CAC wins major victory for consumers as AEP agrees to rate protections and $55 million in credits!

AEP agrees to refund $55 million in fuel cost charges, freeze rates, and accept responsibility for hundreds of millions of dollars in additional costs related to the Cook nuclear power plant outage as a result of settlement with consumers.

On March 12, 1999, American Electric Power (AEP) agreed to a settlement with consumer groups regarding the cost and responsibility for costs of the extended outage of the Donald C. Cook nuclear plant in Bridgman, Michigan. The consumer groups included the Citizens Action Coalition of Indiana (CAC), Indiana Office of Utility Consumer Counselor(OUCC), and a group of AEP’s large industrial customers. As a result of the settlement:

• AEP will return $55 million dollars in credits to consumers on their July, August, and September bills. This is approximately what consumers have been charged to date for AEP to purchase replacement power that routinely would have been generated by the Cook plant had it not been for the outage.

• AEP will implement a five-year rate freeze. The rate freeze will be based on the lower historic fuel costs of AEP when the DC Cook is in operation. AEP will also continue to be subject to Indiana’s electric utility over-earnings test.

• AEP has also agreed to bear virtually all of the costs of the outage, whether past or future, for replacement power or for repair and maintenance. This could easily reach $300 million.

• AEP will increase its annual payments to its nuclear decommissioning fund by $2.5 million over the next five years.

• Essentially, AEP has taken responsibility for the Cook nuclear power plant outage and its related costs.

In exchange, AEP will be allowed to defer and amortize costs related to the Cook outage over five years instead of being forced to expense those costs in 1999 and 2000.

Background on the outage.

The Cook plant was shut down in September 1997 as a result of AEP declaring critical emergency cooling systems were inoperable during a Nuclear Regulatory Commission (NRC) inspection. Since that time, approximately 3,336 "deficiencies" in plant equipment or procedures have been found, 494 of which must be resolved prior to restart. AEP also received a $500,000 fine as a result of the NRC’s determination that federal regulations had been violated. The Cook plant is not expected to restart until December of 1999 at the earliest.

The settlement is approved.

The settlement was approved by the Indiana Utility Regulatory Commission on March 30, 1999. For more information on the DC Cook plant, nuclear waste transportation, nuclear plant decommissioning and other nuclear power issues visit our Nuclear Issues Index page.