Indiana Michigan Power Supply Cost Recovery Plan Docket for 2024

Sierra Club
Project ongoing.

Synapse provided expert testimony and analysis to support the Sierra Club in reviewing Indiana Michigan Power Company (I&M)’s Power Supply Cost Recovery (PSCR) Plans for the calendar year 2024 in Michigan Public Service Commission Docket U-21427. Synapse testimony in this docket focused on evaluating the prudence of I&M’s PSCR plan. Specifically, we evaluated I&M’s justifications for charging Michigan customers for the purchase of energy from its affiliate, Ohio Valley Electric Corporation (“OVEC”) at above-market prices and review I&M’s oversight of OVEC’s operational and planning decisions. We also evaluated the Company’s operation of the Rockport units and reviewed the fuel and power purchase costs it plans to pass on to customers during the PSCR plan and five-year forecast period.

We found that I&M has been purchasing power from OVEC, an affiliate company, at above market value and passing those costs on to ratepayers since 2017 and plans to continue to do that based on its five-year PSCR plan. Specifically, the Company’s plan shows that I&M estimates that it will incur excess costs of $101.5 million in energy market revenues and capacity value over the five-year PSCR forecast period (2024-2028) by purchased energy and capacity from OVEC under the ICPA.
Additionally, we found that I&M's fuel cost plans and five-year forecasts show that the company plans to continue to operate Rockport unit 1 at below a 17 percent capacity factor during the PSCR period, all while passing on to ratepayers costs that exceed market revenues by $112.5 million per year on average.

We recommended that the Commission amend the PSCR plan and remove costs incurred above the cost of market purchases for energy and capacity. The Company should cap the recovery of costs incurred under the ICPA at the equivalent market value in the future. We also recommend that the commission not allow I&M to develop a PSCR plan that assumes uneconomic commitment of the Rockport units. Finally, we recommend that the Commission indicate that it will disallow recovery of the fuel portion of all net revenue losses incurred as a result of imprudent unit commitment decisions in future reconciliation dockets.