Nuclear power plant life extension project could cost $1.17bn

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 2,100 MW Donald C. Cook Nuclear Plant in Michigan. The project is expected to sustain the plant over the 20-year extension of its operating license.

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 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. It is not part of the general rate case that is currently pending before the commission.

I&M proposes to recover interest costs associated with the project through a rider that will be reflected as a line item on Indiana billing statements beginning in 2013. This makes it possible for I&M to phase in the recovery of the costs over the time of the project as opposed to a lump-sum charge on customers’ bills after the project is completed.

The operating license for Cook Unit 1 was issued in 1974, and 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.

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