Michigan PSC approves settlement for Indiana Michigan Power’s first integrated resource plan

The first integrated resource plan pitched by Indiana Michigan Power Co. (I&M) won approval from the Michigan Public Service Commission (MPSC) last week as part of a settlement between the company and a mix of governmental, citizen, and environmental groups.

I&M counts approximately 131,000 residential and commercial customers among its service territory in southwest Michigan. An IRP, as filed here, was required under Michigan’s energy law beginning in 2016 for all companies with rates regulated by the MPSC to review utilities’ long-range plans for providing reliability and cost-effective approaches to electricity.

As part of the settlement, I&M agreed to acquire 2,160 MW of new carbon-free resources or expand existing ones through a request for proposal process, of which at least 30 percent will stem from power purchase agreements (PPAs) and another 70 percent from company-owned assets. However, it is incentivized to get at least 50 percent of its capacity additions through PPAs. The utility will also increase its annual energy waste reduction savings targets over the next five years to incrementally move to a 2 percent reduction by the end of 2027. Failure to achieve interim goals would subject the program to a third-party administrator.

Notably, the agreement pointed out that I&M has a 750 MW capacity need, though it did not address that at this time. Instead, specifics will be determined in a future proceeding, including pricing and consideration of alternatives. Further, I&M will file an ex parte application for approval of costs for generation and storage resources for all projects smaller than 225 MW and a certificate of necessity application for those larger than 225 MW. The company will be able to proceed with its conservation voltage reduction program for the next three years, though, with capital costs approved through 2025.

There is also the case of the Rockport Unit 2 coal plant, an Indiana-based traditional energy supplier. I&M’s Michigan-jurisdictional share of the plant was authorized as fully recoverable by rates through the end of its lease in 2028.

This case was not without controversy. The final settlement was agreed to between I&M, MPSC Staff, and the Association of Businesses Advocating Tariff Equity. However, five other organizations objected to the IRP: the Michigan Department of Attorney General, the Citizens Utility Board of Michigan, the Michigan Environmental Council, Sierra Club, and the Great Lakes Renewable Energy Association. The MPSC determined that the settlement was fair and in the public interest, backed by evidence, and overrode those objections.

As a result, I&M will file its next IRP within five years, after filing its original IRP in August 2019, before withdrawing and refiling it later.