Indiana Utility Will Close Coal Units, Transition to Renewables

Northern Indiana Public Service Co. (NIPSCO) last week told state regulators it plans to retire four coal-fired units at its Wheatfield plant by 2023, a coal-fired unit in Michigan City by 2028, and increase its generation from renewables as part of its “Your Energy, Your Future” initiative.

The company’s latest Integrated Resource Plan filed on October 31 details NIPSCO’s effort to generate 65% of its power from solar, wind, and other renewables by 2028. The utility said it expects at least 25% of its generation by 2028 will be from natural gas. The coal units set for retirement are the utility’s last in the state. NIPSCO earlier this year announced it would likely move up its timetable to retire its coal units when it filed its 2018 IRP.

“Customers want what’s best for their families: Energy that is affordable, reliable and sustainable,” NIPSCO President Violet Sistovaris said in a statement. “NIPSCO’s new plan puts them front and center. We have the opportunity to invest in balanced options that will deliver more cost-effective and cleaner energy for our customers. The ‘Your Energy, Your Future’ initiative envisions a brighter future that delivers the energy our customers need while reducing emissions and focusing on the long-term strength of our local economy.”

NIPSCO, headquartered in Merrillville, Indiana, serves customers across 32 counties. It is Indiana’s largest natural gas distribution company and its second-largest power generator.

Modifying Electric Rates

The company’s IRP also includes a request to modify its existing electric rates to support its planned changes in power generation. NIPSCO said those changes equate to more than $4 billion in cost savings to customers. The utility said retiring coal units also will reduce its carbon emissions by more than 90% over the next decade.

NIPSCO’s two filings with the Indiana Utility Regulatory Commission (IURC) came after the utility did what it called “a comprehensive analysis of NIPSCO’s future energy mix and months of meetings with customers, employees and local community leaders. With this direction, NIPSCO will pursue a more affordable and cleaner electric supply balance while maintaining flexibility for the technology and market changes ahead.”

The last four coal-fired units at the Schahfer Generating Station in Wheatfield, Indiana, are expected to close by 2023. (Courtesy: NIPSCO)

The last four coal-fired units at the Schahfer Generating Station in Wheatfield, Indiana, are expected to close by 2023. (Courtesy: NIPSCO)

NIPSCO earlier this year retired the two coal-fired units at its 604-MW Bailly Generating Station plant in Chesterton, Indiana. The utility continues to operate a gas-fired peaking unit at the site, used during periods of high demand for electricity. The decision to close those coal units was part of the utility’s 2016 IRP, which called for a 50% reduction in NIPSCO’s coal fleet by 2023.

The latest IRP calls for the closure of Units 14, 15, 17, and 18 at the 1,943-MW R.M. Schahfer Generating Station in Wheatfield, Indiana, no later than 2023, and Unit 12 at the Michigan City Generating station in Michigan City, Indiana, by 2028. The utility last year said it was holding off on installing wastewater pollution controls at Schahfer due to uncertainty about the Environmental Protection Agency’s Effluent Limitations Guidelines.

The company in a release said it will continue to operate the gas-fired Sugar Creek Generating Station in West Terre Haute, Indiana, along with the Norway and Oakdale hydroelectric dams along the Tippecanoe River.

The company said it is not ready to announce any workforce changes that will come with the closure of the coal units and the transition to renewables. It did say it will “coordinate with internal and outside regional and statewide partners to reduce the impact of the transition over the next five to 10 years.”

Accelerated Timeline for Renewables

NIPSCO said it accelerated the timeline for its move toward renewables in this IRP because “the energy market has … produced more competitive and cost-effective options for NIPSCO customers.”

“We know that every dollar matters to our customers, so we want to be upfront about shorter-term shifts some of our customers will see in their bills during this transition,” Sistovaris said. “This proposal allows us to provide the level of service our customers expect, it addresses changes in the way major industrial customers will acquire electricity and it proposes new assistance programs for income-eligible customers.”

The IURC will review NIPSCO’s plant and must still give its approval. The utility said that under its IRP, new electric rates would be phased in, beginning in September 2019, and again in March 2020. It said it expects the average customer would note an $11-per-month increase, or about 12% in their bill. It said the request represents an increase in annual revenue of $21 million.

NIPSCO said it wants to invest in upgrades to its electric infrastructure, along with environmental controls. Its latest IRP comes on the heels of a statewide analysis of the state’s future energy needs. The report from the IURC released earlier in October said the Hoosier state will need about 10 GW of new power generation by 2035 as utilities across the state phase out coal units.

The U.S. Energy Information Administration (EIA) said that as recently as 2016, Indiana ranked second behind Texas in total coal consumption. But coal’s share of the state’s power generation has fallen steadily over the past 20 years. EIA data shows 98% of the state’s power came from coal in 1998, but that dropped to about 71% in 2016.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).