Indiana panel passes energy report some say could lead to coal bailout

A blue-ribbon panel on Thursday approved a sweeping report that outlines how Indiana should move forward during a huge shift in the marketplace from coal to renewable energy sources, such as wind and solar.

But some members criticized the recommendations for being so vague that they could give a shield to lawmakers to pass legislation favorable to the struggling coal industry.

The 21^st Century Energy Policy Development Task Force, which was set up to guide lawmakers in crafting a long-term energy plan, voted 11-4 on a series of findings and non-binding recommendations.

The panel is recommending that the General Assembly pass a law that would create a mechanism to be used by the Indiana Utility Regulatory Commission “to assure generation and transmission resource adequacy throughout Indiana.” Another recommendation calls for a law that would set forth “specific metrics and goals” for generation capacity and reliability.

Neither recommendation gave specifics on how such laws would address the dramatic shift by utilities from coal to cleaner sources of energy.

Rep. Matt Pierce, D-Bloomington, a task force member, said several of the recommendations were too vague to vote for and could lead to legislation that some lawmakers say the task force blessed.

“We haven’t laid out in specific way what these metrics should be or even the parameters for them,” Pierce said.

Rep. Ed Soliday, R-Valparaiso, co-chair of the task force, said legislation has already been drafted on both recommendations, but he did not give specifics.

“This (recommendation) was written differently,” he told Pierce. “It was more specific. And to be transparent without going too far, there is legislation already drafted for both.”

Some consumer advocates said the language could lead to highly controversial mechanisms recently passed in Illinois and Ohio that bailed out struggling power plants.

“We fear it opens the door to a bailout of Indiana’s coal fleet, or at a minimum, it could extend the life of un-economic coal plants which should be retired now,” said Kerwin Olson, executive director of the  Citizens Action Coalition of Indiana. “Furthermore, it was mentioned that draft legislation has been created around that recommendation. It seems to us that sharing that draft legislation with the task force should have been part of today’s discussion so that task force members voting yes understood what they were actually voting for. The actual legislation is far more important than ambiguous language in a non-binding report.”

In recent years, large utilities across Indiana have announced plans to shut down thousands of megawatts of coal-fired generating capacity in favor of cheaper fuel sources, such as natural gas, solar and wind. That has caused a crisis for the coal industry, which traditionally has counted on electric utilities as one of its largest customers. The coal industry is now in distress, with many large mining companies in bankruptcy.

The issue of electricity affordability and reliability is a huge issue in Indiana, which is the most manufacturing-intensive state in the nation. Steelmakers, automakers, retail superstores and other large customers consume massive amounts of electricity every day.

The Hoosier Environmental Council said it was disappointed that the task force did not give more attention to energy efficiency and distributed generation, a term referring to on-site energy generation, such as solar panels on a house. In recent years, Indiana has dismantled government programs promoting both.

“The final adopted report continues to portray renewables technology, from an affordability and reliability perspective, in a skeptical light even if the latest economic data show that utility-scale renewables are competitive without subsidies,” said Jesse Kharbanda, the council’s executive director.

He added that the experience of five Midwestern and Plains states shows that that states can reliably operate their grid systems with renewable generation at more than 25% of their electricity mix.

The Indiana Energy Association, a trade group representing five investor-owned utilities, including Indianapolis Power & Light Co. and Duke Energy Indiana, said it looked forward to working with lawmakers to address the findings and recommendations, “including that to keep Indiana competitive in attracting and retaining businesses, the state must encourage the deployment of renewable energy resources while not compromising the reliability and affordability of electric utility service.”

“We’ll continue to work with the state legislature on policies that support these goals,” said Danielle McGrath, the group’s president.

The 15-member task force includes members of both houses of the General Assembly, along with academics, the state’s utility consumer counselor and utility advocates.