Indiana Michigan Power seeking $116.4M rate increase
I&M has filed a petition seeking an increase in its electric utility service rates. The petition, filed under Cause No. 45933, is anchored on several key points.
The company is utilizing a forward-looking test period determined based on projected data for the twelve months ending December 31, 2024. I&M proposes an overall annual increase in revenues from base rates and charges, amounting to approximately $116.4 million or roughly 6.8%. This increase would be phased in over two steps. In Phase I, revenues would rise by about $83.7 million or 4.89%, followed by an additional $32.7 million or 1.91% in Phase II.
Regarding the financial structure, I&M proposes a weighted average cost of capital (WACC) of 6.49%. This WACC reflects the forecasted capital structure for the Test Year end on December 31, 2024, which is based on investor-supplied capital. This structure comprises a 48.8%/51.2% ratio of long-term debt to equity. The company is also seeking an authorized return on equity (ROE) of 10.50%. I&M emphasizes that this proposed ROE is crucial to support its ongoing infrastructure investments, which ultimately benefit the customers.
The primary reason for the proposed rate increase is the significant capital expenditures I&M has undertaken. The company's filing includes average annual capital expenditures of $548.5 million during January 2023 to December 2024. These investments are primarily focused on infrastructure improvements, cybersecurity enhancements, and compliance with environmental and regulatory requirements. The company is also investing in modernizing its energy delivery infrastructure, which incorporates technologies such as advanced metering infrastructure (AMI), Conservation Voltage Reduction (CVR), distribution automation circuit reconfiguration (DACR), and more. These technological advancements aim to improve and modernize I&M's energy delivery infrastructure, enhancing system reliability and providing customers with tools to manage their energy usage and costs more effectively.
I&M is also proposing a new, voluntary pre-pay residential billing option. The program aims to offer more flexibility in payment methods, allowing customers to interact with I&M on their terms and potentially improve overall customer satisfaction. PowerPay participants will receive periodic electronic notifications about their remaining account balance.