Indiana utility seeks 12 percent rate hike to shut down coal power.

From The American Spectator

Under a renewable energy proposal from Northern Indiana Public Service Company (NIPSCO), Indiana consumers would face a 12 percent electricity rate hike, which will cost the average household more than $100 per year in additional electricity costs. NIPSCO is justifying its renewable power rate hike by asserting renewable power saves consumers money, but there’s absolutely no truth to these claims.

Indiana ranks seventh in the nation in coal production and generates 68 percent of its power from coal. Together, affordable coal and natural gas generate 95 percent of Indiana’s electricity. As a result, Indiana electricity prices are substantially lower than the national average. National electricity prices are 10 percent higher than in Indiana.

Unfortunately, NIPSCO wants to put an end to these low prices. It is proposing to shut down two perfectly functioning coal power plants that provide much of NIPSCO’s low-cost electricity. In their place, NIPSCO wants to build expensive wind and solar power equipment and battery storage for when the wind isn’t blowing or the Sun isn’t shining. NIPSCO claims transitioning from affordable coal power to wind and solar will save consumers money, but at the same time that it makes these unfounded claims, NIPSCO is proposing to hike electricity rates 12 percent to pay for the renewable energy “savings.”

NIPSCO is a government-protected monopoly utility, with Indiana state government guaranteeing NIPSCO a profit of approximately 10 percent for every dollar it spends. Accordingly, NIPSCO has a financial self-interest to engage in costly business practices. Building expensive new power facilities, even when existing facilities are working perfectly well, is one of the most effective ways for NIPSCO to ramp up its spending and guaranteed profits, and it does so at the expense of consumers, many of whom will have no knowledge that their electricity bills are about to rise substantially.

In return for NIPSCO receiving guaranteed profits on its expenditures, the Indiana Utility Regulation Commission (IURC) must approve any NIPSCO major investment proposals. In its filing with the IURC, NIPSCO claims its proposal to shut down its coal power plants will save consumers more than $4 billion.

How does NIPSCO claim out of one side of its mouth that its plan to shut down coal power will save consumers money while also proposing to impose a 12 percent rate hike? NIPSCO says its $4 billion in savings will come a few decades from now. NIPSCO seeks large increases today to pay the upfront costs of expensive wind, solar, and battery storage equipment, promising that the modest annual savings from not having to purchase inexpensive coal to power the coal plants will eventually surpass the cost of the wind, solar, and battery storage equipment.

IURC should closely scrutinize NIPSCO’s cost projections. Utilities seeking to build out new wind, solar, and battery storage facilities to replace existing coal facilities have a history of overestimating the costs of future coal power and underestimating the costs of building renewable power equipment. Also, utilities often do not include in their cost calculations the huge subsidies taxpayers must pay for the new renewable power equipment. For example, NIPSCO proposes replacing most of its coal power generation with solar power. Not coincidentally, federal taxpayers, including Indianans, send a check to the owners of solar power equipment for 30 percent of the costs of solar power equipment. This imposes a huge burden on electricity consumers, but NIPSCO does not factor this into its asserted consumer cost savings.

Read the full story here.

James Taylor (JTaylor@heartland.org) is senior fellow for energy and environment policy at The Heartland Institute.

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99 thoughts on “Indiana utility seeks 12 percent rate hike to shut down coal power.

  1. If I understand correctly, NIPSCO is talking about shutting down Michigan City and Wheatfield… by 2028. Total generation is supposed to 1800MW (I don’t know if that’s accurate, seems low).

  2. Batteries eh.

    There’s no way current battery technology can compete with coal. Batteries can be charged and discharged only a finite number of times.

    As an exercise, I once priced out a system to take free electricity, store it in a battery, and resell it at peak rates. Even with free electricity such a system wouldn’t make money because of the cost of regular battery replacement.

  3. “It is proposing to shut down two perfectly functioning coal power plants”
    There is a more balanced and informative account here. It is misleading to speak of “perfectly functioning”. I’m sure that they can be kept going, but the 4 Schahfer plants date from 1976, 1979, 1983 and 1986. The two older ones have reached a point where it is just not economic to keep them running, and they were scheduled for retirement in 2023. NIPSCo now proposes to retire the lot in 2023 – clearly the others are not much younger. Whatever is done will cost money and raise rates. NIPSCo thinks their proposal is the most economic. How do we know it isn’t?.

