AEP / Indiana Michigan History

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Background

AEP owns I&M. American Electric Power is a huge utility holding company that owns utilities in Indiana, Michigan, Ohio, Virginia, West Virginia, Kentucky, Tennessee, Arkansas, Louisana, Texas, and Oklahoma. Their headquarters are in Columbus, Ohio.

Cook Nuclear Power Plant Court Case

Although Indiana does not have any nuclear power plants (primarily because CAC has successfully stopped them from being built here), AEP (I&M) has a nuclear power plant just across Indiana’s border in Michigan that provides electricity to Indiana ratepayers. This nuclear plant is called the DC Cook nuclear power plant. In 1999 AEP settled a court case filed against them by CAC and other consumer groups due to negligence at the DC Cook nuclear power plant which forced the plant’s closure until safety systems were made operational. The settlement resulted in a five year rate and fuel cost freeze and a $55 million rebate to customers. Customers also avoided $500 million in costs to restore the safety systems at the power plant.

Resolution of the 8-year lawsuit against AEP

In the summer of 1999, CAC decided to join eight states and a number of environmental advocacy organizations in bringing a lawsuit against American Electric Power. The reason for this lawsuit was that AEP had made significant modifications to many of their coal-fired power plants, and according to the EPA rule known as "New Source Review," making those modifications meant that AEP was also supposed to bring those power plants into compliance with the Clean Air Act regulations, which they refused to do.

In October of 2007, AEP finally settled the lawsuit. They agreed to pay a $15 million civil penalty to the states who were plaintiffs in the case, and spend $4.6 billion to improve pollution controls at 16 power plants in the Midwest and mid-Atlantic. AEP also agreed to spend $60 million on projects to help reverse the harmful effects of its plants’ pollution on lakes, rivers and forests in eight states. 

The most recent completed AEP rate case

Also in October of 2007, AEP filed a rate case with the Indiana Utility Regulatory Commission. They were asking for a rate increase of 20.5%, or $47.5 million. They were also asking for more trackers. However, the rate increase was completely unjustified. Their last rate case was in 1991, and their net investments had only increased by 2.3% since then. They also generate more electricity than they need. They make an extra $96 million per year by selling extra electricity to other utilities. That electricity is generated by power plants paid for by ratepayers. There is no reason why they shouldn’t have used some of that $96 million to cover the $47 million rate increase they were asking for.

In early 2009, we helped to cut the 20% rate increase down to a 6.7% increase, and to guarantee a minimum of $2.35 million for an energy efficiency program for AEP customers. This is a much better result than what would have happened if the Regulatory Commission had decided this matter on their own.

Uprates at the Cook Nuclear Power Plant

AEP has stated that they are probably going to file with the IURC for approval to "uprate" their Cook nuclear power plant. Right now, Cook produces around 2,000 MW of electricity. They want to increase that by around 430 MW. Keep in mind that these plants are over 30 years old. They are made of concrete and steel, which become brittle over time when constantly exposed to radiation. There are huge environmental and safety concerns with over-stressing these reactors. Across the country nuclear reactors that are 20 to 30 year old are getting their licenses extended. At these same reactors, operators are finding corrosion, holes, cracks, and other safety concerns more and more frequently. AEP’s initial estimate for the uprate is $2 billion. However, if history holds true, this price tag is grossly underestimated.

Within the last few years, Cook’s reactors have been shut down because of a fire in one of the turbine units, because of the cooling unit taking in too many fish with the water, and most recently they were down for an extended refueling period to correct some "operational problems."