Indiana Michigan Power (I&M), an American Electric Power (Nasdaq: AEP) company, has filed a joint settlement with the Indiana Office of Utility Consumer Counselor (OUCC), Amazon Web Services (AWS), Microsoft, Google, the Data Center Coalition (DCC), and the Citizens Action Coalition (CAC). This settlement is the result of a collaborative negotiation process that supports I&M's ability to provide the best service possible for all customers and allows the company to continue pursuing opportunities that support the economic growth of its communities. It also addresses power demand increases with the recently announced data centers locating in northeast Indiana, as well as potential future large load customers, while ensuring reliable and affordable service for all customers.
The settlement will require new large load customers, including data centers, to make long-term financial commitments proportional to their size to ensure the costs to serve these customers are reasonably recovered from the customer, and not passed on to existing customers. These investments will support the ongoing grid modernization for the benefit of all customers.
Data centers provide the digital infrastructure enabling the applications, technologies, and services that have become central to our daily lives and modern economy-everything from banking and medical care to online education and entertainment. The growing demand for digital services can require a significant amount of electricity around the clock to operate. To serve this increased power demand, I&M is required to invest in additional generation, as well as new transmission facilities to meet customer needs and maintain a safe and reliable grid for all customers.
In April, AWS announced an $11 billion investment in a data center campus just west of New Carlisle, Ind. that will create at least 1,000 jobs and Google announced a $2 billion data center in Fort Wayne. These investments are among the largest economic development projects in the state of Indiana and bring significant benefits to surrounding communities.
"AWS is excited to be expanding our operations in Indiana and be part of the state's growing tech sector. We have recently announced an $11 billion investment that will create numerous well-paying jobs and significantly contribute to the state's economy," said Brandon Oyer, Head of Energy & Water for the Americas, AWS. "Through continued partnership with I&M, this agreement supports the ongoing investment to modernize the local electric grid for the benefit of all ratepayers and ensure that costs to support data center growth are not passed along to other customers."
I&M is currently in conversations with additional data center customers, who have also expressed an interest in locating in the northeast Indiana region.
The settlement filed with the Indiana Utility Regulatory Commission (IURC) recognizes the energy needs of new large customers and proposes additional commitments that these customers must meet when establishing electric service. These new requirements are important to balance the interest of the new customers with the interest of I&M's existing customers. The new structure will enable I&M to optimize its existing and future investments to serve these new large loads in a way that is expected to reduce energy rates for all customers over time. In addition, the settlement ensures that such net new investments will be reasonably recovered from these large load customers.
"I&M looks forward to working with some of the leading technology companies in the world that have chosen to locate in northeast Indiana. It is an exciting time for our region and I&M is committed to doing our part to support these customers as they bring investments and jobs to Indiana. I&M has the responsibility to serve the new customers, while also protecting existing customers, including residential, small business and those within other industries, from impacts related to necessary infrastructure improvements required to serve these customers," said Steve Baker, I&M president and chief operating officer.
Protecting the interests of all customers was an important consideration of all parties that participated in the settlement agreement, including the OUCC and CAC.
“Data centers will play a critical role in Indiana’s future economic development in the years to come, while requiring substantial increases in power generation and transmission infrastructure,” said Indiana Utility Consumer Counselor Bill Fine. “The terms in this agreement will ensure a balanced approach as those investments are made, protecting residential, commercial, and industrial customers from bearing the costs of new infrastructure necessary to serve new, large-volume customers.”
"As ratepayer advocates since 1974, Citizens Action Coalition takes very seriously our role as watchdogs for utility consumers," said Kerwin Olson, CAC Executive Director. "This settlement includes significant protections for I&M ratepayers as these large new loads come online in Indiana and provides for increased transparency into the energy needs and impacts of these new customers. Additionally, the contribution to INCAA will enable meaningful assistance and support for low-income Hoosiers in managing their monthly energy bills, including weatherization services to make homes more efficient, healthier, and safer."
To further demonstrate the commitment of supporting the local communities, the companies that are signatories to this joint settlement—AWS, Microsoft, and Google—have each agreed to provide an annual contribution of $500,000 for five years to the Indiana Community Action Association, which provides various programs to support low-income Hoosiers once those companies begin taking service in the I&M service territory.
"Since breaking ground on our campus in Fort Wayne, Google has been committed to being part of Indiana's economic future and supporting communities across the state to thrive for the long term. The inclusion of community support in this settlement builds on that commitment. We are building a strong partnership with Indiana Michigan Power and look forward to working together to explore opportunities for us to invest in new solutions, like grid-enhancing technologies, that will strengthen energy infrastructure for all Indiana customers," said Amanda Peterson Corio, Global Head of Energy at Google.