Indiana Michigan Power (I&M), a subsidiary of American Electric Power (NYSE:AEP), filed a proposal with the Indiana Utility Regulatory Commission (IURC) outlining a $1.17 billion project at the Donald C. Cook Nuclear Plant in Bridgman, Michigan. The project will sustain the plant over the 20-year extension of its operating license and continue to make a source of reliable and emission-free power available to its customers.

“The Cook Plant plays a significant role in enabling I&M to provide our customers with the lowest cost power among all investor-owned utilities in Indiana,” said Paul Chodak III, president and chief operating officer for I&M. “The plant is a major source of revenue and jobs in the regional and state economy.”
In its filing, I&M is asking regulators to recognize that there is a viable need for the project, named the Life Cycle Management Project, and allow for timely recovery of interest charges associated with financing the work.

The two units at the Cook Plant generate over 2,100 megawatts – enough energy to power approximately 1.5 million homes – and account for 40 percent of the company’s power generation portfolio. The operating license for Cook unit 1 was issued in 1974, with the license for Cook unit 2 issued in 1977. I&M received license extensions from the Nuclear Regulatory Commission (NRC) in 2005 that will allow the units to run until 2034 and 2037 respectively – an additional 20 years beyond their original operating licenses.
 
The Cook Nuclear Plant provides a hedge for I&M’s customers against the cost of complying with increasingly stringent federal air emission regulations. 

The Life Cycle Management Project consists of a group of projects scheduled to span six years with the majority of work to be performed during regularly scheduled refueling outages.
The project is not part of the general rate case that is currently pending before the IURC. During rate case proceedings, the company informed the Commission that separate filings would be necessary to conduct capital projects at its power plants that are not subject to being retired. In testimony presented as part of the general rate case, I&M indicated that the overall cost of the Life Cycle Management Project at Cook would be just under $2 billion. The extensive analysis that has been performed since then lowered the overall estimate of the project to $1.17 billion.

I&M proposes to recover interest costs associated with project through a rider that will be reflected as a line item on Indiana billing statements beginning in 2013. This process makes it possible for I&M to phase in the recovery of the costs over the time of the project, as opposed to a large, one-time hit on customer bills after the project is completed. A typical residential customer could see an increase of $1.52 per month.

“I&M is always mindful of the impact that rate increases have on our customers,” said Chodak, “The Life Cycle Management Project is the most economical and reasonable means of meeting our customers’ energy needs now and in the future. The way that we are prosing to recover the cost of the project will result in long-term savings to customers.”