AEP offers $55 million to settle Cook case
By Lesley Stedman
Wednesday, March 17, 1999
INDIANAPOLIS - Residents of Fort Wayne and the surrounding area would receive credits of about $14 on three months each of electric bills if state regulators approve a settlement American Electric Power reached with consumer advocates.
AEP, the electric giant formerly known to the Fort Wayne area as Indiana Michigan Power Co., has agreed to credit customer accounts a total of $55 million for the higher prices it charged after the company shut down its Cook Nuclear Plant.
The Indiana Utility Regulatory Commission must still review the settlement.
The company closed both units at the power plant in Bridgman, Mich., after the federal Nuclear Regulatory Commission found problems during an inspection in September 1997. That forced AEP to buy electricity elsewhere for its customers.
"The advantage of nuclear power is that the fuel cost is so low," said Michael Brian, spokesman for AEP. "But when (a plant) goes down and we have to buy replacement power, it's usually from fossil fuels."
That power typically costs more, he said.
The company would provide the credits during the warm months of July, August and September when electric bills are often at their highest. AEP estimates the average residential customer would save $14 during each of those months.
"Customers are essentially getting back the money they paid for replacement power, dating back to the Cook outage," said Jerry Polk, who handles utility issues for Citizens Action Coalition. "We're very pleased. It's a great deal for consumers."
AEP also agreed to stop passing the additional cost of replacement fuel on to customers. That means customers would pay a rate based on the cost of power generated by the nuclear plant, even if the electricity comes from elsewhere.
That rate would be frozen for five years.
Polk said the rate freeze protects customers from paying for the repairs of the nuclear plant.
The company would also be required to submit its actual costs to the regulatory commission twice each year. If at the end of five years those actual costs are less than expected and regulators determine customers overpaid, AEP would provide additional refunds.
Brian said AEP has been working since Cook's closing to make repairs and bring the plant back on-line.
"It's just a matter of time," he said. "Other plants have faced the same kinds of things and are back up running."
The settlement will allow the company to concentrate on that repair work rather than an extended legal battle with consumer advocates, AEP officials said.
The regulatory commission was expected to begin hearings on the issue Monday, but the parties announced the settlement instead. Commission spokesman Mike Leppert said the commission will likely consider the settlement later this month.
PUBLISHED WEDNESDAY MARCH 17, 1999