Long-awaited study sets stage for Ind. shift from coal

Source: By Jeffrey Tomich, E&E News reporter • Posted: Tuesday, August 18, 2020

Indiana regulators have delivered a long-anticipated study to the governor and a legislative task force that will help guide policymakers as they debate the continued pace of the state’s shift from coal to cleaner energy.

The 338-page study, issued Friday by the Indiana Utility Regulatory Commission (IURC), analyzed a variety of state energy policies and market conditions, including possible moratoriums on coal plant closures, which the report concluded would raise electricity prices.

Indiana, a big consumer and producer of coal, is at a pivot point on energy and climate. Two of the state’s investor-owned utilities have begun planning to save their customers money by shutting many of their older coal-fired power plants in the coming years in favor of renewable energy and battery storage.

In 2018, Northern Indiana Public Service Co. announced a plan to shut its coal fleet within a decade — most of it by 2023. In June, CenterPoint Energy (formerly Vectren) announced a plan to reduce its reliance on coal from 78% to just 12% by 2025 (Energywire, June 16).

The state’s coal industry has pushed back on the trend, both in regulatory proceedings and at the General Assembly, lobbying for policies to help preserve their shrinking market share.

The GOP-controlled Legislature has tried in each of the past two years to pass bills that would prohibit shuttering Indiana coal plants or make it more difficult to do so. The General Assembly passed a version of such legislation this spring (Energywire, March 11).

The bill has had little practical effect, and the provision on coal plant retirements will sunset on May 1, 2021. But clean energy groups say it’s possible that similar legislation will be proposed again next spring based on recommendations from the Indiana 21st Century Energy Task Force.

“It’s clear that that’s sort of the thinking of where the governor and the Legislature are regarding future policy,” said Kerwin Olson, executive director of the Citizens Action Coalition, an Indiana environmental and consumer advocacy group.

State Rep. Ed Soliday, the Republican vice chair of the task force, who led the push for a moratorium on coal plant retirements, wasn’t immediately available yesterday. But it is expected that GOP legislators will again seek to slow down the Hoosier State’s transition away from coal.

Carbon taxes, natural gas and renewables

Among various policy and market scenarios analyzed in the report, two considered the cost impact of a moratorium on coal plant retirements. In one scenario, plant retirements would push off until at least 2025. In another scenario, coal plants would run until 2030.

The analysis showed that such a mandate would lead to slightly higher electricity prices.

Other scenarios examined the effect of lower renewable energy costs, a carbon tax, “aggressive” energy efficiency measures and higher natural gas prices, which were found to have the biggest impact on electric rates.

While the report was overseen by the IURC, analysis was done by the State Utility Forecasting Group at Purdue University, Lawrence Berkeley National Laboratory and Indiana University researchers.

The IURC study also looked at the roles of regional transmission organizations (RTOs), utility-integrated resource plans and how emerging technologies such as rooftop solar and electric vehicles would affect Indiana’s grid. Researchers at the University of Indiana studied the social and economic effect of a transition to cleaner energy.

While the study doesn’t make any specific recommendations, it does support the need for planning flexibility and the continued reliance on long-range utility plans that outline how utilities plan to meet energy demand.

Utilities submit integrated resource plans (IRPs) to the commission every three years. The plans are nonbinding but help guide both shorter- and longer-term power plant investment decisions.

“The modeling done for this report indicates ongoing system reliability is achieved through utility planning appropriately coordinated with the RTOs,” IURC spokesperson Stephanie Hodgin said in an emailed statement. “Flexibility and optionality in resource selection, as reflected in effective integrated resource planning, supports the reliability needs of the future.”

Danielle McGrath, executive director of the Indiana Energy Association, the trade association for the state’s investor-owned electric and gas utilities, agreed.

The study “underscores the importance of modeling through the integrated resource planning process to understand the short and long-term effects from a cost comparison standpoint,” McGrath said in a statement.