    • No one disputes that, Nick. If NIPSCO had proposed building a replacement coal or natural gas facility, they wouldn’t look so incompetent. Are wind, solar, and battery truly more cost-effective in the long term compared a new coal or NG facility?

          • So why do you think NIPSCo is getting it wrong (and you can be so certain). They are the people who have actually been keeping the power on, and will have to continue doing so, while staying solvent.

          • That’s been explained over and over again.
            The biggest reason why is that these costs don’t include the cost of backup needed when the sun doesn’t shine and the wind doesn’t blow.
            Beyond that they assume that the wind will blow and the sun will shine a lot more than it actually does.
            Nor do they include realistic maintenance costs.

        • Nick-san:….

          Wind and solar are unreliable, intermittent, diffuse, inefficient, and require 100% IMMEDIATE backup of coal/gas plants for those ever-so-rare phenomena: night, haze, clouds, no wind, winds to strong, dust, snow, hurricanes, typhoons, cyclones, short winter daylight times, etc….

          Factoring out wind/solar subsidies, and adding the costs of running back-up conventional plants NOT producing ANY power while wind/solar plants inefficient and temporarily feed the power grid, the cost is about $0.30/kWh for solar, and only sightly better for wind. Coal and natural gas costs are about $0.06/kWh…

          Wind and solar are insanely stupid ways to generate grid-level power as Germany, Spain and Scandinavian countries have learned the hard way…

          As to why government hacks and private-sector rent seekers can’t understand why wind and solar are so insanely stupid, that’s easy: “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”~ Upton Sinclair

        • We know they’re wrong because combined cycle natural gas is, by far, the least expensive type of power plant to build and operate in almost every State in the Union. The only exceptions are Alaska, Hawaii and the New England States.

          We also know they’re wrong because they say they have to hike electricity rates now to pay for speculative savings decades in the future.

        • Nick, I think articles on here on WUWT have answered question. I know you’ve read them because you’ve commented on them. But I’d like to take a tangent with you. It regards your argument articulation. The worst way to convince a person that what they believe is wrong– or to at least convince them to think critically of their own beliefs– is to take what they say and repeat it in the contrary. “How do we know they are wrong” is a contrarian repeat of what I essentially said. It does not convince me of anything and, perhaps most importantly, it causes you to look like you aren’t prepared to argue what you believe. Either because you know what you believe is wrong or you don’t actually know what you believe. It reveals in you a possibly unconscious defense mechanism to throw arguments away from yourself as quickly as possible and, thus, reduce the chance of exposing your own lack of understanding or your own fears.

          • “is to take what they say and repeat it in the contrary. “How do we know they are wrong””
            Well, clearly the best way to convince here is to repeat it in the affirmative. There is a lot of that. But it is a real question. NIPSCo is a regular utility, in business. It supplies electricity and tries to make money. They think the best way is to use more renewables. Locals say no. Why? basically, because we said so, and have said many times. But meanwhile more and more people who actually have to generate power are setting up renewable projects. They do the sums. How do we know they are wrong?

        • Having grown up in NW Indiana and seeing NIPSCO in action, I can definitely say they are wrong. All that utility cares about is profits to its board and kickbacks to the regulatory board to keep it that way. Back in the 70’s and 80’s, they were allowed to raise rates if they didn’t meet revenue and profits targets without any additional public hearings. And since they are also the natural gas supplier, you couldn’t escape. After multiple $400/month utility bills on our 1800 sq ft house, my dad installed a wood burning stove in 1979 or 1980.
          Question to answer: since NW Indiana is one of the few places in the world where lake effect snow is a thing, how are those solar panels going to work when buried under 6 feet or more of snow?

        • Here in Ontario Canada – they eliminated coal plants and our winter heating bills went from $300-350 to over $800 A MONTH – that’s not even with their current ‘carbon tax’ on it! We installed a wood stove – has since paid for itself and now saves us money as we never use the electric heat.

      • I am truly glad I live in a climate with a mild non snow winter. These idiots will end up killing people during severe winters.

    • I thought every public utility was expected to include the cost of eventual plant replacement in their current rates so that they would be able to replace aging power plants when the time came. It’s reasonable to think if NIPSCo has done this, the rate hike must be necessary to pay the higher costs of renewables over continued coal power.

