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I&M/AEP Wants to Impose Another Rate Hike on Hoosiers

Indiana Michigan Power (a subsidiary of American Electric Power) hiked rates in 2018, and again in 2020. Now they’re back before the Indiana Utility Regulatory Commission (IURC) with their hands out demanding their third rate hike in four years.

 

I&M wants to raise their annual revenues by $104 million, or 6.5%, and of course that can only happen by taking more money from their customers.

  • I&M wants to hike the fixed monthly charge on your bill to $20 a month - a 33% increase

  • For an I&M residential customer using 1,000 kilowatt hours a month, this amounts to a $15 (11%) increase in the base monthly electric bill (before trackers/riders are added to the bill).

 

I&M monthly electric bills have increased:   
  • 16% from 2019 to 2020
  • 41% in the last 5 years
  • 88% over the last 10 years
I&M fixed monthly charge has increased:
  • From $7.80 to $10.50 in 2018
  • From $10.50 to $15 in 2020
  • They now want to go from $15 to $20 in 2022

 

At the same time, Hoosier households struggle with declining and stagnant income and wages, and significant increases in the cost of energy, health care, food, and other necessities, particularly now with a pandemic still raging.

 

In this rate case, I&M is trying to do two things that will force those who use less energy to pay more on their bills.

 

  • I&M wants to significantly increase your monthly fixed charge from $15 to $20: The monthly fixed charge on your bill is the amount  you pay regardless of how much energy you use, and even if you don’t use any energy. Raising the monthly fixed charge disproportionately hurts households on low- or fixed-incomes, most notably senior citizens, children, and people with disabilities. These vulnerable Hoosiers have already been particularly hard hit by the COVID19 pandemic. We should be protecting vulnerable customers, not continuing to harm them. 

     

  • I&M wants to charge you more for using less electricity: I&M also wants to continue using a billing mechanism called declining block pricing, which literally charges those who use less electricity more per kilowatt hour.

 

As Hoosiers get better at controlling their energy costs through a variety of mechanisms - energy efficiency, energy conservation, installing renewable resources, etc. - I&M gets more frustrated because they’re selling less energy, which means that they’re not making as much profit as they want to. 

 

In order to protect their profits, I&M is using this rate case to continue an all-out attack on their customers who are using less energy.

 

They are justifying this request for a rate hike by saying that they need "to send appropriate price signals to our customers." The only one who will benefit from charging more for using less is I&M. It protects their revenues and profits by removing the control that customers have over their energy costs.

 

I&M Electric Base Rates Comparison 

for a customer using 1000 kilowatt hours (kWh) of electricity per month

   Current Bill   Proposed Bill 
   Charges & Rates   Total Bill   Charges & Rates   Total Bill 
 Fixed Charge:  $ 15 $15 $20 $20
 per kWh, first 900:
$0.11482 $103.34 $0.12405 $111.65
 per kWh, over 900  $0.10809  $10.81 $0.11932 $11.93
   Total:  $129.15  Total:  $143.58

This is the core of your electric bill - otherwise known as "base rates." This part of your I&M bill makes up about 88% of your current total I&M bill as of July 5, 2021.

 

Trackers: the other 12% of your current I&M electric bill not included in “base rates"

 

Trackers, also called "riders," are currently included in your I&M bill and added to the average bill you see above. The amount collected through trackers changes frequently as some are adjusted quarterly, while others change on a semi-annual or annual basis. I&M is asking to continue all of their current trackers and create a new one for the costs associated with the installation of new smart meters. Since the trackers will change before this case is concluded and before I&M files another base rate case, how much the trackers will add to your monthly bill in the months and years ahead is unknown at this point. I&M’s current trackers are listed below.

Current Trackers (aka "Riders")
  Charge per kWh Total Avg. Bill
Demand Side Mgmt (DSM)  ($0.002034) ($2.03)
Fuel Cost Adjustment (FAC)  ($0.001833) ($1.83)
Environmental Cost (ECR)  ($0.000525) ($0.53)
Off-System Sales/PJM Cost (OSS/PJM)  $0.023283 $23.28
Life Cycle Mgmt (LCMR)  ($0.000033) ($0.03)
Resource Adequacy (RAR)  ($0.000252) ($0.25)
Solar Power (SPR) 
$0.000225 $0.23
Phase-In Rate Adjustment (PRA)  ($0.002008) ($2.01)
Total Trackers on Current Bills:  $16.82

 

Total I&M Electric Bill Including Trackers:

   Current Total Bill 
 Proposed Total Bill 
 Base Rates:  $129.15 $143.58
 Trackers:  $ 16.82 ???????
 Totals:  $145.97 $143.58 + ???

Campaign Tools

Take Action!

Use this form to email the OUCC:

 

 

Tell the Office of Utility Consumer Counselor (OUCC) to stop I&M from charging you more for using less by:

  • Opposing I&M’s request to increase the fixed monthly charge on your bill
  • Opposing I&M’s request to continue using declining block rates

 

Tell the OUCC to fight for residential customers to ensure that monthly bills are affordable, just, and reasonable.

Make sure to reference Cause Number 45576 in your comments!

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