I&M Seeks to Amend Tariff for Large Energy Users
Indiana Michigan Power Company (I&M) has filed a petition with the Commission seeking approval for modifications to its Industrial Power Tariff (Tariff IP). The proposed changes aim to better accommodate large load customers whose demands exceed or are expected to exceed 150 MW. Andrew J. Williamson, Director of Regulatory Services at I&M, provided detailed testimony to support these modifications. In his testimony, Williamson highlighted increasing demand from large load customers and the concurrent transformation of generation resources. The proposed modifications include a 20-year contract term, a contract termination fee, provisions for reducing contract capacity, a 90% minimum monthly billing demand, and increased collateral requirements.
One of the proposed changes is the introduction of a 20-year contract term for large load customers. This long-term commitment is necessary to support the substantial investments I&M must make in transmission and generation infrastructure. “An initial contract of twenty (20) years provides reasonable assurance that these large customers will take service over a period that reasonably aligns with the cost of the significant investments and financial commitments the Company will make to provide service,” Williamson testified, Williamson Testimony at 8. Additionally, the modifications include a contract termination fee equivalent to five years of minimum billing if a customer permanently closes after the first five years of the contract.
The proposed 90% minimum monthly billing demand aims to mitigate the financial risks associated with significant variations in large customers' electricity usage. Williamson explained, “For a large load customer, the difference between a 60 percent and 90 percent minimum billing demand can be the revenue requirement associated with the cost of service of one or more power plants” Williamson Testimony at 14.
These modifications are designed to balance the interests of I&M, its customers, and stakeholders. As Williamson stated, “The proposed tariff modifications ensure that I&M has reasonable terms and conditions of service in place that recognize and address the different needs and unique risks that large load customers present from I&M’s other Tariff IP customers” Williamson Testimony at 4.
The filing by I&M is similar to a recent proposal by AEP Ohio, which seeks to establish a new rate structure for data centers and cryptocurrency operations. AEP Ohio's plan includes a requirement for new data centers with loads exceeding 25 MW and cryptocurrency mining operations with loads surpassing 1 MW to commit to paying for at least 90% of their projected monthly energy needs over a ten-year period.