      SR

    • Michigan City dates back to the 1950’s but I’m not entirely convinced the age of Michigan City and Wheatfield are viable arguments for shutting them down. However, there are a total of 7 units between the two generating stations and the combined nameplate capacity of the 2 stations is about 2500MW. They’re small units. They may not be economical anymore.

          • The city built up around Stapleton, and then the new residents complained about the noise. Happens all over the US. Happened a lot in So cal where I came from. They even started building high rises in the flight path. I still remeber vividly coming home and seeing a small plane sticking out of the fourth floor of a building at the departure end of Meadowlark Airport (long gone now).
            Homes near airports need to be sold with the stipulation that if one complains about the noise, the house is forfeited. You shouldn’t buy a house under the flight path next to the airport, then complain about the noise. But then, Kalifornia is all Blue now.

    • Neither your link nor any articles I have read suggest they are functioning anything other than “perfectly.” NIPSCO shut down two coal plants this year 5 yrs ahead of schedule and the 2023 closures were a big surprise when NIPSCO announced a few years ago they were being considered. NIPSCO just keeps saying stuff like, “The energy sector is changing and will continue to change” and announcing goals for renewables vs. coal. Not presenting much substance at all.

      So in Victoria, people don’t question rate hikes presented as cost-savings? You just say, “Well this entity we pay bills to says this will be better economically for us customers, so it’s probably true.”

      • It’s like going into a chemist and asking for a product, but the girl behind the counter says “or could I interest you in this product, it’s equivalent to the named brand and only $100 dollars more”.

    • ”How do you know it isn’t.”

      The history of installed wind and solar clearly says it isn’t.
      Germany’s Energie Wind anyone?

    • ”How do you know it isn’t.”

      The history of installed wind and solar clearly says it isn’t.
      Germany’s Energie Wind anyone?

    • Coal plants last at least 60 years if well maintained. Solar and wind start to degrade from new and last about 20 years. It’s a no-brainer to build cheap coal-fired power plants, which provide reliable baseload, not intermittent and unpredictable power like wind and solar do.

    • To answer your question, of course, we don’t know that. The comments here are the usual knee-jerk hate on renewables.

      NIPSCO is not getting totally in to renewables – they are retaining their natural gas plants, and their hydro power plants (which incidentally, are “renewables” too, and also are variable, with average annual capacity factors of about 50%, which is the same rate that late model wind turbines are producing – yet hydro power plants never garner the “renewable hate” reactions that wind and solar get here. Meaning, the reactions here are as much about, or more about, ideology than engineering.

      I am a strong climate alarmist skeptic – and an engineer who is enthusiastic about engineering progress and economic feasibility … I practice no ideology other than common sense, and good engineering sense. The rest of ideology is mostly non-sense.

  4. Look at Australia’s southern states, New South Wales, Victoria and South Australia. All very expensive power after axing coal and using renewable as a replacement.

      • Courtesy of the Google partial answer-machine-if-it-fits-their-politics: –

        “Man is not a rational animal; he is a rationalizing animal.”

        ― Robert A. Heinlein, Assignment in Eternity

        Auto

  5. I wonder what the response would be if they had to commit to reducing electric rates, once the renewables project was completed, to 12% below current rates until such time that consumers recouped the initial costs, and after that time some % below current prices for the life expectancy of the renewables (since actually saving consumers money is the object of this program).

    I know they would object. I just wonder on what grounds they would object. After all. They are the ones claiming it will save consumers money.

    • They would object because they know there will be no savings. The savings will be the “pot of gold at the end the rainbow”. And they already have a well-worn excuse for why the savings never occur.
      AGW will be “worse than we thought”, and rates will have to be raised several times to account for the damage done by “carbon pollution”.
      There is a higher probability that Elvis will reappear and do a Christmas concert, than switching to unreliable energy production methods in Indiana, will result in savings.
      Solar is a complete waste of money. They have access to coal and natural gas, which provide energy 24/7. There is no way that solar can compete with that in Indiana.
      If they were to do this it will cost 50% more, at a minimum. And the highest probability is more than double.

  6. The Ontario government in Canada tried a similar track with the shutting down of perfectly good cheap coal power plants and installing windmills all over the southern part of the province. The end result was the power prices soared to 1500% of what the they were before the shutdowns with the increased costs and guaranteed power prices in the contracts for the windmill operators. The next result was that a number of manufacturing plants shutdown and left the country complaining the power prices made their products production too expensive. One of these plants was actually a power windmill manufacturing plant in Peterborough that closed putting 300 people out of work. The latest victim of these increased costs was the GM plant in Oshawa which is closing due to high production costs and lower profits. Another 2600 jobs bite the dust never to return.

