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A state lawmaker wants to prevent Indiana utilities from retiring coal-fired power plants early in favor of newer, cleaner technology unless they can prove it’s required by a federal mandate or otherwise in the public interest.
The move comes as several large Indiana utilities are planning to shut down thousands of megawatts of coal-fired generating capacity in favor of cleaner or cheaper fuel sources.
State Rep. Ed Soliday, R-Valparaiso, introduced a bill this week that says public utilities “may not retire, sell, transfer, or terminate a lease” on an electricity-generating plant without getting permission from state regulators.
Several environmental groups and consumer advocates said the bill seems designed to prop up the coal industry, which is struggling as utilities shift to other fuel sources. U.S. coal consumption is now at its lowest point in 40 years, and at least six major coal companies have gone bankrupt since 2015.
Coal-fired power plants have been hit hard by rising maintenance costs, including pollution controls. At the same time, the cost of solar and wind power has fallen as the technology has improved. Natural gas, meanwhile, is beating coal as a fuel source in price, thanks to the shale-drilling boom.
In 2010, Indiana had 26 active coal-burning power units. By 2016, it had just 13, and now that number is on track to decrease by at least another 10 by 2028. But coal still accounted for more than 60% of the state’s electricity generation in 2018.
Soliday did not return calls to explain his bill. Likewise, the Indiana Coal Council, an advocacy group for the mining industry, could not be reached for comment. The Indiana Energy Association, which represents investor-owned electrical utilities, said it is still studying the bill and declined comment.
It is Soliday’s latest move to slow down the huge, sweeping shift in Indiana power generation. Last year, he spearheaded an unsuccessful move to put a two-year moratorium on large, new power plants. The effort failed after strenuous objections from utilities, environmentalists and consumer groups, who saw it as an effort to delay the plans of utilities to retire coal-fired generating units.
Many environmental groups said Soliday’s latest effort should be stopped. The measure, House Bill 1414, was referred to the House Utilities Committee, which Soliday chairs.
“Here we are, handcuffing Indiana utilities for modernizing their power plants in a way that could actually promote more innovation and cleaner air,” said Jesse Kharbanda, executive director of the Hoosier Environmental Council. “Indiana needs to be associated with being at the forefront of innovation.”
The Sierra Club said the bill would hurt the environment and be a drag on Indiana.
“This bill is bad for energy consumers, bad for our air and water, and bad for climate progress at a time when we need to accelerate the clean energy transition, not slow it down,” said Wendy Bredhold, senior representative for the Sierra Club’s “Beyond Coal Campaign” in Indiana and Kentucky.
“This will make Indiana look like a laughingstock in the country for clinging to this old and outdated mechanism for generating power when there are newer, cleaner and better options available today,” said Ben Inskeep, senior energy policy analyst in Indianapolis with EQ Research, a clean-energy consulting firm based in Raleigh-Durham, North Carolina.
Soliday’s bill also would mark a huge shift in how utilities decide when to close old power plants. They now make those decisions for business reasons, after studying market forecasts and other data through an extensive process, in conjunction with consumer advocates, big customers and other interested parties.
The Indiana Utility Regulatory Commission would have to approve any move to retire old coal-fired units. It adds that a utility may not “materially and adversely affect the operation, safety, capacity, economic useful life, or any other aspect of the electric generating facility.”
Several utility observers say the bill would interfere with how and when a utility decides to retire a plant.
“The commission has never had approval authority for plant retirements, and they shouldn’t now,” said Kerwin Olson, executive director of Citizens Action Coalition, an energy consumer watchdog group. “Those are business decisions made by utility companies.”
Meanwhile, the coal industry is bracing for the loss of more business. Just last month, Indianapolis Power & Light Co. said it plans to retire two of the four coal-burning units at its massive Petersburg Generating Station by 2023. The two units went into service in the late 1960s. The Indianapolis-based utility stopped using coal in recent years at two other plants—Harding Street in Indianapolis and Eagle Valley in Martinsville—in favor of natural gas.
