Indiana Michigan Power's request for a $104 million annual rate hike – about 6.5% – should be denied, the state's consumer advocate for utilities said Thursday.
Instead, the Indiana Office of Utility Consumer Counselor said I&M should be seeking a rate decrease of $6.3 million.
Bill Fine, the state's utility consumer counselor, represents all Indiana consumers “to ensure quality, reliable utility services at the most reasonable prices possible through dedicated advocacy, consumer education and creative problem solving,” according to the agency's website.
The office made its recommendation in a filing with the Indiana Utility Regulatory Commission, the organization that will decide whether to approve I&M's July 1 request. The review process typically takes 300 days.
In addition to a potential increase in electricity rates, northeast Indiana households might be asked to shoulder an increase in their natural gas bills. NIPSCO last month asked the Indiana Utility Regulatory Commission to approve a 17% rate hike.
That request includes a proposed increase in the base monthly charge from $14 to $24.50. If approved, the increase would generate about $115 million annually for NIPSCO.
The Utility Consumer Counselor's brief concerning I&M's proposed price increase included testimony from 11 expert witnesses, based on the agency's three-month technical and legal review of evidence filed by the utility.
“After receiving base rate increases in 2018 and 2020, I&M has not made the case for this increase at this time,” Fine said in a statement. “Our analysis of the utility's request shows I&M to be a financially sound utility that is capable of providing safe and reliable service to its Indiana customers with the revenues it currently has.”
In its request, I&M argued it needs the money to make investments in reliability, customer experience and new technologies.
The increase for residential, commercial and industrial customers would vary depending on usage, but I&M calculated estimates for the typical residential customer who uses 1,000 kilowatt-hours of electricity a month. Those customers would see monthly bills increase from about $158 to $167 per month, a 6% increase.
The estimate includes a requested service charge increase of $5 to $20.
I&M's proposed improvements include replacing 120 miles of overhead and underground power lines; replacing more than 2,500 poles; upgrading 16 substations; and inspecting and maintaining trees – the primary cause of outages – along 4,000 line miles.
The Utility Consumer Counselor's filing said the monthly residential customer charge should remain at $15. The agency also suggested reductions in I&M's itemized budget request. Staff positions currently vacant don't need to be filled, the agency said, and various operating and maintenance expenses can be reduced.
A decision is expected in the spring.
I&M said Thursday it respects the OUCC's role in Indiana's process of conducting utility rate reviews. The company plans to file a formal response by Nov. 9
“I&M stands by its request for a 6.5% rate increase to best serve our customers in a safe, reliable manner,” the utility said.
For information about Indiana Michigan Power's pending rate review and the regulatory rate review process, go to www.indianamichiganpower.com/poweringthenext.