NIPSCO’s new resource plan covers future retirements of four coal units

Northern Indiana Public Service Co. (NIPSCO) filed on Nov. 1 with the Indiana Utility Regulatory Commission an integrated resource plan (IRP) that would seek the retirement in future years of much of the utility’s coal-fired capacity.

NIPSCO’s current resource portfolio is made up of hydroelectric, wind, demand side resources and natural gas-fired sources in addition to the company’s coal-fired plants. Coal remains the largest part of NIPSCO’s fleet, accounting for 66% of total capacity. Roughly 20% of the resource portfolio is fueled by natural gas. Another important element of the supply mix is an Industrial Interruptible Program, which o­ffers incentives to the largest-consuming customers for reducing their usage. The program accounts for about 530 MW, or 15%, of the resource mix.

NIPSCO also o­ffers a Net Metering and Feed-in Tari­ff Program, which allows commercial and residential customers to generate their own power from green resources. In the Feed-In Tari­ff (FIT) program, there are about 35 MW of wind, solar and biomass.

Due to regulatory and economic factors, including low natural gas prices, NIPSCO’s energy supply has already been shifting to include less coal-fired generation. The IRP noted: “We see the same trend among utilities here in the Midwest and nationally.”

Environmental regulations also contribute to decreased reliance on coal, as does the age and condition of generating plants. At this point, NIPSCO estimates that both the environmental upgrades and maintenance capital costs to be up to $1 billion in order to continue running these plants into the future.

Said the IRP: “We have reached an important decision point as a result of our analysis—whether to invest in compliance upgrades at our existing plants or retire units. The main factors in helping to make these decisions are reliability, compliance, flexibility, diversity and a­ordability. The results point to the retirement of four of NIPSCO’s seven coal-fired electric generating units at two different power plants over the next seven years—roughly 50 percent of the existing coal fleet. Specifically, we plan to retire our Bailly Generating Station coal-fired units (7 and 8) as soon as mid-2018 and two of our coal-fired units (17 and 18) at R.M. Schahfer Generating Station by 2023.

“As always, NIPSCO is focused on ensuring we are prepared to meet our customers’ energy needs. In the short term (through 2019), we will rely primarily on our existing resources. There may be a window of time when we will have to purchase short-term capacity to fill any gaps during the transition. If additional capacity is needed, we will procure from the MISO market and/or PPAs.

“While we continue to assess, the plan for long-term replacement generation will be further revisited and refined in our next IRP. In the meantime, we will begin work to identify lowest cost replacement options. Based on what we know now, we expect combined cycle gas turbine (CCGT) to be a likely avenue, but that is subject to change based on key market, compliance and technology developments. Between now and our next IRP filing, we will continue to monitor those developments.”

The coal units are:

  • Bailly Unit 7, 160 MW, in-service in 1962;
  • Bailly Unit 8, 320 MW, in-service in 1968;
  • Michigan City Unit 12, 469 MW, in-service in 1974;
  • Schahfer Unit 14, 431 MW, in-service in 1976;
  • Schahfer Unit 15, 472 MW, in-service in 1979;
  • Schahfer Unit 17, 361 MW, in-service in 1983; and
  • Schahfer Unit 18, 361 MW, in-service in 1986.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.