Matthew Kandrach – President, CASE
June 10, 2018
Recent announcements by Indiana utilities threaten the state’s coal industry and Hoosier ratepayers.
Amid rapidly fluctuating market conditions and a spate of overzealous environmental regulations, coal
plants are closing at an alarming rate across the nation including in the Hoosier state.
Indiana has been among the states most impacted by this trend. And, with utilities, such as Vectren and
Northern Indiana Public Service Company (NIPSCO), weighing more closures, it will worsen before it gets
better if regulators don’t intervene.
As a coal state, Indiana has a lot to lose. The mines clustered in southwest and west central parts of the
state put Indiana in the top 10 nationally when it comes to coal production. The state’s prolific mining
sector supports 41,980 jobs and contributes over $5 billion to the state’s economy annually. Indiana also
draws a greater ratio of its electrical power from coal than all but one other state, resulting in some of
the lowest utility rates in the nation.
Ongoing utilization of the state’s abundant coal resources, mining infrastructure, and coal power plants
should be an economic priority for everyone in Indiana. Unfortunately, some of the state’s most
important utilities don’t share that viewpoint. This puts the competitive advantage offered by Indiana’s
coal sector in serious peril.
Thirty-nine coal power plants have been retired in Indiana since 2010. And now, the aforementioned
utilities have plans to decommission multiple coal plants in the months ahead.
NIPSCO plans to retire its Bailly Generating Station in Chesterton and has also announced plans to shut
down 40 percent of the generating capacity at its Wheatfield facility by 2023. Meanwhile, Vectren plans
to close three of its plants, replacing the lost capacity with a $900 million natural gas plant and a $75 million solar plant.
Fuel sources like natural gas and solar have a role to play in Indiana’s future and that of the nation at
large. But in Indiana, where ratepayers have so much to gain from continued coal-fueled power,
stepping away from such an abundant, affordable fuel source undermines the region’s energy diversity
and weakens the reliability of the grid.
These moves run contrary to the best interests of Indiana consumers. In the case of Vectren, the
company’s pending sale to Houston-based Center Point likely hinges on approval of its plan to switch
from Indiana coal to Texas natural gas.
The coal fleet has a crucial role to play in Indiana and nationwide, as was underscored in recent research
from the Department of Energy’s National Energy Technology Laboratory (NETL) . The March paper
states that the continued retirement of coal power plants puts the nation at risk of being unable to meet
power demands – especially in the event of severe weather events like the recent “Bomb Cyclone” that
struck the U.S. in early 2018.
In the face of outsized demand during catastrophic weather or other unexpected circumstances, the
nation’s natural gas pipeline network simply doesn’t have the capacity to ensure that fuel is on hand
everywhere it’s needed. In some parts of New England, unmet demand for natural gas was so great that liquefied natural gas was imported via tanker from Russia – even in the face of ongoing sanctions against Russia.
Coal, on the contrary, is the most resilient form of power generation in the nation. The NETL study found
that without the resilience of coal plants – and their ability to easily ship and store fuel onsite and
therein ensure 24-hour baseload capacity – the eastern United States would have faced widespread
blackouts.
Indiana has all it needs to maintain an affordable, reliable power grid in the face of all weather
conditions. It has coal resources within its borders, a mining sector well-positioned to extract it, and a
fleet of coal power plants. The Vectren and NIPSCO plans would undermine those significant
advantages, running contrary to the best interests of Indiana ratepayers by introducing overreliance on
natural gas and accompanying prospect of blackouts and price volatility.
Decision makers at the Indiana Utility Regulatory Commission and the Midcontinent Independent
System Operators have an obligation to look more closely at the Vectren and NIPSCO plans. These
closures will cost the state jobs, economic activity, and the ability to capitalize on its ample coal
resources. It is essential that regulators thoroughly review the plans and focus, instead, on a sound,
stable energy future for the state of Indiana.
