Cities breaking contracts with Indiana Michigan Power

SOUTH BEND, Ind. (AP) - Almost a dozen municipalities in Indiana and Michigan have given notice to Indiana Michigan Power that they'll break their contracts because they believe they can get a better price for electricity.

The cities, including Mishawaka and New Carlisle in Indiana and Niles in Michigan, all belong to the Indiana Michigan Municipal Distributors Association. They gave the required four-year notice that they'll end their contracts in 2020, before the 2026 end dates.

Niles City Administrator Ric Huff said the association, which negotiated the current contracts, estimates that it's spending 30 percent more for electricity than the current market price. Mishawaka Utilities general manager Jim Schrader estimates that the figure is closer to 20 percent.

The cities could buy electricity from another utility under an individual deal for each city or a common deal for them all, or they could renegotiate a new deal with Indiana Michigan Power, the South Bend Tribune (http://bit.ly/24iBd8C ) reported.

Schrader said the city-owned Mishawaka Utilities hopes to decide where it will buy electricity in the next year and a half.

In a statement issued Tuesday, director of communications and government affairs Brian Bergsma said Indiana Michigan Power values its relationship with the cities "and are proud to have provided reliable energy for many years." He also said the company "will continue to be a low-cost provider of safe and reliable power."

Schrader said Mishawka is seeking a fixed price per usage because it wants to get away from the formula used by Indiana Michigan Power to calculate what the city pays for electricity. He said the city is charged a "true up" that's calculated each year for extra unforeseen costs, which means the city's electric costs fluctuate from year to year.

Dowagiac is the only city that belongs to the Indiana Michigan Municipal Distributors Association that didn't notify the utility that it was breaking its contract. City Manager Kevin Anderson said Dowagiac is under a contract that doesn't allow it to terminate its contract until 2021, but it can enter a new deal with Indiana Michigan Power if that's the route the association decides to go.

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Information from: South Bend Tribune, http://www.southbendtribune.com