Two Indiana House representatives, a Republican and a Democrat, will again push for legislation to require electric utilities to use a more open competitive bidding process when they seek outside help on major projects.
State Rep. Sharon Negele, R-Attica, and Christina Hale, D-Indianapolis, say their proposal has the potential to lower electricity costs for all Hoosier utility customers and would make sure Indiana manufacturing stays competitive.
"Energy producers are loathe to change, but we know change is coming," Hale said at a briefing for Times editors on Monday.
"If nothing else, technology is driving change. Our aging infrastructure is driving change. We want to work smarter, and one way we can do that is to let the market work for us."
The Indiana Energy Association, representing large utilities, has faced off with the two state representatives on their competitive procurement proposal for several years running.
The association contends there are already requirements in place that assure utilities undertake projects in a cost-efficient manner. It points out utilities must obtain Indiana Utility Regulatory Commission approval when building new generating plants and for other large-scale projects, particularly those that involve customer surcharges known as "trackers."
"To be honest, we are not certain what the problem is they are trying to solve," said Mark Maassel, president of the Indiana Energy Association. "We really have a process that works well."
Negele's and Hale's proposal would set up what they call a transparent process for contractors to bid on projects at the large investor-owned utilities. The Indiana Utility Regulatory Commission would oversee that process.
The utility would still select the winning bidder, as they do now, but that bid would have to be presented to the Indiana Utility Regulatory Commission for approval.
Such a competitive procurement process would apply when utilities undertake projects such as NIPSCO's installation of $739 million in pollution-control equipment at its Schahfer and Michigan City generating stations. That project, started more than five years ago, is wrapping up now.
Maassel said utilities like NIPSCO already use competitive procurement to get the best price and quality the marketplace offers. The utilities don't see the need for another body to oversee that procurement in what would amount to a "pre-approval" process.
Indiana manufacturers have been floating a broad range of proposals to moderate increases in Indiana industrial electric rates, which have risen at twice the rate of the nation as a whole during the last decade.
Indiana Industrial Electricity Consumers Inc., an alliance of 26 of the state's largest manufacturers, has proposed changes in state regulations to allow them to make greater use of cogeneration plants. Local companies such as ArcelorMittal, Praxair, Alcoa and BP are part of that alliance.
As the tussle between manufacturers and utilities dragged on throughout the summer, the Indiana Energy Association started to point to monthly data that showed Indiana's competitive position improving on electricity rates. But it also noted Indiana utilities still face significant cost pressures including the costs to comply with federal clean power regulations.
At the briefing at Times offices on Monday, Chris Olsen, of Lafayette-area starch and corn sweetener manufacturer Tate & Lyle, said Indiana needs to get a handle on electric rates if it wants to compete with other states for manufacturers.
He pointed out just five years ago electricity costs for the Tate & Lyle plant in Lafayette were 10 to 15 percent lower than for the company's plants in nearby states such as Ohio and Illinois. By contrast, electricity costs today for the Lafayette plant are about 30 percent higher than for those in the other two states, he said.
"What's happened in the last four or five years -- the cost of electricity for us in Indiana has gone from being a competitive advantage to being a competitive disadvantage," Olsen said.