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

Daniel BurkePublished every day

Indiana Michigan Power is building 185 miles of new extra-high-voltage transmission line across northeast Indiana, from Allen County through Steuben County, as part of MISO's $21.9 billion Tranche 2.1 plan. The in-service date is 2032 to 2034. But there is an active FERC complaint filed July 30, 2025, by five state utility commissions challenging the cost-allocation framework. An adverse ruling could delay project financing before a single tower goes up. If you operate in northeast Indiana and are capacity-constrained today, 2032 is not a planning horizon, it is a gap that requires a bridge. On-site generation and battery storage are the options worth modeling now.

On AES Indiana: the Phase 2 rate increase hits in January regardless of the pending rehearing. The evidentiary session is set for March 2027 and covers the $71 million rate award, the BlackRock and Qatar Investment Authority ownership approval, and the Monrovia Google data center load terms simultaneously. Former Commissioner Andy Zay's ex parte allegation was not adjudicated in the $625,000 settlement. If it surfaces in March, it could void the original order entirely. That creates two scenarios worth modeling: a partial refund if the order is voided and the case is refiled, and a fresh filing that could reset rates higher than the current Phase 2 increase. Model both before January.

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.

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 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.

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.

For the huddle

When does the AES Indiana Phase 2 rate increase take effect?

The AES Indiana Phase 2 rate increase takes effect in January 2027, regardless of the pending rehearing. The rehearing's evidentiary session is not scheduled until March 2027, so AES Indiana customers will begin paying the higher rate at least two months before the contested order is reconsidered.

For the huddle

What is the I&M 765-kV transmission backbone and when does it come online?

Indiana Michigan Power is building 185 miles of new extra-high-voltage transmission line across northeast Indiana as part of MISO's Tranche 2.1 plan. The projected in-service date is 2032 to 2034, and an active FERC cost-allocation challenge filed by five state utility commissions could delay financing and push that date further.

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

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