Indiana Bill Proposes Preventing Public Utilities From Retiring Coal

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Indiana Bill Proposes Preventing Public Utilities From Retiring Coal

Indiana Bill Proposes Preventing Public Utilities From Retiring Coal

Published :

Published :

A recently proposed Indiana bill would prevent public utilities from retiring, selling, or otherwise altering the operations of any of their electric generating facilities without first obtaining permission from the Indiana Utility Regulatory Commission (IURC).  H.B. 1414 was introduced January 14 by Rep. Ed Soliday, the chair of the House Utilities, Energy, and Telecommunications Committee, and comes as many Indiana utilities are floating plans to close existing facilities and replace them with wind, solar, and battery storage resources.  While the bill is technology-agnostic, the state’s current reliance on coal-fired power generation and mining make it likely that coal plants are the intended beneficiaries.

The state currently is home to nearly 15,300 MW of coal-fired capacity, second only to Texas with 18,900 MW.  Its fleet of efficient gas plants comprises just 3,800 MW, well below that of neighboring states.  Further, its coal mining industry adds more than $750 million to the state’s economy each year according to the Indiana Coal Council.  Last year, Rep. Soliday proposed an amendment that would have halted the construction of new large electric generating facilities in the state until at least 2021 while a newly formed task force studied the issue, though it was unsuccessful.

Since 2010, 41 coal-fired generators comprising 4,500 MW of capacity in Indiana have retired or been converted to natural gas.  Regulated utilities including Indianapolis Power & Light (IP&L), Northern Indiana Public Service Company (NIPSCO), Duke Energy Indiana, and Southern Indiana Gas & Electric Company (SIG&E) have announced plans to retire another 5,200 MW of coal-fired capacity over the next decade.  In most cases, the utilities determined through long-term resource planning that retiring coal generators and replacing them with other types of generation would save ratepayers money.  Additionally, Hoosier Electric announced this week that it would retire its merchant unregulated 1,000-MW Merom plant along the Wabash River.  Absent any other actions, these retirements would push Indiana’s operating coal capacity down to just over 9,000 MW by 2029.  Because many of the current utility plans have not yet been approved by the IURC, H.B. 1414 could prevent them from retiring the facilities.

While H.B. 1414 would keep these generators online, it is unclear whether its passage would force utilities to run them at historical levels given the fact that natural gas generation is often cheaper.  Indiana’s fleet of gas-fired combined cycles (CCGT) ran at a capacity factor of 67% in 2018, up from just 37% in 2014.  The two newest plants, IP&L’s Eagle Valley and the independent St. Joseph, ran at 73% in 2018 and above 90% during the first nine months of 2019 thanks to their high efficiency and low fuel prices.  Coal consumption in the state fell by roughly 9.5 million tons between 2014 and 2018, and EVA expects it to decline by another 5 million tons by 2024 under its current fuel price and retirement outlook.

For more details, analysis, or other policy review related to the industry, please contact Rob DiDona at [email protected]

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