In July, Duke Energy Indiana, the state’s largest utility, said it wants to retire nine of its coal-fired units by 2038 and build two large natural gas plants, along with 700 megawatts of wind energy and 1,650 megawatts of solar energy.
Merrillville-based Northern Indiana Public Service Co. said it aims to retire four of its five remaining coal-fired units within five years, and the fifth within a decade. It plans to generate 65% of its power from solar, wind and other renewables by 2028, and at least 25% from natural gas.
Vectren Corp., owned by Houston-based CenterPoint Energy Co., plans to retire three of its four coal-burning generating units in southern Indiana by 2024. In their place, Vectren wants to substantially increase the use of natural gas as a fuel source and build a 50-megawatt solar farm.
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Only in Indiana.
Coal is eighteenth-century technology. If Rep. Soliday aims for consistency, he should try to prop up other obsolete eighteenth-century technologies. To protect horse breeders he should require travel in horse-drawn carriages. He should ban steamboats, that pernicious nineteenth-century innovation, to protect flatboat operators. He should make our militia fight with muzzle-loaded muskets and ban breech-loaders. And anyone using a fountain pen will face severe regulatory sanction. If grandpa made do with a quill pen that’s good enough for Rep. Soliday.
Soliday does not realize that these business are making business decisions. When a 30+ year old coal fired power plant needs a major overhaul and maintenance, they look at the cost, usually in the $100,000,000+ range, and ask if I invest that kind of money, will I get a payback over the next 30 years? In light of the radical changes happening in the energy business, the answer is almost always NO. Even if the answer might be yes, when they go to a bank and tell them they want to finance this project, the banks don’t have a crystal ball, but they can see the change coming, and tell them to get lost. Coal is dead because money to support it has dried up. No amount regulation will bring it back. Only direct subsidies will prop it up, and guess what, that costs money.
This will cost Hoosiers a lot on their energy bills as they have to pay for failing plants and higher cost coal over cheaper (and cleaner) options. Not to mention, diminished health, particularly children who are more susceptible to asthma and other lung problems, will make us sicker and live shorter lives.
There sure are a lot of geniuses reading Indianapolis Business Journal and commenting…such an incredible wealth of untapped energy-producing knowledge, it would appear.
Did it occur to anyone that it is possible to design and install better scrubbers on existing coal plants to reduce harmful emissions while other technologies are being perfected, so that facilities already bought and paid for may be “used up?”
And this is to say nothing of one of the biggest untapped sources of energy lying around serving as mosquito breeding grounds; old motor vehicle tires. Don’t laugh; for all practical purposes, they are free for the taking by the millions and possess an enormous number of BTUs…ask anyone in fire-fighting who has tried to extinguish a large pile of discarded tires that has caught fire. Sure, they are dirty when burning but, again, cleaning up their smoke would seem to be a solvable problem, given existing technology….and using them for this purpose would be a good example of end-use recycling.
This doesn’t even make sense from a business perspective, let alone an environmental one. When natural gas, solar, and wind are rapidly declining in price per kilowatt and efficiency is increasing, why would a utility pump money into a 30-year commitment on a technology that is more difficult to deal with and dwindling in supply?
Or simply some people who own utility stocks and read the annual reports. Educated investors.
See my first comment. It is all about money.
Bob P, if the scrbbers work so well, why is it that Indiana has some of the worst air in the country? How about if you and Mr. Soliday and your families move just downwind from the coal plants? I would agree that if a plant has had major, expensive retrofiting in the last 5-10 years and has a 10 year useful life remaining, it’s costly to just abandon it today. But they are a business and have decided to make the move – notice, though, that their proposals are to close plants over the next 10-20 years, not tomorrow. What possible reason is there for a legislator to intervene other than to kowtow to the lobbyists who support him. As Tom W. points out in the first comment, “Only in Indiana”!