FORT WAYNE, Ind., February 14, 2013 – Indiana Michigan Power (I&M), a subsidiary of American Electric Power (NYSE:AEP), has been authorized by the Indiana Utility Regulatory Commission (IURC) to increase its electric rates by $85 million annually.  Even after the increase, I&M residential customers will continue to pay among the lowest rates of investor owned utilities in the state of Indiana. 

I&M filed for an increase in rates in September 2011 to recover its costs of serving customers.  The costs used to determine the rate increase predominantly reflect a historic cost of service using costs largely incurred over two years ago that are lower than current costs.   

The amount granted represents an overall increase of 6.4% percent over the rates set in I&M’s last rate case, filed in 2007.  Rates for residential customers will increase more than the average to reduce the subsidy those customers currently receive from commercial and industrial customers and to better match the rates paid to the costs incurred. An average residential customer will likely experience an increase of about 13%.

A bill for a residential customer using an average of 1,000 kilowatt-hours per month will increase by approximately $12 a month over rates that were set in 2009.  The rate increase is expected to take effect in March. 

“We understand these are difficult economic times for our customers, so we do not take this lightly,” said Paul Chodak III, I&M president and chief operating officer. “While we have worked extremely hard over the years to cut costs internally, we reached the point that cutting further would impact our ability to provide safe, reliable power, which we know is so important to our customers. A rate increase was pivotal to ensure I&M can continue to provide the reliable service our customers enjoy.”

The increase authorized by the IURC is less than the $174.3 million originally requested by I&M to recover the costs associated with the day-to-day costs of running the electric utility and over $3 billion of investments made at I&M’s power plants and energy delivery systems.  Part of the increase is needed because federal environmental regulations are contributing to the early retirement of three generating units at I&M’s Tanners Creek Plant in Lawrenceburg, IN.   

“The rates we proposed in the 2011 filing were based on a review of the company’s financial records from April 2010 through March 2011, with adjustments for known expenses through March 2012,” said Chodak. “Being authorized to receive this level of revenue means our customers will continue to benefit from the safe, reliable power they have come to expect in their daily lives.”

Customers can take steps to offset the rising cost of energy by managing their energy use. For example, I&M offers energy-saving tips and programs to reduce overall energy use and a free online energy calculator that can help customers understand what steps they can take to use electricity wisely. Learn more at www.IndianaMichiganPower.com/save.

I&M also offers alternative payment plans such as its Average Monthly Payment (AMP) that helps customers level out monthly payments and make the budget for electricity more predictable.

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Indiana Michigan Power (I&M) is headquartered in Fort Wayne, and its 2,500 employees serve more than 582,000 customers. It operates 3,595 MW of coal-fired generation in Indiana, 2,110 MW of nuclear generation in Michigan and 22 MW of hydro generation in both states.  The company also provides its customers 150 MW of purchased wind generation.

I&M is a unit of American Electric Power (NYSE: AEP), which is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning more than 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.