NIPSCO seeks $38M from customers for first 3 months of forced coal plant run

The Northern Indiana Public Service Co. spent $116.7 million from January through March to comply with Trump administration orders forcing the operation of two Jasper County coal units scheduled for retirement at the end of last year.

Coal units at the R.M. Schahfer Generating Station earned $33.5 million in coal-generated electricity sale revenue over that period, according to a Tuesday filing with the Federal Energy Regulatory Commission.

Utilities warn of soaring costs related to Trump order for Indiana coal plants to stay open

NIPSCO is asking federal regulators to let it collect $38 million in quarterly costs from customers in the Midcontinent Independent System Operator’s 15-state footprint, which includes Indiana. The figure includes $2.8 million in profits for the utility company.

“We recognize that customers are focused on their energy bills and understand the importance of keeping energy affordable,” the company said in a statement to the Indiana Capital Chronicle. “… FERC has established a process that allows utilities to seek recovery of costs to comply with these federal orders, subject to FERC review and approval.”

“As this process moves forward, NIPSCO remains committed to managing costs responsibly to comply with this order, while providing safe, reliable service for our customers and supporting electric reliability across the region,” the statement said.

Federal orders’ price tag

Schahfer’s two remaining coal units, Nos. 17 and 18, were set to retire Dec. 31 after four decades in operation in the northwest Indiana town of Wheatfield.

But on Dec. 23, U.S. Energy Secretary Chris Wright issued emergency orders to NIPSCO, CenterPoint Energy and MISO, directing them to “take all measures necessary to ensure” units at Schahfer and the F.B. Culley Generating Station in southern Indiana’s Warrick County were operational for 90 more days.

Subsequent 90-day directives in March and June have extended the forced operations at both facilities through Sept. 19. The Department of Energy orders were made under the Federal Power Act.

NIPSCO will charge customers through a tariff placed on the energy markets operated by MISO — after a 60-day notice period initiated with Tuesday’s filing and once the regional transmission operator submits and obtains federal approval for a separate compliance filing.

Meanwhile, the costs incurred on Schahfer’s coal units continue to stack up — even as both units have stopped bringing in revenue, amid extended outages.

‘Significant’ costs expected going forward

Unit 17 was available for coal-generated energy sales through February despite being derated from a capacity of 424 megawatts to 325 megawatts. In March, NIPSCO placed it in a planned outage for repairs and maintenance, with the outage scheduled to end in October.

Unit 18, meanwhile, has been in forced outage for more than a year, since last July, when a low-pressure rotator blade failed.

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Restoring the unit will require work on the turbine, generator, coal-handling system, mill, cooling tower and more, according to the filing.

“NIPSCO will need to incur significant expenses to bring Unit 18 up to operational capability consistent with the DOE Orders,” the company wrote. “… DOE is aware of the investments that have been, and will be, necessary to comply.”

The unit is expected to go back online in mid-December.

NIPSCO will make similar filings to recover costs incurred under the two later federal orders, as well as any future ones. The utility is preparing to keep the coal units operational “through late 2028 or early 2029” if required to do so, according to its filing.

State-level denial of hike for infrastructure work

Also this week, state regulators dealt NIPSCO a blow when they rejected the utility’s $741 million, five-year plan for natural gas transmission, distribution and storage infrastructure improvements and charges.

Indiana’s TDSIC statute lets utilities, with Indiana Utility Regulatory Commission approval, recover 80% of costs incurred through a tracker. The remaining 20% is recovered through the next rate case.

The utility said the plan would “support continued improvements focused on modernizing and strengthening NIPSCO’s natural gas system, including investments intended to enhance system safety, reliability and resiliency.”

But in a scathing 3-0 denial issued Wednesday, the IURC said  that NIPSCO “failed to provide sufficient evidence for the Commission to determine that each proposed eligible improvement is cost-justified.”

“We decline to accept NIPSCO’s suggestion that cost-justification can be inferred because the projects were selected by internal subject-matter experts,” Commissioners Bob Deig, Anthony Swinger and David Veleta wrote.

The regulators cited a 2024 state Supreme Court opinion dealing with Duke Energy Indiana, arguing that the decision set a higher standard for the burden of proof utilities face on their infrastructure plans.

NIPSCO’s is the first plan to be considered since then, according to a concurring opinion authored by Swinger, the IURC’s chair.

“Although NIPSCO did provide more information for some projects as compared to others in its attempt to provide cost-justification, such as the rural extensions, we decline to sift through the proposed projects to create a reasonable TDSIC plan,” the regulators wrote in their joint order.

In order to try again, NIPSCO will have to file a new case with “the sufficient evidentiary foundation” for regulators to consider each proposed project.

“We appreciate the Commission’s review of our filing,” the utility said. “… We are reviewing the Commission’s order to assess its impact on the proposed investments and determine next steps. NIPSCO remains focused on delivering safe and reliable service and meeting the energy needs of the customers and communities we serve.”