Trish Demeter and Ed Burgess: A fateful choice looms for Indiana’s electricity grid

Much has changed since Indiana’s electric utilities last issued their plans to power Hoosier homes and businesses—fossil fuel prices, supply chains, federal policies, geopolitics and technologies, to name just a few.

These changes have opened new opportunities to offer customers lower energy prices and cleaner air. But if Indiana utilities move ahead with their current proposals that ignore these rapidly evolving market conditions, they will waste their customers’ money on 20th century strategies and technologies. Don’t Hoosiers deserve better options for an affordable, reliable and modern grid?

Four of the state’s largest electric utilities—CenterPoint, Duke Energy Indiana, Indiana Michigan Power and Northern Indiana Public Service Co.—have proposed replacing coal-fired power plants with natural-gas-fueled plants. It’s like upgrading from a 1995 Toyota Corolla to a 2005 Toyota Corolla when, for the same price or less, you could have a Ford Mustang Mach-e. It would be irresponsible for these utilities to not reconsider their plans before breaking ground on new projects when changing market conditions make potentially cost-saving and innovative solutions available.

In particular, changes to the federal tax code made last year via the Inflation Reduction Act reshaped the energy sector by reducing the cost to build clean-energy resources, such as wind, solar and battery storage. Thanks in part to these changes, utilities now have new opportunities to offer their customers more affordable rates that also improve grid reliability and reduce harmful air pollution. But if utilities ignore this opportunity and choose to forge ahead with outdated plans for expensive, old-school, polluting resources, they will be locking in higher rates for their customers for decades to come and locking out investments that are—for a limited time—coming at a unique discount.

A new review of these utilities’ plans by Strategen Consulting confirmed that building clean energy—like wind, solar and battery storage—could meet customers’ needs at lower costs. In the year of deployment, battery storage and clean energy would provide direct financial savings of $3.5 million to CenterPoint’s ratepayers, $68.5 million for Duke Energy Indiana’s ratepayers, $66.2 million for I&M’s ratepayers, and $3.4 million for NIPSCO’s, with savings expected to grow over time. Meanwhile, these clean-energy options come with additional benefits, including new jobs for Indiana’s workforce, avoiding unpredictable fuel price spikes and preventing the buildout of power plants that carry the risk of losing money when they operate.

Clean energy outcompeting fossil resources aligns with national trends. A recent study by RMI illustrated with 11 recent examples from utilities serving more than 6 million customers how market competition that relies on updated pricing and real-world conditions leads to lower-cost and cleaner outcomes for customers, all while maintaining grid reliability. Crucially, in these leading examples, only about 10% of new energy supply came from natural-gas plants, while about 90% was from clean-energy resources. Simply put—when given an honest chance, clean energy wins almost every time.

Indiana’s electricity grid stands at a crossroads. The state, which generates nearly 90% of its electricity by burning fossil fuels and whose residents pay more for their electricity than 70% of the country, has the once-in-a-generation opportunity to drive energy costs down by simply taking advantage of market competition and acknowledging present-day realities. If Indiana’s utilities and the Indiana Utility Regulatory Commission decide to proceed with these outdated plans, while better options that would actually lower costs are passed over, they will be doing their customers a disservice.•

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Demeter is a managing director of the central and Midwest regions at Advanced Energy United. Burgess is a consulting partner at Strategen Consulting.