s comprehensive electric vehicle program proposal for Michigan. I&M must also present findings in its next general rate case on I&M’s shorter pole inspection interval cycle for vegetation management and was directed to conduct a cost-benefit analysis on tree trimming.
I&M plans to file both plans with the commission later this year.