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Nipsco may retire nearly half of its coal-fired generation fleet

Highlights

Northern Indiana Public Service is considering the retirement of nearly half of its 2,574 MW coal-fired generation fleet by the end of 2023, with a final decision expected in November.

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The NiSource subsidiary is looking to shut its 480 MW Bailly baseload plant as early as mid-2018, more than a decade sooner than previously planned, and two units totaling 722 MW at its R.M. Schahfer baseload plant by the end of 2023, according to Nick Meyer, spokesman for the Merrillville, Indiana-based utility.

Nipsco would continue to operate its 469 MW Michigan City baseload coal plant and the two larger coal units, representing 903 MW, at Schahfer.

Nipsco could replace the lost coal generation with a combination of power purchases, energy efficiency and new renewable and natural gas generation. "The landscape for electric generation is shifting dramatically, not just for Nipsco, but for our nation as a whole," Violet Sistovaris, the utility's executive vice president, said Tuesday in a statement. "Companies with aging coal-fired units are facing intense economic and environmental regulatory pressures that are driving important decisions today about how to meet the customer needs of tomorrow."

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For instance, the two units at Bailly, on the shore of Lake Michigan near Chesterton, Indiana, went into commercial operation in 1962 and 1968, respectively. Schahfer's four units were built between 1976 and 1986. Michigan City's single unit has been in operation since 1974.

Together, the three baseload plants burn 6 million-7 million st/year of thermal coal.

Meyer said Nipsco intends to spend the next couple of months in discussions with stakeholders about the utility's next integrated resource plan. When the plan is filed November 1 with the Indiana Utility Regulatory Commission, all questions about the future of its generation fleet will be answered, he said.

If Nipsco decides to retire existing coal generation, it will formally notify the Midcontinent Independent System Operator. MISO, he acknowledged, "will be an important stakeholder."

Meyer noted that MISO could conclude it does not support the Bailly and/or Schahfer retirements over the next several years because they could adversely affect grid reliability.

While Nipsco could build a new gas-fired combined-cycle plant at some point, its short-term options include relying more on interruptible load programs "and we may need to buy ... some short-term capacity," Meyer said.

Nevertheless, the company currently believes that retiring the four coal units is the "most viable option for customers. Our goal is to transition to the best-cost, cleanest electric supply mix available while keeping options open for the future as technologies and markets change," Sistovaris added.

In recent years, Nipsco has invested more than $800 million in new environmental control technologies at certain coal units, including Michigan City and Schahfer.

Nipsco's total generation fleet is 3,812 MW, including interruptibles and wind energy power purchase agreements. It owns 3,283 MW of generation, mostly coal, but also natural gas and hydro. Two simple-cycle gas peakers, 78 MW and 55 MW, respectively, are located at the Schahfer site.

Nipsco serves about 810,000 natural gas and 460,000 electric customers across 32 counties in Indiana.

--Bob Matyi, newsdesk@platts.com

--Edited by Valarie Jackson, valarie.jackson@spglobal.com