Indiana Industrial Rates 2026: The Cost of the Coal Exodus
For decades, Indiana lured heavy manufacturing and steel production with some of the cheapest electricity in the Midwest, fueled by abundant in-state coal. By 2026, that paradigm has shifted entirely. Major IOUs like NIPSCO (Northern Indiana Public Service Company) and AES Indiana have executed accelerated timelines to retire their remaining coal fleets, replacing them with massive solar, wind, and battery storage portfolios. While this cleans the grid, the Indiana Utility Regulatory Commission (IURC) has approved substantial rate base expansions to cover the capital costs, directly increasing the utility tariffs paid by industrial facilities.
Executive Impact
- →Stranded Asset Recovery: When a utility retires a coal plant years before its debt is paid off, the remaining balance (the "stranded cost") is often securitized and recovered from ratepayers via a dedicated bill rider, compounding base rate increases.
- →MISO Capacity Scarcity: Indiana sits largely within the Midcontinent Independent System Operator (MISO). As traditional dispatchable generation retires across the Midwest faster than reliable replacements are built, MISO faces shrinking capacity reserve margins, leading to localized price spikes during extreme weather.
- →The NIPSCO Industrial Landscape: Serving the heavily industrialized northwest corner of the state (Gary, Hammond), NIPSCO\'s rate structures are acutely sensitive to the shifting consumption patterns of large steel and petrochemical loads.
Navigating Regulated Tariffs
Because Indiana prohibits competitive retail generation, commercial and industrial users cannot leverage brokers to bypass NIPSCO or AES base rates. Cost mitigation must occur "behind the meter" or through tariff optimization.
- Interruptible Tariffs: Due to MISO capacity concerns, Indiana utilities offer excellent financial incentives for facilities willing to curtail load during grid emergencies. Participating in a utility-managed Demand Response program is one of the most effective ways for manufacturers to lower their blended $/kWh.
- Primary vs. Secondary Service: Taking power at transmission or primary distribution voltages (and owning the step-down transformers) yields massive rate discounts. Facilities planning expansions in 2026 should evaluate the ROI of purchasing their own substation equipment.
The Push for Corporate Renewables
Historically, Indiana's heavy reliance on coal penalized the Scope 2 emission reporting of corporations with facilities in the state. To attract ESG-focused manufacturing, utilities have introduced voluntary "Green Power" tariffs.
While these riders allow a facility to claim 100% renewable energy attribution, they typically carry a slight premium over standard brown power rates. However, as the cost of NIPSCO's new utility-scale solar arrays is socialized into the base rate, the premium required for the specific "green" designation continues to shrink.