Possible rate hikes coming for I&M users

Indiana Michigan Power seeks to increase electric rates

Posted on Sept. 28, 2011 at 1:00 a.m.


ELKHART – Indiana Michigan Power, saying it is struggling to under environmental mandates and financial obligations, has requested permission from the state to raise overall electric rates 14 percent.

In a rate case filed last week with the Indiana Utility Regulatory Commission, the utility is seeking to increase net annual revenues by $148.6 million. To do so, I&M has proposed raising the rates 9.5 percent for industrial and commercial users and jumping rates 22.7 percent for residential customers.

Under the company’s plan, the monthly electric bill would increase about $20 for the average household using 1,000 kilowatt hours of electricity each month.

The rate hike will create more financial strain on Elkhart residents, said Vonda Horst, director of social services at Church Community Services. Already many of the clients appealing to CCS for financial assistance are having to choose between keeping the electricity or the natural gas on.

“It’s going to drain us. Again,” Horst said.

In testimony submitted to the IURC, Paul Chodak III, I&M president and chief operating officer, addressed concerns over the impact of higher rates on consumers. He emphasized that Indiana Michigan Power currently has the lowest rates of all investor-owned utilities in Indiana with households paying about $84.65 each month for 1,000 kilowatt hours.

These rates, he continued, will remain below the average rate if the company’s rate request is approved entirely.

“I&M’s current rates are not just and reasonable,” Chodak stated in testimony. “While I&M continues to work hard to control our operating expenses, I&M is faced with the cost of environmental mandates and other challenges. …The company’s long-term effort to tighten our belt significantly contributes to keeping our rates low in the face of such environmental mandates and other challenges, but we are out of notches.”

Indiana Michigan Power, a subsidiary of American Electric Power, provides electricity to about 458,000 retail customers in northern and east-central Indiana and to another 128,000 retail customers in southwestern Michigan. Locally, residents of the city of Elkhart receive electricity from I&M while county residents get their electricity from Northern Indiana Public Service Co.

Now that the case has been filed, the IURC will next hold a prehearing conference to schedule additional filing and hearing dates, according to the commission.

As part of request for more revenue, I&M is launching an initiative to explain its position and be transparent. The company, Chodak told The Elkhart Truth, wants consumers to understand the reasons for the rate increase.

“It’s not like the rates go up, I get a raise,” he said.

The hotter than usual summer resulted in higher electric bills because Elkhart residents plugged in fans and turned down air conditioners to keep cool, CCS officials said. Also many of the unemployed who have returned to work are getting smaller paychecks or they have been laid off again.

People will not be able to cover the rate hike “because they already can’t handle what they have,” Horst said.

Chodak stated, in his testimony, all electric utility providers, including I&M, are facing “a multitude of U.S. Environmental Protection Agency regulations” that include rules to cut emissions of sulfur dioxide and nitrogen oxides as well as rules to control coal ash handling and disposal, and to regulate water usage and discharge from power plants.

To comply with these new regulations, I&M will be installing scrubbers on units 1 and 2 at its Rockport power plant in Spencer County, Indiana. The utility is also moving up the retirement date to December 2014 of units 1, 2 and 3 at the Tanner’s Creek facility near Lawrenceburg.

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