Mark Maassel

Indiana Energy Association President Mark Maassel speaks before the Indiana General Assembly's Interim Study Committee on Energy, Utilities and Telecommunications on Wednesday at the Indiana Statehouse, in Indianapolis. Maassel is a former president of NIPSCO.

By Keith Benman keith.benman@nwi.com, (219) 933-3326

Indiana's large manufacturers and utilities squared off before Indiana legislators Wednesday to present competing views of what the future should hold for satisfying industrial power needs in the state.

Indiana Industrial Energy Consumers told legislators the state's utility regulations have to be changed to control electricity costs for manufacturers, primarily by making it easier for them to build their own electric generating plants.

"One of the great things about our industrial businesses is they are innovators," Indiana Industrial Energy Consumers legislative director Jennifer Wheeler Terry told legislators. "Let's give them the chance to do that."

Specifically, manufacturers are asking for changes in state law that would make it easier to build what are known as cogeneration plants, also known as combined heat and power plants. Those plants are very efficient because they produce electricity and then capture the heat produced for other industrial processes. ArcelorMittal already operates a co-generation plant built in the late 1990s at its East Chicago steel mills.

The Indiana Energy Association, representing the state's five large investor-owned utilities, including NIPSCO, argue Indiana's current approach to utility regulation is a good one and before regulations are changed the cost to all utility customers has to be considered.

"Utilities are not at all opposed to combined heat and power," said Indiana Energy Association President Mark Maassel. "The advantages they have shown are real advantages. ... It really all comes down to who pays."

Maassel said the cost to utilities and their other customers comes in the interconnections utilities much provide for cogeneration plants and the backup power they must by law provide for times when those plants are not operating.

Representatives of both manufacturers and utilities appeared in the afternoon before the General Assembly's Interim Study Committee on Energy, Utilities, and Telecommunications, which has been charged with evaluating amending Indiana law regarding alternative electricity generation. It met in Senate Chambers at the statehouse.

Legislators peppered Terry and a representative of MacAllister Power Systems, Chris Cummings, with questions about how the cost of the cogeneration plants would be covered.

"We are talking about private investment in new generation capacity," Cummings said.

Terry said the cogeneration plants could ultimately save utilities and their residential customers money because they will eliminate some of the need for utilities to build expensive new power plants in the future.

She pointed out Indiana industrial electric prices have gone from being the 5th lowest in the nation in 2003 to just the 26th lowest in 2014, according to data from the U.S. Energy Information Administration.

Maassel said the large manufacturers are denying their proposals represent deregulation, but he said they are definitely a step in that direction. He said 11 of 24 states that have implemented some form of deregulation have since tried to retract it in all or part. And he pointed out Indiana's electric rates remain lower than those of most deregulated states.

"We have to take a hard look at why we might go down a path that could lead to the type of problems other states have experienced," Maassel said.

The interim study committee is expected to make recommendations later this year on whether any changes are needed in Indiana law to allow for more alternative generation in the state.

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