    • Since movement is what a wind turbine is all about, a video tells much more than a still picture. If you want to see what this wind farm looked like 17 years ago, click on the link below. I understand that these turbines have all been removed and new ones installed at a different location.
      http://louxeng.com/movies/SouthPoint1.m4v

    • “here’s what renewable energy looks like after a few decades”

      The oil and gas industry and coal companies clean up their defunct drilling and mining operations. Does the wind industry do the same?

      Today in Oklahoma, you can go to former oil and gas drilling sites and they have been restored back to nature to the point that you would never know they had been there.

      I live in a rural area and a number of years ago a small coal surface mining operation started up just a few hundred yards from my property line. Well, this naturally concerned me and I worried about the ramifications. But after strip mining for about a year, the mining company closed up their operation and they went in there and restored the land and I swear you can walk that ground today and never know a piece of heavy equipment had ever been there. I was amazed and very gratified.

      The oil, coal and gas industries take care of Mother Nature.

    • Don’t know anything about REMC in particular, but most co-ops buy their electricity from the local producer. So if their wholesale cost goes up, so will yours.

  7. “…savings will come a few decades from now….” And the check is in the mail. Solar panels will undoubtedly need to be all replaced and I don’t know of any wind turbines that last that long so they will probably need wholesale replacement as well. How do these people get away with outright misinformation and lies?

    • “Savings will come in a couple of decades…” Isn’t that just about the time all these green things need to be replaced?

  8. The article refers to people from Indiana as “Indianans”. Whaa…?

    I have lived in Indiana for over four decades. I have never heard anyone in the state use that word. We are “Hoosiers”.

    • In 2017 the U. S. Govt. Publishing Office’s style manual made Hoosier the official name of those living in Indiana.
      Don’t call me

      John Finley – The Hoosier’s Nest (~1826)
      The emigrant is soon located,
      In Hoosieer life initiated; Erects a cabin in the woods,
      Wherein he stoes his household goods.

      The source of the name is debated.

  9. While the West continues to waste $trillions on wildly expensive, intermittent and unreliable wind and solar boondoggles, China is currently building one new coal or natural gas plant every week to meet their growing energy demands.

    Moreover, China plans to have commercial Thorium MSRs available by 2030, which will initially replace their old/dirty coal plants (which are causing huge air pollution problems) , and then, eventually, their natural gas plants.

    https://web.archive.org/web/20171214071933if_/https://www.iaea.org/NuclearPower/Downloadable/Meetings/2016/2016-10-31-11-03-NPTDS/05_TMSR_in_China.pdf

    Thorium MSRs are theoretically capable of producing unlimited amounts of energy (China has the largest dirt-cheap Thorium reserves in the world) at $0.03/kWh; 50% cheaper than coal/gas and 10 TIMES cheaper than wind/solar.

    Many people are skeptical that China will successfully develop Thorium MSRs, but the probability of China successfully developing Thorium MSRs far exceeds the probability that CAGW is a real concern…

    If China is successful in developing commercial Thorium MSRs, a second tsunami of industrial production will flood into China to take advantage of cheap and unlimited amounts of power, few business regulations and cheap labor. If the West continues to build insane wind/solar plants, the tsunami will be even bigger…

    The West is committing economic suicide with this insane CAGW hoax…

  10. Indiana’s winters are well known for their undless weeks of gloomy, gray skies. Not a good idea to depend on solar. Solar that can get covered by 12inches of wet snow and ice.

    Windless winter nights too are common.

    Reliance on Renewables — a formula for sure-fire energy disaster in the MidWest Great Lakes region.

  11. Renewable power with renewable equipment. Batteries last about 1000 deep cycles, more or less depending on type, and in some uses are replaced every few years regardless of usage. What are they planning in this proposal? Maybe they are estimating high future carbon taxes on coal and getting out while they can.

    The article only mentions shutting down two coal power plants. Out of how many? Surely more than two. How much would the price increase to shut them all down?

    They are part of Midcontinent Independent Transmission System Operator (MISO)
    https://www.misoenergy.org
    This page has a pie chart of the current breakdown of energy sources for that grid.

