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Thursday, May 31, 2018 1:00 am

State OKs smaller I&M rate hike

Typical monthly electric bill to rise by $9.41

DAVE GONG | The Journal Gazette

The Indiana Utility Regulatory Commission on Wednesday issued an order allowing Indiana Michigan Power to move forward with its planned rate increase but at a much smaller hike than it initially asked for.

In its order, the commission authorized the power utility to increase rates to a level that would generate an additional $96.8 million in annual revenue. It's much less than the $263.2 million the utility originally requested. Indiana Michigan Power further reduced its request to $191.5 million after Congress passed tax cuts last year.

The hike approved Wednesday equals about 7.26 percent, as opposed to an original request of 19.7 percent. The monthly increase for a typical customer using 1,000 kilowatt hours of electricity would be $9.41. Utility officials say that figure includes the proposed customer charge portion of the bill, which is about $10.50 per month for a residential customer. The utility's original plan would have increased the residential base rate from $7.30 to $18.

The increase will go into effect in phases starting in July. The full increase will take effect early next year.

“I&M constantly works to provide our customers with reliable service in a cost-efficient manner,” said Toby Thomas, I&M president and chief operating officer, in a statement. “This first rate review in five years will move I&M forward and provide more customer and community-centered programs to help our lower-income customers and the communities we serve.

“At the same time, we are building the future by boosting infrastructure and transitioning for our future generation needs.”

The proposal to increase rates by nearly 20 percent drew ire from residents during a public forum held last October. Some residents criticized multiple rate hikes from the utility while lamenting that there isn't a larger focus on renewable energy sources.

Several organizations opposed the original increase proposal, including the cities of Fort Wayne, South Bend and Muncie, as well as the Sierra Club and the Indiana Office of Utility Consumer Counselor.

On Wednesday, Fort Wayne City Councilman Geoff Paddock, D-5th, said he was happy to see the IURC approve a lower increase, because his district has a lot of low-income residents. It's important, Paddock said, for utilities to offer the best service at the lowest possible cost.

“On the local level, I believe we've tried to do the same with our water and sewer service through City Utilities,” Paddock said. “That oftentimes means a rate increase is something that just cannot be avoided. This is obviously good news for the consumers that the Utility Regulatory Commission has actually granted a lower increase.”

Wednesday's order also includes approval of a settlement agreement between I&M and those who opposed the hike. As part of that agreement, I&M is required to participate in “a public collaborative process designed to increase transparency by developing performance-based metrics to be reviewed annually.”

The utility is also required to provide a $4 million credit to customers from July 1 to Dec. 31 “to reflect the impact of the Tax Cuts and Jobs Act of 2017 on I&M's current rates for the period before new base rates go into effect.”

In a news release, I&M said it plans to allocate close to $1 million “to establish new programs helping those who meet income qualifications to pay their energy bills and reduce energy use,” and will grant up to $700,000 to communities and agencies in Indiana for local economic development. The utility must also make an effort to switch to diverse energy sources, including renewable resources, and eliminate the fee for credit card payments.

The utility also committed Wednesday to implementing several new programs designed to help low-income customers manage their electric bills. Specifically, I&M will give about $350,000 to the Indiana Community Action Association to help low-income customers weatherize their homes, as well as manage and pay their winter electric bills.

dgong@jg.net