Indiana Michigan Power Nuclear Decommissioning Trust

The trust exists solely to accumulate and disburse funds for decommissioning the Donald C. Cook Nuclear Plant in Bridgman, Michigan. Its structure is prescribed by Nuclear Regulatory Commission regulations, which require Indiana Michigan Power to demonstrate reasonable assurance that adequate funds will be available when the plant's operating licenses expire. The NRC reviews trust adequacy biennially based on site-specific cost estimates.

Capital flows from ratepayer contributions collected through Indiana Michigan Power's regulated electricity rates. Annual funding levels are set in rate cases before the Indiana Utility Regulatory Commission and the Michigan Public Service Commission. Investment income earned on trust assets reduces the total contribution requirement, creating a direct link between portfolio performance and customer bills.

NRC regulations and Internal Revenue Code Section 468A impose strict limits on trust investments. Permitted asset classes are generally restricted to marketable securities and certain fixed-income instruments; private equity, venture capital, and speculative commodities are typically excluded. The NRC requires the trust to be managed in a manner consistent with nuclear decommissioning fund guidelines that emphasize liquidity and principal preservation.

American Electric Power, through its subsidiary Indiana Michigan Power, administers the trust. AEP's treasury function oversees investment policy and manager selection, subject to NRC reporting and the oversight of state utility commissions. Third-party asset managers and a securities-lending agent handle day-to-day portfolio execution.

Withdrawals commence when the Cook plant permanently ceases operations and active decommissioning begins. Unit 1's operating license expires in 2034 and Unit 2's in 2037, though either unit could retire earlier. The actual draw schedule depends on whether Indiana Michigan Power elects immediate dismantlement or a deferred SAFSTOR approach.

The federal government is legally obligated to accept and dispose of spent nuclear fuel but has no operating permanent repository. Until one opens, spent fuel remains in dry cask storage at the Cook site, extending the trust's liability horizon and increasing total decommissioning cost estimates per NRC site-specific analyses.

Yes. NRC regulations require the trust to hold assets in a separate legal vehicle, insulated from the utility's creditors, and used exclusively for decommissioning. This bankruptcy remoteness is a core condition of the plant's NRC operating license.