NIPSCO is seeking to recover $38 million in costs that it sustained by a federal order requiring it to keep open coal-fired units at R.M. Schahfer Generating Station, which were scheduled to retire at the end of 2025, according to recent federal regulatory filings.
NIPSCO made a filing in the Federal Energy Regulatory Commission case on Tuesday, saying the costs represent how much was required to comply with a U.S. Department of Energy order from Jan. 1 to March 31. The DOE has subsequently issued two additional orders, through Oct. 31.
In the filing, NIPSCO said it earned $33.5 million in sales revenue of coal-generated electricity during the first three months of 2026.
The $38 million would come from customers in Indiana and 14 other states covered by the Midcontinent Independent System Operator. NIPSCO included $2.8 million in profits as part of the overall total.
Unit 17 has been in a planned maintenance outage since March 1 of this year, according to the filing, while Unit 18 has been in forced outage since July 9 due to the failure of the unit’s low-pressure rotator blade. NIPSCO has been working on repairs with an expectation of putting it into service by mid-December, while Unit 17 is expected to go back online in October.
NIPSCO said in a statement that FERC has established a process that allows utilities to recover costs to comply with these federal orders, subject to FERC review and approval.
“We recognize that customers are focused on their energy bills and understand the importance of keeping energy affordable,” the statement read.
“As this process moves forward, NIPSCO remains committed to managing costs responsibly to comply with this order, while providing safe, reliable service for our customers and supporting electric reliability across the region.”
Citizens Action Coalition Program Director Ben Inskeep said the consumer advocacy group is “very concerned” about the FERC case, particularly as out of the $38 million, $30 million is repair costs.
“Those two units are not operating and haven’t generated any electricity since late February, but consumers are being asked to pay for repairing them,” he said.
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“It’s throwing good money after old, dilapidated resources.”
NIPSCO states in the filing that it anticipates that the DOE orders could continue through late 2028 or early 2029.
NIPSCO said FERC should reject any argument that its fixed costs associated with the impacted Schahfer units are already being recovered through retail rates approved by the IURC in its 2025 rate case, which included a $70 million reduction associated with operations and fuel at Schahfer.
State Rep. Randy Novak, D-Michigan City, said federal and state governments need to be doing more to protect energy consumers.
“By requiring utility companies to keep old, unreliable and costly coal plants operational, they are stifling energy innovation and raising rates on customers,” Novak said in a statement. “I get that coal has become something of a culture war issue. But the White House should put our wallets before making a point for the sake of making a point.
“If the government is going to force coal-burning power plants to stay open for the development of privately owned AI technology, the corporations profiting off that technology should be footing the bill, not consumers.”
The federal case comes in the same week that the Indiana Utility Regulatory Commission rejected NIPSCO’s plan to defray about $741 million in natural gas infrastructure costs by passing along the costs to ratepayers.
The commission’s order stated that “… we find that NIPSCO has failed to provide sufficient evidence for the Commission to determine that each proposed eligible improvement is cost-justified. Thus, we cannot conclude that NIPSCO’s proposed Plan is reasonable and it is not approved.”
In his concurring opinion, commission member Anthony Swinger said NIPSCO’s Transmission, Distribution and Storage Improvement Charge (TDSIC) plan was the first to be considered under a higher burden of proof standard set under the Indiana Supreme Court’s ruling in a 2024 case involving Duke Energy.
Under state law, utilities can request permission from the IURC to recover up to 80% of costs, while the remaining 20% can be covered in its next rate case.
NIPSCO’s TDSIC Plan was developed to address deliverability of gas supply needed in the northeastern part of its service territory and in rural areas. The Office of the Utility Consumer Counselor noted that two of the projects weren’t eligible for TDSIC as they seemed to be based on federal mandates.
IURC testimony included the commission’s order, which noted that the system work NIPSCO plans may provide operational benefits, but the company’s cost estimate was excessive and did not demonstrate sufficient cost justification. IURC experts were concerned that NIPSCO primarily framed cost justification on a “plan-wide” basis instead of an improvement-by-improvement basis.
In a rebuttal to the findings of IURC staff, NIPSCO Director of Regulatory Policy and Demand Side Management Robert Sears said the utility has an obligation to maintain a safe and reliable gas system and relies on its subject-matter experts to evaluate risk and determine which projects are needed based on a number of factors and conditions.
He stated it would be ill-advised and dangerous to shift the responsibility of addressing system risk to NIPSCO’s ratepayers.
In a statement, NIPSCO said the plan — spanning 2026 through 2030 — would have made improvements focused on modernizing and strengthening its natural gas system, including expanding gas service to underserved areas.
“We are reviewing the Commission’s order to assess its impact on the proposed investments and determine next steps,” the statement read. “NIPSCO remains focused on delivering safe and reliable service and meeting the energy needs of the customers and communities we serve.”
Inskeep said CAC has long been critical of the TDSIC statute.
“To finally tell a utility ‘no’ when they come to you with a $781 million plan is really welcome news,” he said.
Inskeep said the IURC recognized that NIPSCO’s plan did not have a lot of benefit to the consumer. He said the costs to consumers could still be realized down the line in future rate cases.
Novak applauded the move as well.
“Utility providers need to bring sufficient evidence that consumers will benefit from projects like this before they can raise prices on their customers,” Novak said in a statement. “I am hopeful that in the future our regulators will protect Hoosier families from unnecessary costs like they did in this case.”