State regulators in MISO asked FERC to let power industry stakeholders determine how to allocate the costs of an Indiana coal plant forced to stay online by the Trump administration’s Department of Energy.
The Organization of MISO States (OMS) said the RTO’s stakeholders and regulators should decide on now to divvy up the costs of sustaining operations at thermal plants whose retirements are delayed under emergency orders issued by DOE under Section 202(c) of the Federal Power Act.
Northern Indiana Public Service Co. — whose units 17 and 18 at its R.M. Schahfer Generating Station are under such orders through March 23 — filed in late 2025 to recover costs of running the plant from MISO Midwest participants (EL26-36). (See Enviros Warn NIPSCO Against Rebuilding Coal Unit on DOE Emergency Order.)
FERC previously approved a cost allocation plan for MISO Midwest entities to split the expenses of running the J.H. Campbell coal plant in Michigan — another of a handful of aging thermal plants set to retire that DOE says can’t be spared due to reliability concerns.
OMS said instead of applying a similar allocation, FERC this time should task MISO with engaging its member states and stakeholders to design a cost allocation for the Schahfer units. If FERC decides against that avenue, it should open NIPSCO’s request for an allocation plan to a hearing that weighs anticipated rate impacts and provides opportunity for comments from affected states and customers, OMS said.
“In either case, OMS stresses that any ultimate cost assignment that results from this proceeding should be based on a clear demonstration of need and commensurate with benefits received to help mitigate unintended consequences,” OMS wrote.
OMS said if FERC continues to allow the costs of emergency orders to be allocated across MISO Midwest, generation owners could start to exploit a predictable outcome.
“If the commission routinely approves broad regional cost allocation for 202(c) order costs without a demonstrated, commensurate benefit, utilities may be incentivized to accelerate retirements and cash in on a 202(c) order cost shift, moving costs away from local customers and onto an 11-state region,” OMS wrote in Jan. 20 comments to FERC.
The regulators’ group said DOE’s “self-determined energy emergency does not obviate the commission’s obligation to establish just and reasonable rates.” It said a cost allocation design should be “equitable and durable,” especially because DOE is likely to order other retiring thermal units to stay in service.
OMS noted also that while FERC regulates wholesale markets and interstate transmission, “states are responsible for determining what generation is needed, where it is located, how it is financed and whether it is prudent to serve retail customers.”
OMS said NIPSCO’s proposal would spread Schahfer expenses broadly across MISO Midwest, even to customers who won’t experience any reliability benefit, “including Indiana.” The group noted that PJM, its member states and stakeholders were allowed to develop a cost-recovery plan last year when DOE ordered Constellation Energy’s Eddystone Generating Station to keep running.
Multiple OMS members abstained from the vote to submit the comments, including the Arkansas Public Service Commission, the Louisiana Public Service Commission, the Mississippi Public Service Commission, the New Orleans City Council, the Public Utility Commission of Texas, and, interestingly, the Indiana Utility Regulatory Commission.
FERC has already rejected similar requests in the case of the J.H. Campbell coal plant when it decided in late summer 2025 that costs should be spread across MISO Midwest. Those costs have risen to $80 million and climbing after three emergency orders. (See FERC Rules Costs of Mich. Coal Plant Extension Can be Split Among 11 States and J.H. Campbell Tab Rises to $80M on DOE’s Stay Open Orders.)
Consulting Firm Predicts Tens of Millions in Costs
Keeping Schahfer units 17 and 18 operating is likely to come with steep costs. Synapse Energy Economics estimated that DOE’s initial 90-day extension of the trio of Indiana coal plants under emergency orders — the Schahfer units and CenterPoint’s Culley Unit 2 — would cost $20.6 million under economic commitment practices. Schahfer would account for the lion’s share of the cost, which could rise significantly, the consulting firm found.
“If DOE extends the order long term, we estimate the coal units would require an additional $33.7 million per year in capital expenditures to replace equipment as it wears out and install environmental controls to maintain compliance with environmental regulations,” Synapse wrote in a report prepared for Earthjustice, Sierra Club and the Environmental Law and Policy Center.
All three units were to retire at the end of 2025.
Synapse’s numbers don’t account for the extensive turbine repairs NIPSCO has said Schahfer Unit 18 requires immediately before becoming available for dispatch. NIPSCO officials have said that work could take six months or more.
The Illinois Commerce Commission likewise asked FERC to give states and stakeholders space to asses a suitable cost-recovery for the Culley unit under CenterPoint’s complaint for a cost allocation mechanism (EL26-38). The ICC said DOE’s orders are becoming “routine” and order issuances could go on for years.
“The likely frequency and length of these orders, much longer than [an] initial 90-day period, is crucial in considering how to handle cost allocation for generating units that are unexpectedly and unnecessarily being retained on the system,” ICC wrote in Jan. 23 comments to FERC.
The state commission said given the “volume of DOE 202(c) orders, and the potential harmful impacts on ratepayers across the MISO region, a robust stakeholder process is needed.” It said DOE’s continued orders to retiring coal plants will “result in significant, but currently unknown costs with unknown benefits.”
