Months before federal officials ordered one of Indiana's aging coal plants to remain available, the utility that owns it was asking permission to shut it down.
In a February letter to the U.S. Department of Energy, CenterPoint Energy argued its Culley Unit 2 plant near Evansville had become an "increasingly unreliable asset," estimating it would cost $14-18 million in maintenance to keep operating. The company noted the plant represented less than one percent of the Midcontinent Independent System Operator's generating capacity and said three consecutive long-term planning documents supported retiring it.
The request was denied.
Instead, the Department of Energy has repeatedly invoked emergency authority to require Culley Unit 2 and Northern Indiana Public Service Company's (NIPSCO) Michigan City coal units to remain available through at least September, citing concerns about electric reliability.
The orders have upended years of utility planning and sparked a broader debate over who should decide when power plants retire.
Years of planning
Coal plant retirements typically don't happen quickly.
Utilities spend years forecasting electricity demand, identifying replacement resources and determining whether aging plants remain economical. Those plans are then reviewed by regulators and by the Midcontinent Independent System Operator, or MISO, which studies whether enough generation will remain available to keep the grid reliable.
Joe Daniel, a principal with the clean energy nonprofit RMI, said the process is designed to ensure reliability isn't sacrificed when older plants are retired.
"These weren't decisions that happened overnight," Daniel said. "Utilities spent years evaluating future demand, planning replacement resources and working through technical studies before deciding these plants could retire."
Daniel said those studies concluded the plants could be replaced while maintaining reliable electric service.
"The utilities had determined these coal plants were no longer necessary and could be economically replaced," he said. "Then the Department of Energy used its emergency authority to require them to remain available."
MISO emphasized in a statement that it does not decide when power plants retire. Instead, utilities propose retirements, while the grid operator evaluates whether those closures can occur without threatening reliability.
The Indiana Utility Regulatory Commission similarly said utilities develop Integrated Resource Plans every three years outlining how they expect to meet future electricity demand. The commission declined a formal interview because of pending litigation involving the federal orders.
Why the plans changed
Daniel said the electric grid has changed significantly since many of those retirement decisions were made.
Electricity demand, which had remained relatively flat for years, has increased because of data centers, manufacturing growth and electrification. At the same time, supply chain constraints and equipment shortages have delayed construction of new electricity generation.
Those challenges, he said, have created legitimate reliability concerns.
But he said they don't erase the years of planning that preceded the retirement decisions.
"The question isn't whether conditions have changed," Daniel said. "It's whether emergency authority is the appropriate way to respond to those changes after utilities, regulators and grid planners had already completed years of analysis."
CenterPoint and NIPSCO have both said they are complying with the federal orders while reserving the right to seek recovery of any additional costs.
Who pays?
Keeping older coal plants online comes with a price.
Kerwin Olson, executive director of the Citizens Action Coalition, an Indiana environmental advocacy group, said utilities had already begun planning and investing in the resources intended to replace the retiring coal units.
"If you're paying to keep these older coal plants operating while also paying for the replacement resources that were already planned, customers are ultimately paying for both," Olson said.
Nicole Pollard of the Sierra Club, a national environmental advocacy group, said the federal orders also disrupt years of utility planning.
"Utilities don't decide to retire plants overnight," she said. "Those decisions involve years of coordination with regulators and grid operators to make sure replacement resources are in place before a plant is taken offline."
David Kieve, president of EDF Action, a national environmental advocacy group, said those additional costs are likely to fall hardest on households already struggling with affordability.
"Energy bills are part of the affordability crunch many families are already feeling," Kieve said. "Higher costs hit people with lower incomes the hardest."
Kieve also noted that CenterPoint itself described Culley Unit 2 as an "inefficient and increasingly unreliable asset" before federal officials ordered it to remain available.
What's next?
The Department of Energy's current emergency orders expire in September, but the agency has already extended them multiple times.
Meanwhile, Gov. Mike Braun has directed state agencies to support efforts to maintain electric reliability. In an executive order issued last week, Braun instructed the Indiana Secretary of Energy and Natural Resources to seek an extension of federal emergency orders if reliability concerns remain and directed state agencies to participate in proceedings involving electric generation and grid reliability.
The order also calls for a review of state regulations affecting energy infrastructure and asks agencies to recommend ways to increase what it describes as "affordable, reliable and dispatchable" electric generation.
That uncertainty, Daniel said, creates challenges for utilities that typically plan their generation portfolios years in advance.
Normally, he said, electricity markets encourage older, less economical plants to retire while signaling where new investment is needed.
Repeated emergency orders interrupt that process, leaving utilities uncertain about when, or whether, long-planned retirements will happen.
