Indiana Michigan 2025 Power Supply Cost Recovery Plan
Synapse provided technical assistance to the Michigan Attorney General, Citizens Utility Board of Michigan, and Sierra Club in reviewing Indiana Michigan Power Company’s (I&M or The Company) Power Supply Cost Recovery Plan (PSCR) for the calendar year 2025 in Michigan Public Service Commission Docket U-21596. Synapse's testimony focused on evaluating the prudence of I&M’s PSCR plan for 2025. Specifically, we evaluated I&M’s justification for charging Michigan customer for the purchase of power from its affiliate, Ohio Valley Electric Corporation (“OVEC”), at above-market prices.
Synapse found that OVEC currently maintains and operates its two power plants, Clifty Creek and Kyger Creek, uneconomically. Further, OVEC is projected to continue this practice based on the Company’s own data and Projects. I&M projects OVEC power will cost between $68.84 and $86.74/MWh during the PSCR forecast period (2025-2029). The Company’s own projections show that it will incur excess costs of $48.1 million in energy market revenue and capacity value over the five-year PSCR forecast period by purchasing energy and capacity from OVEC. These costs will be passed on to ratepayers absent protection from the Commission.
Other findings from the docket are:
- I&M invested over $100 million in Coal Combustion Residuals and Effluent Limitation Guidelines compliance upgrades at the Clifty Creek and Kyger Creek plants. These investments have resulted in substantial costs for Michigan ratepayers. I&M’s remaining portion of these costs, along with the costs to comply with any new or updated environmental regulations, will be charged to I&M customers during the PSCR plan period.
- I&M is attempting to recover approximately 64 percent of its share of the outstanding debt at the OVEC plants (billed through the ICPA demand charge) through the PSCR factor during the PSCR period. If the Commission does not act to limit the costs passed on to I&M ratepayers during the PSCR plan period, I&M will be able to front-load its collection of outstanding debt, protecting the Company from potential future disallowances while placing the financial burden on ratepayers.
- At OVEC, I&M is projecting a jump in utilization to around 60 percent capacity factor in 2029. This is up from I&M’s projections of only 6 percent utilization in last years forecast.
Synapse recommends that the Commission amend the PSCR plan by removing the above-market OVEC costs from the PSCR factor for the plan year. Synapse further recommends that the Commission warn I&M that, based on the current evidence, it will likely disallow recovery of OVEC costs that exceed the cost of energy and capacity from a comparable benchmark in future PSCR reconciliation dockets.