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I&M Rate Case - OUCC Consumer Fact Sheet (7-8-08)

The following fact sheet was distributed at the OUCC information meeting and IURC public field hearing held in Ft. Wayne on July 8, 2008.

OVERVIEW – I&M REQUEST

Indiana Michigan Power (I&M) is seeking an increase in electric rates and charges for its Indiana customers. The utility’s request is pending before the Indiana Utility Regulatory Commission (IURC) in Cause No. 43306.

  • I&M – a wholly owned subsidiary of American Electric Power Company, Inc. (AEP) – provides service to residential, commercial and industrial customers in 20 northern, northeastern and east-central Indiana counties.

Residential electric bills include two major components: 1) The base rate and 2) The fuel adjustment clause.

The utility’s base rate is at issue in this case.

  • Base rates include operating and maintenance expenses, along with costs for capital projects.
  • In its testimony in this case, I&M advises that the proposed base rate increase is due to growth in operating and maintenance costs, along with numerous infrastructure improvements to its Indiana transmission and distribution systems. 
  • Any changes in a regulated utility’s base rates must be approved by the IURC before taking effect. Indiana law allows regulated utilities to petition for rate cases no more frequently than once every 15 months. 
  • I&M’s current Indiana base rates were approved in 1993. 
    • I&M’s Indiana base rates were frozen from 1999 through 2007 under IURC orders in Cause Nos. 38702-FAC40-S1, 41210 and 42045. Issues addressed in those cases included an extended 1997 outage at the D. C. Cook Nuclear Plant, the 1997 merger of AEP and Central & South West Corp. (CSW), and the termination of a 1951 operating agreement between AEP and I&M.
  • For a residential customer, the utility’s proposal would: 
    • Increase the monthly service charge from $6.65 to $7.40, and 
    • Set the energy charge at 7.41 cents-per-kilowatt-hour (kWH), regardless of monthly usage. (Under I&M’s current tariff, the monthly energy charge is 7.41 cents for each of the first 200 kWh, 6.612 cents for each of the next 300 kWh, and 5.707 cents for each kWh over 500 kWh.) 
      • If a residential customer uses 1,000 kWh per month, the utility’s proposal would increase the base rate portion of the bill from $68.49 to $81.50. 
  • In this case, I&M is seeking an additional $125.6 million in annual Indiana operating revenues. A portion of the increase as proposed by I&M would be recovered through five rate recovery mechanisms, or “trackers.”
    • Each tracker would be adjusted on an annual basis subject to OUCC review and IURC approval, and would address regional transmission costs, environmental compliance expenses, energy efficiency programs, future infrastructure projects, and off-system sales.
    • Other investor-owned electric utilities in Indiana (Duke Energy, Indianapolis Power & Light, Northern Indiana Public Service Co., and Vectren Energy Delivery) utilize trackers to varying degrees.

This case is separate from the utility’s Fuel Adjustment Clause (FAC) process, which allows electric utilities to recover the costs of coal and other fuels on a dollar-for-dollar basis in addition to base rates.

  • Under Indiana law, regulated electric utilities may request FAC adjustments to reflect actual supply cost changes on a regular basis. I&M makes such requests every six months, while most utilities file FAC requests every three months. 
  • Utilities are not allowed to profit on the FAC portion of electric bills. 
  • Fuel adjustments for all regulated Indiana electric utilities are subject to OUCC audits and require IURC approval.
  • I&M’s Indiana fuel costs were frozen from March 2004 through June 2007, under the order in IURC Cause No. 42045 as referenced above.

OVERVIEW – OUCC INVOLVEMENT

The Indiana Office of Utility Consumer Counselor (OUCC) is a separate state agency from the IURC, and is the statutory representative for the interests of all utility consumers (residential, commercial and industrial) in cases before the IURC. 

  • The OUCC has not yet taken a position in this case, with the agency’s legal and technical staff reviewing the utility’s request and evidence. 
  • The IURC has established a August 1 deadline for the OUCC to complete its review and file testimony. 
  • The OUCC’s testimony will be available online at www.in.gov/oucc/2984.htm after being filed with the IURC.

OVERVIEW – INTERVENING PARTIES

Several additional parties have formally intervened in this case through legal counsel, as allowed by Indiana law.

These parties include the City of Fort Wayne, City of South Bend, Citizens Action Coalition of Indiana, and a group of I&M’s industrial customers (including General Motors Corporation, Praxair, Inc., Marathon Petroleum Company LLC, Air Products & Chemicals, Inc., BOC Group, and I/N Tek.)

The intervening parties are schedule to file testimony August 1, the same date the OUCC’s testimony is due.

TIMELINE

June 19, 2007: Indiana Michigan Power (I&M) filed a petition with the IURC initiating this case.

August 8, 2007: The IURC issued a pre-hearing conference order establishing a procedural schedule.

January 31, 2008: I&M filed testimony and exhibits in support of its request.

May & June 2008: A technical evidentiary hearing was held in Indianapolis, to allow for IURC, OUCC and intervenor questioning of I&M’s technical witnesses who have filed written testimony in this case. The hearing covered portions of 13 days in May and June.

July 8, 2008: An IURC public field hearing is being held in Ft. Wayne.

August 1, 2008: The OUCC and intervening parties are scheduled to file testimony in this case.

September 15, 2008: I&M is scheduled to file rebuttal testimony.

October 21, 2008: An IURC technical evidentiary hearing is scheduled to begin at 9:30 a.m. at the National City Center in Indianapolis and is scheduled to last six days. While evidentiary hearings are open to the public, participation is typically limited to cross-examination of technical witnesses who have filed testimony on behalf of the case’s formal parties.

IURC final orders are issued at the Commission’s weekly Conferences. Conferences are typically held on Wednesday afternoons, with agendas posted 48 hours in advance at: www.in.gov/iurc/2428.htm.

A settlement agreement is possible in any legal proceeding; all hearing and filing dates in any legal proceeding are subject to change.

WHAT WILL HAPPEN AT THE PUBLIC FIELD HEARING

An IURC public field hearing is a formal, legal proceeding. It is presided over by an Administrative Law Judge and recorded by a court reporter, with at least one Commissioner present.

Consumers may make sworn written or oral comments on the pending case. Consumer comments are given equal consideration whether they are written or oral.

Attorneys for the case’s formal parties – the utility and the OUCC – participate.

A public field hearing does not include a question and answer format; it is designed to allow sworn consumer testimony under oath. IURC Commissioners are not allowed to answer questions, as they will ultimately weigh the evidence and render a final decision.

No final IURC decision in the case will be made during the field hearing.

ADDITIONAL INFORMATION

All publicly filed documents in this case are available for review on the IURC Website by: 

  • Visiting www.in.gov/iurc 
  • Clicking the “Electronic Filing System” link in the upper right portion of the page 
  • Clicking the “Search Cases” link near the upper left corner of the following page 
  • Entering docket number 43306 in the first field on the search page

Case updates will also be posted on the OUCC Website at www.in.gov/oucc/2984.htm.

GENERAL AGENCY INFORMATION

Indiana Office of Utility Consumer Counselor (OUCC)

  • State agency 
  • Represents the interests of all Indiana utility consumers – including residential, commercial and industrial customer interests – in cases before the IURC and federal utility regulatory commissions
  • Staff of attorneys, accountants, engineers, economists, consumer services and support personnel

Indiana Utility Regulatory Commission (IURC)

  • State agency 
  • Regulates many, but not all, Indiana utilities 
  • Regulates utility rates, financing, service territory, quality, etc. 
  • Neutral, fact-finding body required by law to make decisions that balance the interests of utilities and consumers