The legislation has drawn some concerns from clean energy advocates, who want to see changes before they are passed.
Indiana’s busiest energy-related legislative session in years saw more action this week, with the passage of a House bill to standardize large-scale renewable energy regulations and a Senate bill regarding refinancing of closing coal plants.
Both bills are in broad strokes keeping with a transition to clean energy. But advocates say they have concerns about both and want to see major changes before bills pass the full legislature.
The refinancing bill (SB 386) that passed the Senate 39-11 on Monday would institute securitization, a measure typically seen as a way to protect ratepayers from continuing to pay for the costs and guaranteed investor profit margins on a coal plant even after the coal plant has closed. But Kerwin Olson, executive director of Citizens Action Coalition, said it lacks the mandates to actually protect customers, while benefiting investors and utilities.
The siting bill (HB 1381) that passed the House 58-38 on Wednesday creates uniform setbacks; decommissioning requirements; regulations on wind turbine height, sound and shadow flicker; and other standards for renewable energy. And it generally prohibits localities from instituting their own more restrictive measures.
The renewables industry has long called for uniformity and state oversight, and renewable developers, the Indiana Chamber of Commerce and the Clean Grid Alliance support the bill. Statewide standards can prevent municipalities or counties from passing moratoriums on all renewable development, or standards so restrictive that they are essentially bans.
But the Hoosier Environmental Council and others worry that the siting bill in its current form undercuts communities’ ability to develop renewables in environmentally friendly ways that don’t negatively impact surrounding land. An amendment adopted Tuesday appeared on the surface to address those concerns but included caveats that could allow developers to circumvent local wishes, as critics see it.
Securitization questions
Securitization allows the issuance of low-interest-rate bonds to cover the costs of investments in coal plants, including for pollution controls as well as investors’ guaranteed rate of return. The bonds are guaranteed by ratepayers. That means ratepayers are paying off the lower interest on the bonds rather than the higher interest on the original coal plant debt. This can lower the burden on consumers after coal plants close, which is especially important since the consumers are likely being billed for new energy sources — perhaps utility-scale renewables — at the same time.
But the Indiana bill does not mandate that utilities reduce the payments ratepayers are making on the coal plant debt, even after a utility issues bonds and bills consumers for those costs. Additionally, the Indiana bill does not mandate any of the revenue from bonds be invested to retrain workers or support communities impacted by closing coal plants — measures that consumer protection advocates typically see as intrinsic to the concept of securitization.
The bill was originally introduced as a pilot meant only to affect one utility, CenterPoint Energy (formerly Vectren), which is closing its A.B. Brown coal plant in 2023 with $250 million outstanding in stranded costs. An amendment to the bill expands it to cover all utilities, and makes it a permanent policy rather than a pilot.
“Now that it’s not a pilot, it increases the urgency to get it right,” Olson said. “This is a great deal for Wall Street and the utilities, which can do whatever they want with the savings. There are no guarantees for customers and no investments in communities. It’s not what securitization is supposed to be.”
Hoosier Environmental Council Executive Director Jesse Kharbanda said the securitization bill is of particular significance given that Indiana residents have seen their electric rates increase significantly compared to other states in recent years: It had one of the lowest energy prices 15 years ago but ranked 24th in the country in 2019, according to the Energy Information Administration. While securitization could help lower rates, Kharbanda said, “design is everything. We think that there needs to be clearer safeguards in the bill that ensure ratepayers fully benefit from the securitization process.”
Olson pointed to a bill introduced in Kansas — but opposed by utilities — as a model he’d like to see Indiana follow. He worries that advocates of the Indiana bill don’t understand that while the concept is popular, the actual bill includes few protections.
“It’s frustrating that people are excited because they see the word securitization, but it’s not actually what’s in the bill,” Olson said.
Securitization is among the topics slated to be studied by the state’s Energy Task Force if it is restarted for a two-year term, as current legislation proposes. A previous Energy Task Force published a report last year, but it did not deal with topics that stakeholders had requested, including securitization. Olson and Kharbanda agreed it is unwise for a law to be passed about securitization before the task force has studied the issue. They note that legislators have tabled other bills and discussions related to the clean energy transition until the Energy Task Force can resume its work.
Siting concerns
The Hoosier Environmental Council was concerned during the early stages of the siting bill that it would impede local efforts to require pollinator habitat and other environmentally appropriate ground cover to be planted below solar installations. The recent amendment to the bill, by Republican Sharon Negele, allows more local control over ground cover, but it gives the landowner veto power over any such plans or requirements from local governments.
Kharbanda worries that landowners would essentially cede their veto power to solar developers doing projects on their land, and developers would be unwilling to invest in ideal ground cover options. The amendment also says that the local entity can only make ground cover requirements that are “economically feasible.”
While pollinator-friendly native plants can turn utility-scale solar installations into environmental boons for an area, ground cover done poorly could lead to erosion, flooding, invasive plants or other problems, experts note.
“It would not be at all surprising if the total acreage of solar farms in Indiana — by the end of this decade — is on par with the total acreage of state parks in Indiana,” Kharbanda said, noting that solar farms being discussed could cover 50,000 acres.
“It’s so important that the community has a voice in these projects’ design because it has repercussions on the community at large, whether in terms of stormwater runoff, soil and water conservation, wildlife habitat. We want to see preservation of local control. No one knows the topography, water resources, drainage and stormwater patterns better than the different local entities and local governments.”
Facilitating local control of issues like ground cover “is ultimately in the best interest of the long-term growth of solar in Indiana,” Kharbanda continued. “It’s critical solar farms are sited right and designed right so that the community at large can truly capture the maximum possible benefits.”
Kharbanda said his organization will have to “scrutinize” the setbacks and other measures in the bill before taking a position on those aspects. Olson said his coalition is generally supportive of the siting bill and that it is in line with similar laws in other states.
As the legislative session moves forward, advocates see the siting and securitization bills as among a handful of key pieces of energy legislation that have emerged from dozens of energy bills initially proposed. SB 386 is authored by two Republicans and a Democrat, and HB 1381 is authored by Edmond Soliday, the Republican chair of the House utilities committee.
Other significant bills include HB 1191, which banned local governments from electrifying home heating in new construction, and HB 1520, which demands reliability be considered in energy decisions. Both bills — also authored or co-authored by Soliday — passed their full chambers, and advocates say they will be closely watching and working with legislators as the bills move forward.
Olson said that the nuances of this session’s pending legislation could either accelerate or curb Indiana’s transition to clean energy.
“We need to get in the game,” Olson said. “There’s enormous potential for [renewable] energy growth in the state of Indiana.”