By Steve Krohne and Mark Alson
According to recent reports from the United States Energy Information Administration (“EIA”), between 2010 and the first quarter of 2019, United States power companies announced the retirement of more than 546 coal-fired electric generating units, which aggregate for 102 gigawatts of electric generating capacity. Further, power companies intend to retire another 17 gigawatts of coal-fired electric generating capacity by 2025. (See “More U.S. coal-fired power plants are decommissioning as retirements continue,” www.eia.gov, July 26, 2019). The EIA noted that coal-fired power plants in the United States remain under significant economic pressure. Many plant owners have retired their coal-fired units because of relatively flat electricity demand growth combined with increased price competition from natural gas and renewables. Id.
The state of Indiana has historically been heavily reliant on coal-fired generation to meet the state’s electricity needs. But even Indiana is experiencing a number of retirements of older coal-fired generating units. In 2010, Indiana had 26 active coal-fired electric generating units and by 2016 had just 13. (See John Russell, “State electric plants pivoting away from coal,” Indianapolis Business Journal, April 3, 2019). One projection forecasts the number of coal-fired plants could decrease by another eight by 2028. Id. Meanwhile, the renewables’ share of annual electric generating capacity rose from 0.5% in 2007 to 6.2% in 2017, and that share continues to increase. (See State Utility Forecasting Group, 2018 Indiana Renewable Energy Resources Study at 6).
In the 2019 session, the Indiana General Assembly took steps to study changes in how electricity is being produced in the state. The General Assembly enacted House Enrolled Act 1278, which established the 21st Century Energy Policy Development Task Force. The task force consists of four members of the Indiana Senate (including co-chair Sen. Eric Koch, R-Bedford), four members of the Indiana House of Representatives (including co-chair Rep. Ed Soliday, R-Valparaiso), and seven members appointed by the governor. The duties of the task force are to: (1) examine the state’s existing policies regulating electric generation portfolios; (2) examine how possible shifts in electric generation portfolios may impact the reliability, system resilience and affordability of electric utility service; and (3) evaluate whether state regulators have the appropriate authority and statutory flexibility to consider the statewide impact of possible shifts in electric generation portfolios, while still protecting customer interests.
HEA 1278 also directed the Indiana Utility Regulatory Commission to conduct a comprehensive study of the statewide impacts of transitions in the fuel sources and other resources electric utilities use to generate electricity, new and emerging technologies for the generation of electricity, including the potential impact of such technologies on local grids or distribution infrastructure, electric generation capacity, system reliability, system resilience, and the cost of electric utility service for consumers. The IURC is required to complete its study and submit it to the task force by July 1, 2020.
The task force must issue a report setting forth its recommendations to the General Assembly and the governor by December 1, 2020. The report is to include recommendations concerning the following: (1) outcomes that must be achieved in order to overcome any identified challenges concerning Indiana’s electric generation portfolios, along with a timeline for achieving those outcomes; (2) whether existing state policy and statutes enable state regulators to properly consider the statewide impact of changing electric generation portfolios and, if not, the best approaches to enable state regulators to consider those impacts; and (3) how to maintain reliable, resilient and affordable electric service for all electric utilities customers, while encouraging the adoption and deployment of advanced energy technologies.
The first meeting of the task force was held Aug. 26. The task force heard the views of various stakeholders, including industry representatives, consumer representatives, environmental representatives and regulators, as to recommended desires and outcomes. At the initial meeting, co-chair Soliday indicated the task force would proceed in a deliberative manner to ensure Indiana retains a reliable and resilient electric grid. Meetings of the task force are open to the public. The next meeting is set for Sept. 19 in the chamber of the Indiana House of Representatives.•
• Steve Krohne and Mark Alson are partners in the energy and utilities law practice at Ice Miller LLP. Opinions expressed are those of the authors.