NIPSCO sent its new strategy for electricity generation and transmission to the Indiana Utility Regulatory Commission on Wednesday, formally submitting a plan to retire its coal-fired R.M. Schahfer Generating Station in Wheatfield and the Michigan City coal plant.
The utility intends to replace coal with renewable sources, including solar and wind. NIPSCO President Violet Sistovaris said the decision to retire the four coal-fired generators at Schahfer by 2023 and one at Michigan City by 2028 was a result of the utility's investigation of the most cost-effective, reliable and environmentally sustainable means to deliver power to its customers.
"Of late, what we're seeing is that our customer needs have really changed, and the energy market has really changed," Sistovaris said. "All indications are that the energy market is going to continue to change for the next decade and beyond."
Also on Wednesday, NIPSCO submitted a request to increase electric rates, a move the company said is necessary to upgrade infrastructure, address changes in federal tax policy, and change the way it charges large industrial customers. The new rates, once fully implemented, would increase an average residential customer's bill by $11 a month, or about 12 percent.
The infrastructure upgrades will include work to aid the transition from coal, Sistovaris said.
"We need to make upgrades to our current transmission system to really ensure broad reliability of the grid as the five (coal) units ultimately come offline, and then as we add the renewable energy sources to the grid," she said.
'Coal free by 2028'
NIPSCO is calling its strategy "Your Energy, Your Future."
Ultimately, the company expects the transition to renewable sources to save money — estimating total customer savings of $4 billion over 20 years. And, it will reduce its carbon emissions by 90 percent by 2028.
"We see an opportunity to really invest in a balance of energy options and make energy more affordable and cleaner," Sistovaris said.
The document filed with the IURC on Wednesday is an Integrated Resource Plan charting the company's plans for the next 20 years. The state requires that a utility create a new IRP every three years, though in light of changing markets NIPSCO did its new IRP a year early.
As part of the IRP process, NIPSCO issued a request-for-proposals that served as an open call to meet the company's future electricity needs. The RFP generated 30 responses with 90 proposed projects, including solar, wind and battery projects. They offered a variety of partnerships between the proposing companies and NIPSCO, ranging from simple agreements to purchase electricity, to NIPSCO's ownership of generating infrastructure.
The new electric rates must be approved by the Indiana Utility Regulatory Commission during a yearlong process that includes input from customers and the public. The rate hike, if approved, would be instituted in two phases, in September 2019 and March 2020, according to NIPSCO's proposal. The average $12 monthly increase would include a $3 increase in the set monthly charge all customers pay.
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Sistovaris said NIPSCO's plan will include new assistance programs for income-eligible customers.
The increase would generate about $21 million in annual revenue for the company.
The change in the way NIPSCO bills its largest industrial customers would make it possible for them to be billed in a market-sensitive manner rather than a traditional tariff.
"The new program will support their efforts to remain globally competitive," Sistovaris said.
NIPSCO is working on the coal-to-renewable transition process now, evaluating the 90 proposed projects to supply its electricity in the future. They include a variety of proposals, largely for solar but also for wind and for batteries to ensure constant service.
"The topography is going to change," Sistovaris said. "You are going to see more wind turbines. You're going to see more solar farms."
None of the many proposals NIPSCO received would put wind turbines in Lake Michigan, company officials were quick to note.
Batteries will be positioned to ensure the flow of electricity.
"For days that the wind isn't blowing or the sun isn't shining, that battery technology is absolutely critical," Sistovaris said.
NIPSCO projects that, by 2023, 53 percent of its electricity will come from renewable sources, 24 percent from natural gas and 17 percent from coal. By 2028, renewable sources will constitute 65 percent of supply, with natural gas at 25 percent. The rest will come from purchases on the open market.
NIPSCO will continue to generate electricity at its gas-fired Sugar Creek Generating Station in West Terre Haute and at its hydroelectric dams along the Tippecanoe River.
Sistovaris said the company is willing to work with communities to determine the best future use of the Michigan City plant, and of the Bailly Generating Station in Chesterton retired earlier this year.