Indiana Utility Asks for Rate Hike to Replace Coal with Renewables

Published May 9, 2019

The Indiana Utility Regulatory Commission (IURC) is considering a plan filed by Northern Indiana Public Service Co. (NIPSCO) to remove coal from its electric power mix by 2028 and replace it primarily with electricity generated by solar power.

NIPSCO states a comprehensive analysis it conducted determined its plan would save ratepayers and the state money over the long term.

NIPSCO provides electric power to approximately 460,000 customers across Indiana. In the Integrated Resource Plan NIPSCO filed with the IURC, the company proposes closing its Wheatfield coal plant by 2023 and its coal unit in Michigan City by 2028.

Zero Coal Goal

Under NIPSCO’s proposal, the percentage of electric power generated by coal would decrease from 65 percent today to 15 percent in 2023 and zero by 2028.

NIPSCO proposes replacing the 1,800 megawatts (mw) of electric power generated by the two coal plants with a mixture of 1,500 mw of solar with battery backup, 150 mw of wind, 125 mw of reduced demand through efficiency and demand-side management programs, and 50 mw of electricity purchased from other utilities.

Although NIPSCO says its electric power shift will save ratepayers more than $4 billion in the long run, it has asked IURC to approve a 12 percent rate hike to pay for decommissioning its existing power plants and building the renewable capacity to replace it.

‘Political Patronage and Power’

NIPSCO’s plan will harm lower and middle income households in Indiana, says Craig Ladwig, executive director of the Indiana Policy Review Foundation.

“Coal today provides reliable, environmentally sound, and cheap energy to the people who need cheap energy,” Ladwig said. “Rich people don’t need cheap energy. It’s the people in the lower middle class and poor who need energy. That’s who this is going to hurt.

“This doesn’t have anything to do with reliable energy; it has to do with command and control politics,” said Ladwig. “If solar power and wind power are actually as efficient and cost-competitive as proponents for them claim, why are we subsidizing them both? You really don’t drill too deep down into the science before you realize this just has to do with political patronage and power.”

Fails Reality Check?

Data from the Energy Information Administration and other studies show natural gas and coal power provide the lowest-cost electric power across the nation. Currently, Indiana’s electricity prices are 6.8 percent below the national average. The state’s relatively low electric power rates reflect the fact 68 percent of the electricity generated in Indiana comes from coal power plants, with natural gas providing approximately 27 percent of the remaining electric power.

NIPSCO’s claim its proposal will reduce electric costs in Indiana does not align with reality, says Ladwig.

“When it comes to providing energy in Indiana, we’re probably providing energy in the most efficient and environmentally friendly way right now,” Ladwig said. “That’s reality.”

“NIPSCO’s idealized vision of the future of a less expensive energy system powered by renewables fails to match up with reality,” said Ladwig.

Linnea Lueken ([email protected]) writes from South Carolina.