A renewed federal order is keeping two aging Indiana coal plants running months after their planned retirement — and utilities say the price tag is quickly climbing into the hundreds of millions.

The U.S. Department of Energy on Monday issued new emergency orders requiring Northern Indiana Public Service Co., NIPSCO, and CenterPoint Energy to continue operating coal units at the R.M. Schahfer and F.B. Culley generating stations through at least June 21.

The directive extends an initial 90-day order issued in late December under Section 202(c) of the Federal Power Act.

Federal officials have argued the move is necessary to avoid potential power shortages and maintain grid reliability across the Midwest.

“The Trump Administration will continue taking action to keep America’s coal plants running to ensure we don’t lose critical generation sources,” Energy Secretary Chris Wright said in a statement. “Americans deserve access to affordable, reliable, and secure energy to power their homes all the time, regardless of whether the wind is blowing or the sun is shining.”

The orders require NIPSCO, CenterPoint and the Midcontinent Independent System Operator, or MISO, to ensure the plants remain available to operate — despite earlier plans to retire the units at the end of 2025.

The Indiana plants are among a handful of aging coal units nationwide that federal officials ordered to remain online in recent months as part of a broader intervention into regional power markets that has bypassed typical state and grid planning processes.

Mounting costs for utilities

But utility officials told state regulators this week that complying with the orders is already proving to be costly.

At a Tuesday hearing before the Indiana Utility Regulatory Commission, NIPSCO President and Chief Operating Officer Vince Parisi said the mandate will require significant new spending to keep the aging coal units running, including major capital investments on top of day-to-day operating expenses.

“We’ll have fixed and variable operating costs… as well as any kind of capital investment,” Parisi said. “I think we’ve estimated it could be in excess of $100 million just in the investments in the units, and then operating costs on top of that.”

Those costs include fuel, chemicals and staffing, along with potential upgrades needed to keep the units operational. One of the Schahfer units in Jasper County, Parisi noted, has been offline since last summer and is still under evaluation.

CenterPoint officials additionally described similarly steep expenses, telling regulators the federal order is driving daily operating costs into the seven figures.

“We are averaging $1.2 million on a daily operation,” said Michael Roeder, CenterPoint’s Indiana president, adding that costs will fluctuate depending on how the unit is dispatched. “As we get into the second 90 days, [we’ll] likely take a planned outage, which will also have an additional cost to it.”

Roeder said those costs are being tracked but are not currently reflected in customer rates.

Other estimates — including from the Sierra Club — suggest the combined cost of keeping the plants running could total hundreds of thousands of dollars per day across both Indiana coal facilities.

Keeping NIPSCO’s Schahfer plant online has an estimated net cost to consumers of about $174,000 per day, according to the Sierra Club analysis, and net costs for running CenterPoint’s smaller Culley plant could tally approximately $21,000 per day.

The plants were initially slated for retirement as utilities across Indiana — and the country — shift away from coal toward natural gas and renewable energy sources.

Federal officials, however, have argued that retiring too much “baseload” generation could threaten reliability, particularly during extreme weather or periods of high demand.

The Department of Energy pointed to performance during a January cold snap, when Schahfer generated more than 285 megawatts daily and Culley, in Warrick County, operated at roughly 30 megawatts.

The agency has also cited rising electricity demand — including from data centers and manufacturing — and periods of low wind and solar output as reasons the plants remain “critical” to grid operations.

The orders also lean on recent extreme weather events, like a late-January winter storm that tested grid capacity across the Midwest, as evidence that the coal units are needed during periods of high energy demand.

Indiana has long relied on coal as a cornerstone of its electricity mix, but utilities have spent years steadily retiring or converting aging units.

Investor-owned utilities have closed multiple coal plants over the last decade and announced plans to shutter or transition several more, replacing them with natural gas, solar and wind resources.

The Schahfer and Culley units were part of that broader shift, with retirement decisions made years ago and approved through state and regional planning processes. Officials with MISO, the regional grid operator, had previously indicated the system was expected to remain reliable even as those units retired

Legal, environmental pushback grows

The federal intervention has drawn strong pushback from environmental and consumer advocates, who argue the orders are unnecessary and costly.

“Cleaner power sources are available and Schahfer and Culley were ready to stop burning coal, so the federal order for them to continue burning coal is an unwarranted extension of coal and coal ash pollution in Indiana,” said Indra Frank, coal ash advisor at the Hoosier Environmental Council.

A coalition of groups — among them, the Sierra Club, Environmental Law and Policy Center and Citizens Action Coalition of Indiana — has filed legal challenges seeking to overturn the orders. In filings and public statements, they argue the federal government has failed to demonstrate an actual emergency and is improperly overriding state and regional grid planning.

“Once again, President Trump’s Department of Energy is attempting to force Midwest residential and business consumers to pay higher electricity bills to keep coal plants running that are no longer needed and not economically viable,” said Howard Learner, executive director and CEO of the Environmental Law and Policy Center. “The utilities already made the right financial call to retire these plants. The Trump DOE is making a bad situation worse when it comes to energy affordability problems that hit peoples’ wallets hard, while adding more pollution that harms public health.”

The groups also warn that extending the life of the plants will drive up utility bills and prolong environmental risks, including coal ash disposal and air pollution.

Utilities have not yet said how or when they might seek to recover the additional costs, though similar filings in other cases have proposed spreading expenses across customers in multiple states within the MISO region.

Similar legal fights are playing out in other states, including Michigan and Pennsylvania, where federal orders keeping coal plants online are also being challenged. Advocates said a case already under review in Michigan could help determine how far the federal government can go in overriding state and regional energy planning decisions.

In the meantime, however, utilities say they will continue complying with the federal mandate.

“We continue to assess the full impact of these orders on our operations, customers and employees,” NIPSCO said in a statement.

Advocates, meanwhile, say the outcome of the legal challenges — and how long the orders remain in place — will determine whether Indiana ratepayers ultimately bear the cost of keeping the plants online.

“The federal government has invented a grid reliability crisis in a transparent and illegal attempt to commandeer uneconomic, dilapidated power plants, force them to operate, and stick us with the bill,” said Ben Inskeep, program director at Citizens Action Coalition. “We are fighting back against the federal government’s unprecedented overreach that will cause our utility bills to soar and choke Hoosier communities with more toxic pollution from coal.”

Indiana Capital Chronicle is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence. Contact Editor Niki Kelly for questions: info@indianacapitalchronicle.com.