I&M 765-kV Transmission Backbone and AES Indiana Rate Increase: Two Separate Bills Landing on the Same Operators

Briefing note

Indiana Michigan Power (I&M), a subsidiary of American Electric Power headquartered in Fort Wayne, is advancing three MISO-mandated 765-kilovolt transmission projects totaling roughly 185 miles of new extra-high-voltage line across northeast and central Indiana, touching Allen, DeKalb, Noble, Steuben, Whitley, Howard, and Huntington counties. The three components are: the Greentown-Sorenson Transmission Improvements Project (~50 miles, Howard County to Huntington County); the Lulu-Sorenson Transmission Improvements Project (~75 miles, Sorenson Substation in Huntington County to the Indiana-Michigan state line); and the Eastern Indiana Grid Reliability Project (~60 miles, Greentown Substation to the Indiana-Ohio state line). The projects are part of MISO's $21.9 billion Tranche 2.1 long-range transmission plan approved December 12, 2024, targeting in-service dates of 2032-2034; a public comment window for the Lulu-Sorenson project closes October 9, with a Steuben County open house at the Steuben Event Center in Angola on September 24.

Impact

The 2032-2034 in-service window means northeast Indiana manufacturers who are capacity-constrained today face a 6-8 year wait for the backbone relief these lines provide, but there is an active FERC challenge that could extend that timeline further: on July 30, 2025, a coalition of five state utility commissions (Arkansas, Louisiana, Mississippi, North Dakota, and Montana) filed a FERC complaint arguing MISO's Tranche 2.1 benefits framework overstates project value, and if FERC upholds any portion of that complaint, cost-sharing formulas could be reopened and potentially shift more financial burden onto Indiana ratepayers or delay project financing. The Lulu-Sorenson line terminates precisely at the Indiana-Michigan state line where ITC Holdings' Michigan Electric Transmission Company network begins, making AEP/I&M and ITC's commercial coordination for that cross-border tie point a live issue that will shape when the full northeast Indiana manufacturing load pocket actually receives the reliability benefit, and any siting friction on the Michigan side runs on a separate public input process I&M does not control.

Watch

Watch FERC for a ruling on the July 30, 2025 multi-state commission complaint against MISO Tranche 2.1 cost allocation, an adverse finding could delay financing and shift cost burden before a single tower is erected in Indiana.

Briefing note

The reconsideration of AES Indiana's $71 million annual rate increase, approved by the Indiana Utility Regulatory Commission on a 3-1 vote in June 2026 and immediately denounced by Gov. Mike Braun as 'unacceptable', is now scheduled for a one-day evidentiary hearing in early March 2027, following a September 17, 2026 procedural conference attended by AES Indiana, the Indiana Office of Utility Consumer Counselor (OUCC), the Citizens Action Coalition, the City of Indianapolis, and several industrial customers. Rates are increasing in two phases regardless of the pending rehearing: Phase 1 (less than $1/month for a 1,000-kWh household) took effect July 27, 2026; Phase 2 (estimated $8.50/month for the average household) hits in January 2027, with the Citizens Action Coalition estimating total bills will be approximately $23 higher than May 2025. The reconstituted IURC, which now includes Braun appointees Joshua Bain (replacing fired Commissioner Andy Zay) and Joby Jerrells (replacing resigned Commissioner David Veleta), voted 3-1 on September 2, 2026 to grant reconsideration; Indiana separately agreed to pay Zay $625,000 to settle his wrongful termination lawsuit.

Impact

The rehearing scope extends well beyond base rates: the IURC also granted reconsideration of the BlackRock-led consortium acquisition of AES Indiana (which includes CalPERS and the Qatar Investment Authority) and the proposed Google data center in Monrovia, meaning the March 2027 evidentiary session functions simultaneously as a rate-policy, utility-ownership, and large-load-allocation proceeding. The under-reported risk is procedural: fired Commissioner Andy Zay alleged in a September 16, 2026 interview that Braun administration officials engaged in banned ex parte communications with commissioners during the original AES rate proceeding, a claim the $625,000 settlement did not adjudicate, and if that allegation surfaces in the March hearing or the OUCC's parallel appellate filing, it could void the original order on due-process grounds entirely, an outcome far more disruptive for AES's new private-equity owners than a simple rate reduction. If the reconstituted IURC reduces or reverses the $71 million award, AES Indiana's new owners would face an immediate cash-flow haircut on an asset being acquired partly on the strength of its rate base, potentially complicating the deal's late-2026 or early-2027 closing timeline.

Watch

Watch the March 2027 one-day IURC evidentiary hearing for rulings on all three intertwined issues (the $71 million rate award, the BlackRock/QIA ownership approval, and the Monrovia Google data center load terms) any one of which could materially reshape AES Indiana's rate trajectory for industrial customers in the Indianapolis metro.