Monday is a pivotal day for legislation that could extend the life of coal-powered electricity in Indiana, a measure supporters say would briefly pause a transition to cleaner energy sources but that critics argue is bad for the environment and energy markets.
A House floor vote today on House Bill 1414 — which would set a higher bar for utilities wanting to shut down a power plant, at a time when coal-power plants are the only ones closing — will determine whether the measure advances to the Senate or dies.
The legislation would require the state’s utility regulatory commission to approve coal plant closures — a role it has never had before. It would also allow utilities to recover the costs for more coal, creating an incentive to buy more and then pass that cost onto customers.
Here are five things to know about the bill:
Should the bill keep moving forward, it will bring Indiana into a club of a select few. Only two other states across the country — Ohio and Wyoming — have adopted similar legislation in the last year that would prop up or delay the demise of coal. Many other states, meanwhile, are moving in the opposite direction and passing legislation that helps with early closure of coal plants.
Ohio and Wyoming both passed their laws aimed at combating market forces in 2019.
Ohio’s provides subsidies for a few coal and nuclear plants around the state, while also reducing requirements that utilities meet benchmarks for renewable energy and energy efficiency. Wyoming’s requires utilities to try to sell their coal plants before being able to close, but no one is wanting to buy them, according to Jeremy Fisher, an analyst in Sierra Club’s Environmental Law Program.
But then why should ratepayers be forced to, Fisher asked.
Though Indiana’s bill differs slightly from those other states, he said, “that’s the theme, a flavor of trying to create those barriers that then saddle consumers with higher cost resources.”
Another theme: All three states have Republican-led state governments and a history of coal power.
Indiana is the eighth-largest coal producer in the nation, and power plants across the state burn more coal than any state other than Texas. Rep. Ed Soliday, R-Valparaiso, the bill’s author, has said during committee that it’s important to keep coal around to get through the gap before natural gas and renewables are ready. But many argue that’s the market’s job: If the demand is there, the supply will be, too.
Some states — including Colorado and New Mexico, as well as Kansas and Missouri — are working on legislation that helps utilities retire coal plants early if they choose to do so, Fisher said. It helps achieve a transition at a lower cost for the company and ratepayers, and some of those savings are directed back to communities impacted by the closures.
Several organizations, including the National Taxpayers Union, wrote letters asking the legislature “not to meddle.”
“States thrive economically when the government allows all businesses to compete, rather than put its thumb on the scale for a chosen area,” three groups — American Conservation Coalition, Citizens for Responsible Energy Solutions and Conservative Energy Network — wrote in a joint letter to Republican House Speaker Brian Bosma last week.
In talking to reporters after Thursday’s House session ended, Bosma said this bill “is in no way a bailout for the coal industry.” He then went on to say that there is one provision that does give some flexibility to the coal industry.
Right now, utilities can charge customers for keeping up to 45 days of extra coal around — a charge that is added on top of what consumers pay for the electricity they use. HB 1414 would let utilities double the amount of coal they can keep in storage, and pass that cost on to customers.
That money also goes directly back to the coal companies that utilities buy from, meaning more money for the coal industry.
“That is the only aspect of this that anyone with a straight face can say is a coal bailout,” said Bosma.
He noted it is something the utility has to ask for and that the regulatory commission has to approve. And Soliday said that it is voluntary and utilities “may not take advantage of it.”
In terms of the added cost for customers, Soliday said: “We are talking maybe $1 per month per customer.”
Soliday did not respond to IndyStar requests for comment.
But Kerwin Olson, executive director of the consumer advocacy group Citizens Action Coalition, wants to know what calculations Soliday did to support those claims. The analysis hasn’t been done yet to know how much extra this could cost customers.
“This is a coal tax on the consumers of Indiana to pay for excess fuel supplies, a 90-day pile of coal, that is not needed to provide electricity to the public,” Olson said. “It’s theft, and it taxes Hoosiers.”
The bill was amended Thursday, based on changes offered by Soliday. It adjusted the sunset date of coal from July to May of 2021, and altered some of the language around the Indiana Utility Regulatory Commission’s review of a plant closure. But for many who have been following HB 1414, they say it didn’t change much.
“It’s still problematic and we oppose it,” Greg Ellis, Indiana Chamber vice president of energy and environmental policy, told IndyStar in an email. “The potential remains to interfere with the utilities’ ability to make business decisions.”
One Indiana legislator offered an unsuccessful amendment touting the benefits of whale oil for electricity to “illustrate the ridiculous nature” of HB 1414. “Whale oil is the functional equivalent to coal, at this point,” amendment author Rep. Ryan Dvorak, D-South Bend, told IndyStar.
Another legislator, Rep. Alan Morrison, criticized the amendment, saying this is not a joking matter and that Hoosiers are losing their jobs. Dvorak said he feels for those families and takes this topic seriously, which is why he wanted to draw attention to it.
Dvorak’s amendment failed. But Morrison, R-Terre Haute, put forward another amendment that gives support to employees in the industry that have lost their jobs, which overwhelmingly passed.
An Indiana coal mine recently announced it would stop production, leaving 90 employees without jobs. And Hoosier Energy, a rural electric cooperative, just announced plans to shut down a coal-fired power plant, which will leave roughly 180 without jobs — though the company has said it will help provide training and resources to those individuals.
Many power plants, whether coal-fired or otherwise, still aren’t fully paid off. Ratepayers pay out the costs to build and maintain plants for years. Bosma, when speaking to reporters Thursday, said that ratepayers will continue to pay for coal plants that are being shut down — “that’s the part that’s being missed.”
They will continue to pay for those plants if they are not fully depreciated, and also pay for whatever new energy source, he said, which is why it is important not to make major changes at the moment.
That’s true, according to Olson: Customers will pay for depreciation whether the plant is running or not. But it is not necessarily the most cost-effective approach to run a plant until it is fully paid off, he added, arguing it would be better to close the plant and pay for a cheaper energy source.
Coal is now more expensive to run than alternatives such as natural gas and renewables, according to David Schlissel, the director of resource planning at the Institute for Energy Economics and Financial Analysis, a clean-energy research group. Coal also has greater operation and maintenance costs, which will add to depreciation.
In fact, a recent report from the National Association of Regulatory Utility Commissioners found that coal plants across the country are changing the way they operate because they can’t economically compete. The plants are trying to ramp up and down based on demand, rather than running all the time as they used to. But running this way leads to greater inefficiencies and higher operation costs.
“It’s like a payday loan,” Olson said. “While you’re trying to pay it off, additional fees and costs keep getting piled on top.”
Many legislators have said they expect lively debate on the bill during Monday’s House session. Monday is the final day to vote on bills and send them to the other chamber.
Should the bill advance to the Senate, it is likely it would be assigned to the Utilities Committee, which is chaired by Sen. Jim Merritt, R-Indianapolis.
Merritt said he is aware of the bill, but could not speak to specifics. He added that he is very open-minded about the bill and knows there are a lot of entities against it.
Still, he said he doesn’t have a predisposed position, but that “the bill in its current shape will not be how it leaves the Senate.”
The House session starts at 10 a.m. Monday.