By Amanda Durish Cook
The Indiana House of Representatives last week narrowly passed a bill that could prolong the process of retiring or selling coal plants at a time when the state is advancing toward cleaner alternatives.
The bill, passed by the House 52-41 on Feb. 3, would require utilities to notify the state’s Utility Regulatory Commission if they plan to retire or sell a generating unit with at least 80 MW of capacity, triggering a public hearing and analysis on the reasonableness of the closure (HB 1414).
Utilities would need to give the IURC at least six months’ notice. The bill would also prohibit “a public utility from terminating a power agreement with a legacy generation resource in which the public utility has an ownership interest unless the public utility provides the Utility Regulatory Commission with at least three years’ advance notice of the termination.”
The IURC would conduct a public hearing “to receive information concerning the reasonableness of the planned retirement, sale or transfer” and issue findings and conclusions. Finally, the commission would be required to complete an analysis on the reasonable costs of on-site fuel — i.e., coal piles — and allow the utility to recover those costs in regulatory proceedings.
Critics of the bill say it would introduce a regulatory hurdle, making it more difficult for utilities to retire aging coal plants and replace them with renewable sources.
Hoosier Environmental Council (HEC) Executive Director Jesse Kharbanda argues that the bill’s provisions are unnecessary, especially considering that MISO conducts reliability studies on retiring generators and can designate them as “system support resources” to prevent them from shuttering if they’re needed for reliability.
“That’s an important aspect of our opposition to the bill. It is redundant. It’s about heading off reliability risk when MISO has that process in place,” Kharbanda told RTO Insider.
‘Coal or Rabbits’
Though Rep. Ed Soliday (R) authored the legislation, neither he nor the Indiana House Republican Caucus have issued a press release on it. Soliday’s press secretary did not return a request for comment on the bill’s advancement to the Senate.
Media outlets have widely reported that Soliday defended the bill on the statehouse floor. “Whether that’s coal or rabbits on a treadmill, we need the lights to come on when we flip the switch,” he said. “We’re in transition. Not the first time; won’t be the last. But we’re in transition. All we’re asking to do is manage it.”
Soliday has also said he wants to slow plant closures to buy time as the state’s 21st Century Energy Policy Development Task Force holds more meetings this summer and fall and drafts a report for legislators. The report is due late this year and may provide momentum for statewide energy policy.
If passed and signed, the law would expire May 1, 2021. Kharbanda said Soliday proposed that end date because it’s at the close of the legislative session. Even then, it could be extended.
“A core concern of ours is that there will be a delay in, or potentially a repeal of, that sunset,” Kharbanda said.
He also noted that although the bill in its current form appears to take an “advisory approach,” he worries the language could be amended to make it more official, creating commission dockets that attract intervenors and costly litigation.
“It’s kind of a slippery slope if the sunset date changes or the commission’s role with respect to retirement decision making changes. It could introduce a new level of uncertainty for clean energy companies wanting to build generation sources in Indiana that replace retiring coal plants,” Kharbanda said. He noted that Indiana was the first state to both legislatively phase out its energy efficiency mandate in 2014 and phase out net metering in 2017.
“By adopting this law, Indiana could make a third wrong turn in the transition from coal to clean energy,” he said. “If you’re consistently sending a negative signal to clean energy companies, that’s really to the harm of Indiana. … I think we’re deterring investment and therefore jobs.”
Kharbanda said the bill’s written aim to preserve coal jobs is misplaced in energy legislation. He said that should be handled instead by the Indiana Economic Development Corp. working to attract clean energy jobs to coal-dependent regions and by the Indiana General Assembly increasing appropriations in jobs training.
“We consistently state that every job is precious, and we have a lot of empathy for coal miners in southwest Indiana and coal plant workers in various parts of the state,” Kharbanda said. “We think that there is a more straightforward way to support them.”
He also noted that there are just 2,500 coal miners employed in Indiana, 0.074% of the state’s total workforce. There were 86,900 clean energy jobs in Indiana in 2018, with a predicted 4.7% growth rate, according to the Clean Jobs Midwest report.
Coal Closures at the Crossroads
HEC argues that Indiana can diversify away from coal and pointed to other states that are doing so.
“The facts are that four fellow conservative, historically fossil fuel-dominated states — Iowa, Kansas, North Dakota and Oklahoma — are thriving with 30%-plus renewable energy, lower electricity prices than Indiana and reliable electricity,” HEC said in a statement.
The nation’s unprecedented coal plant retirement trend has extended to the Crossroads of America — though in 2016, Indiana was second only to Texas in terms of coal consumption.
Northern Indiana Public Service Co. announced in 2018 that it would close its remaining coal plants — four units by 2023 and its Michigan City plant by 2028 — replacing them with renewables and wholesale market purchases.
“I like to think that public interest organizations have played a role and pushed various utilities to make sure they’re modeling the very latest renewable energy costs. I don’t think there’s a utility that’s done a better job on modeling for renewable energy and energy storage in the state than NIPSCO,” Kharbanda said.
Last month, Hoosier Energy said it would shutter its 1,070-MW coal-fired Merom Generating Station in 2023.
In its 2019 integrated resource plan, Indianapolis Power & Light said it would close two of the four units at its Petersburg coal-fired plant by 2023 and issue a request for proposals for cleaner replacement capacity. However, the utility still predicts a 28% share of coal in its 2023 resource mix.
In its IRP, Vectren had planned to close its A.B. Brown plant and mothball most of its F.C. Culley plant by 2023. But the IURC rejected Vectren’s plans to construct a replacement 850-MW natural gas station, saying it didn’t explore less expensive alternatives, especially renewable resources. The utility plans to file a new IRP by May 1.
Duke Energy Indiana’s most recent IRP moves up the retirement dates of 4,100 MW worth of coal units at three separate stations, but the last of those won’t occur until 2038.
“While we’re very dissatisfied with the Duke Energy plan, we hope that they see the light in the next integrated resource planning cycle,” Kharbanda said.
He also said it’s possible that Indiana’s next round of IRPs in 2021 could accelerate the pace of coal plant retirements as stakeholders and the commission press utilities to “make sure they’re incorporating the most cutting-edge methodology and modeling for the latest renewable energy and storage costs to ensure that they are producing the most affordable cost possible.”
Kharbanda said Soliday’s bill doesn’t make economic sense at a time when it’s increasingly expensive to retrofit and maintain aging coal plants and renewable energy becomes more cost-effective.
“The utilities, with the increased oversight by the legislature and vigorous participation by ratepayers and environmental groups, is aware that Indiana has really lost its economic competitiveness in respect to energy costs, and that will push the IRPs to be even more rigorous,” Kharbanda said.
Over the past two decades, the state has dropped from fifth in the nation in terms of electricity affordability to the “middle of the pack,” he said.
