A public hearing will be held on June 22 at the Michigan Public Service Commission in Lansing, Mich., regarding Indiana Michigan Power’s (I&M) request for commission approval of an overall rate increase of about $51.7m, or about 17%, on an annual basis, according to a May 22 commission document.
I&M, in a May 15 statement, noted that it is asking the commission to approve its “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 Cook nuclear plant, the company said.
I&M said that while it began the Life Cycle Management project at the Cook plant six years ago, the $1.2bn project has not yet been reflected in Michigan rates. The project will enable the plant’s two units to continue operating through their extended license lives of 2034 and 2037, respectively, the company said. New rates would also reflect the cost of upgrades and modifications required by the U.S. Nuclear Regulatory Commission, as well as enhanced cyber security, I&M said.
The Building the Future plan would also accelerate trimming and clearing of trees and other vegetation near power lines, I&M said. Furthermore, the proposal 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, the company said.
According to I&M’s May 15 application filed with the commission, key factors contributing to the needed increase in the company’s electric revenue requirements include revenue requirement changes related to rate base; depreciation rates; sales forecasts; operation and maintenance expense; as well as such other expenses as amortization and recovery of certain deferred assets.
For purposes of this case, I&M said that it has undertaken a complete examination, based on a 2018 test year, of relevant items of investment, expenses and revenues for the determination of just and reasonable retail electric rates. Based on the test year, I&M said that its retail electric rates in Michigan are, and will be, so low as to deprive the company of a reasonable return on investment.
Among other things, I&M said that it is seeking an overall rate of return of 6.02%, including a rate of return on common equity of 10.60%.
I&M is an operating unit of American Electric Power (NYSE:AEP).