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July 4, 2025 - The two aging coal plants at Cayuga station might live on, despite Duke Energy’s proposal earlier this year to retire them in favor of natural gas units.
In a settlement reached with Reliable Energy Inc. (REI), Duke agreed to study if the nearly 60-year-old coal plants could continue operating and be sold to a third party — perhaps a data center, suggested Savannah Kerstiens, the president of REI, which is a trade association advocating for an "all of the above" approach to meet growing energy demands, including coal, natural gas and nuclear.
Construction of the natural gas units would continue as planned.
But the settlement wasn’t reached with all parties involved in the case.
Consumer and environmental advocacy groups like the Citizens Action Coalition and Vote Solar expressed frustration toward the financial, legal and environmental implications of the agreement and plan to file testimony against the new plan. The Indiana Utility Regulatory Commission will have the final say.
Clean energy is a contentious term in Indiana
Earlier this year, Duke petitioned for the original project under a statute allowing natural gas units to qualify for clean energy incentives if they displace coal-fired electricity generation.
The incentive Duke asked to use would allow the utility to charge its customers in advance for construction of the natural gas project — even before it goes online.
This method would minimize financing and save customers around $800 million dollars over the life of the plant, according to Angeline Protogere, a spokeswoman for Duke Energy Indiana.
But critics and some customers of Duke were concerned about the payment plan, citing monthly bill hikes and increased risk for ratepayers. CAC and Vote Solar testified against the proposal, criticizing the project’s cost and fossil fuel footprint.
At the time, some still felt there was a silver lining: Cayuga’s existing coal units would be retired.
Now the groups are worried about a pathway toward all four fossil fuel plants — two aging coal plants and two yet to be built natural gas units — operating simultaneously while Duke benefits from the financial perks of a clean energy project.
While natural gas has been deemed a clean energy source in the state of Indiana, it remains a fossil fuel that emits greenhouse gas emissions and warms the atmosphere, according to NASA. Research shows that human-caused climate change, largely due to the burning of fossil fuels like coal and natural gas, is leading to intensified droughts, wildfires and severe weather across the globe.
Coal’s impact on the environment is particularly potent.
Burning coal leads to toxic air emissions and coal ash, which contains hazardous contaminants like mercury, arsenic and lead. In 2023, Cayuga station produced 591,700 tons of coal ash, according to the U.S. Energy Information Agency.
The substance has been of particular concern to Hoosier environmental advocates because the Cayuga plants sit next to the Wabash River. Coal ash can contaminate groundwater and adjacent rivers even when it is managed, said Indra Frank, the Coal Ash Advisor at the Hoosier Environmental Council.
“I think it is particularly hypocritical that Duke Energy is seeking to double the climate pollution at the Cayuga site by building these two natural gas plants and now potentially keeping the coal plants open. And then calling it a clean energy project,” said Ben Inskeep, the program director for the Citizens Action Coalition. “Are you serious?”
Duke argues its project still qualifies for the incentives because the coal plants would be sold and that energy would no longer be supplied to its customers.
“We would be displacing the electricity generated from the coal units with power from the new natural gas plant to serve Indiana customers, regardless of whether the coal units are sold or not,” said Protogere.
That argument seems to hinge on how the Indiana Utility Regulatory Commission will interpret the word “displace,” which appears in the Indiana Code definition.
Jennifer Washburn, CAC’s regulatory director, is unconvinced the terms of the statute would be fulfilled by Duke’s plan to potentially sell off the operating coal plants.
“They said, ‘Well, we're a public utility, and we're retiring it from our portfolio.’ That's cute, but that's not what the statute requires,” she told IndyStar, noting in the proposed scenario the pollution and coal ash from the plants would not be displaced. “I would hope that the commission will look at the plain language of the law that the legislature put forward and say, 'This doesn't float.’”
Coal remains a sought-after fuel source in Indiana
The push to keep coal burning in Indiana aligns with the wishes of state and federal officials, but it’s unclear if a future is possible for Cayuga’s coal plants.
In April, President Donald Trump signed an executive order with the aim to reinvigorate the industry in the United States, and in a similar fashion, Gov. Mike Braun subsequently directed state agencies to consider extending the lives coal plants across Indiana.
The settlement between REI and Duke proposes to do just that. After REI's initial opposition to shutting down the two coal plants, Duke agreed to study the feasibility of keeping the two plants online. But one stipulation of the agreement is that the coal study and sale cannot affect the construction, cost or operation of the new gas units.
It’s unclear what the feasibility study might show, according to Protogere.
The coal plants at Cayuga are currently using infrastructure the natural gas plants would need, like a switchyard and the transmission lines that direct power out of the site. And the coal plants are old. Last month, Protogere told IndyStar the aging plants would require “significant investment” to maintain.
The settlement’s push to sell the coal plants isn’t typical — Duke Energy Indiana has never sold one before, Protogere said.
Still, Kerstiens, who runs REI, seemed hopeful about the agreement. She noted keeping the coal plants online could help lessen the energy burden facing the state.
The electric grid operator for the central United States, MISO, doesn’t have enough new energy generators to keep up with units that are closing and the growth in energy demand, according to a 2024 report from the North American Electric Reliability Corporation.
“We’re to a point in Indiana where we’re bringing on all this economic development that requires so much power. We have to think of innovative ways to power those projects,” Kerstiens said. Data centers will likely be a part of that development, she added.
Indiana’s data center boom
The idea to potentially sell Cayuga’s coal units came partly from a 2022 sale of the Merom Generating Station, according to Kerstiens. A public utility sold the coal-fired power plant to a private power company, which now shares the property with an energy-intensive crypto mine AboutBit, LLC.
There isn’t a seller lined up yet, but “say a data center comes in, those two coal units can power the data center,” Kerstiens said. Then, “if you're a Duke ratepayer, you're not on the hook for paying for that data center.”
But concern about data centers in Indiana goes beyond rates.
David Van Gilder, the senior policy and legal director for the Hoosier Environmental Council, is concerned about the speed at which Indiana is consuming energy.
“We are just addicted to not just our current standard of living, which is very energy intensive and very energy wasteful. We’re also addicted to this idea that growth is absolutely essential,” he said. And by growth, Van Gilder said he meant “more stuff, more energy used — faster, more efficient.”
Take data centers — to power the computing that supports artificial intelligence and data storage, the facilities require massive amounts of energy and water to keep rows and rows of computers from overheating. There are at least 69 data centers built or in the works across the state, according to datacentermap.com, and more could soon join their ranks.
Van Gilder isn’t hopeful about what the data center boom will mean for Indiana's energy grid.
“Any energy conservation measures we’ve done, any push that we’ve done for grid enhancement, any push that we’ve done for increased use of renewable energy — all of that geared to reducing fossil fuel use and reducing greenhouse gas emissions is all going to be wiped out in a heartbeat by these new data centers,” he said. “I don’t see how we’re going to get from here to there without, frankly, seriously constraining the way we live our lives.” |
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