  12. According to many who support the deployment of solar and wind derived energy, energy based on renewable is less expensive then energy derived form fossil fuels. So instead of increasing rates they should be lowering rates.

  13. Since it is effectively a public utility, they should also tie the managerial wages to lowering the prices consumers have to pay for electricity. That might prevent the managers running off on expensive green vanity projects.

  14. There is no way that you can scrap perfectly functioning coal power generation and replace it with wind, solar and batteries for just a 12% premium. Perhaps those power plants are in the last years of depreciable expense and rates are about to drop significantly???

    • A foot in the door. Starting down that path, the only way forward will be to pay increasingly more.

      Not coincidentally, environmental groups are now attacking coal ash ground water contamination (with hyped scare words and minimal facts without context) as a reason to kill coal.

  15. Brilliant, NIPSCO. Chase more industry out of your service area w/high electric rates, and you’re well on your way to “Detroitification”.

  16. The supposed savings would kick in just about the time all of the solar and wind equipment has passed its useful life and they will hit you with an even larger rate increase to replace it all with new green energy. Rate payers will never see any savings. Only increased rates to keep paying for the virtue signalers to keep saying they are doing something green.

  17. “NIPSCO is a government-protected monopoly utility, with Indiana state government guaranteeing NIPSCO a profit of approximately 10 percent for every dollar it spends.”
    This tells you everything you need to know about this scam. Both the state government and NIPSCO in collusion, fleecing ratepayers and taxpayers, and lying about it to their face. Scandalous.

  18. The first impact is higher bills for consumers.
    The second impact is higher retail prices as retailers increase their prices in order to pay the higher utility bills.
    The third impact will be unemployment as manufacturers decide to expand in other states rather than pay the higher bills.

  19. Lucky you in Indiana. You get to pay sales tax on utility bill increases in the process of saving money. Just don’t call it educated or economics.

  20. Cripple the power grid for no other reason than virtue-signaling.

    At what point does all this self-indulgence simply become selfish and evil?

  21. This will end another regulatory fiat impediment to coal fired power generation in the USA:
    Trump’s EPA Moves To Repeal Obama’s ‘De Facto Ban’ On New Coal Plants
    “The Environmental Protection Agency (EPA) will raise carbon dioxide emissions limits for new coal-fired power plants and eliminate the Obama administration’s mandate that new facilities install carbon capture and storage equipment.”

  22. Someone upthread mentioned Nipsco’s hydro production. It’s a beauty and renewable/S

    We currently own and operate two Hydro Electric Plants in northern Indiana, which provide electric power to customers across NIPSCO’s service area.
    Norway Hydro Electric Plant – located along Lake Shafer in White County – was put in service in 1923 and NIPSCO purchased the plant in 1944. Norway Hydro’s maximum output is 7.2 megawatts (MW).
    Oakdale Hydro Electric Plant – located along Lake Freeman in Carroll County – was put in service in 1925 and NIPSCO purchased the plant in 1944. Oakdale Hydro maximum output is 9.2 MW.
    Norway and Oakdale were licensed by FERC on October 2, 2007. NIPSCO operates these facilities as “run-of-river dams”. In other words, water flowing through the dams is matched as close as possible to the water flow coming into the dams. These facilities are not flood control dams.

    So over 90 years old and a combined max output of 16.4 MW. Wow. Snow covered solar and iced up windmills may be an improvement on their virtue signaling page.

  23. “How does NIPSCO claim to be a consumer of money while also proposing to impose a 12 percent rate hike?”

    well that’s a win-win-win situation for Indiana:

    1. The state of Indiana receives more taxes + duties

    2. If more long-time unemployed starve or freeze to death in winter due to high energy prices, the social funds will be relieved

    3. The demographic problem: if more elderly citizens due to high energy starve to death or freeze to death in winter, the pension funds will be relieved.

  24. “How does NIPSCO claim to be a consumer of money while also proposing to impose a 12 percent rate hike?”

    well that’s a win-win-win situation for Indiana:

    1. The state of Indiana receives more taxes + duties

    2. If more long-time unemployed starve or freeze to death in winter due to high energy prices, the social funds will be relieved

    3. The demographic problem: if more elderly citizens due to high energy prices starve to death or freeze to death in winter, the pension funds will be relieved.

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