NIPSCO decided to transition away from the coal it's burned for 90 years because of financial considerations, not environmental concerns, company President Violet Sistovaris told the Lakeshore Chamber of Commerce Wednesday.
The Merrillville-based utility estimates it will save up to $4 billion by retiring its aging coal-fired plants, including the Michigan City Generating Station, passing the cost savings onto customers. NIPSCO believes that in a decade it will instead generate 65% of its electricity from renewable energy sources, 25% from natural gas, and 10% from other sources, such as buying power at market rates from the grid when it's most cost-effective to do so.
"It's a customer-focused plan to meet the future energy needs of customers," Sistovaris told a business crowd at a Lakeshore Chamber luncheon at Dynasty Banquets in Hammond. "It's a decades-long transition to a more balanced portfolio. We're going from coal-fired generation to lower-cost cleaner energy sources that will result in $4 billion in cost savings. It's a more balanced, more diverse and more affordable way to reliably provide electricity. It's not politically driven or environmentally driven. It's lower cost."
Every few years, NIPSCO, the second-largest electric utility in Indiana, reviews how it will provide power in the future to its 460,000 electric customers, including five large industrial users that make up 40% of the total demand. The company looked 20 years out in a forecast and saw an opportunity to invest in cleaner and more balanced electricity generation, Sistovaris said.
"Retiring all of our coal plants as quickly as possible was the least-cost option," she said. "Running the coal plants to the end of life was the most expensive. They have aged and gotten more expensive to maintain and operate as anyone who runs an industrial facility can appreciate."
NIPSCO has burned coal for most of the company's history and did not want to abruptly switch to new power sources, so it will keep operating the coal plants until 2028, she said.
"We wanted an orderly transition instead of an abrupt departure," she said. "It was a more feasible way to move on the strategy."
NIPSCO is partnering with developers to build four new wind farms across Indiana, in rural areas downstate. The company also expects to get power from solar panels, natural gas and the grid system, and will continue to evaluate the exact mix based on prices and market conditions, Sistovaris said.
"I would stress that wind and solar is not new technology," she said. "It may feel new to us, but its reliability has been well established in other states."
While the switch was not environmentally motivated, it does have major environmental benefits, including reducing carbon emissions by 90% by 2030.
The investment in renewable energy sources also has economic development benefits, said Steve Eberly with Hoosiers for Renewable Energy.
"In Warren County, which has 8,000 residents, this type of financial investment and employment is unbelievable," he said. "We'll continue to support the efforts of your organization."