NIPSCO broke ground this summer on both its $1.1 billion electric modernization and its $739 million natural gas modernization, which are projected to employ thousands and pump hundreds of millions of dollars into Indiana's economy.
More importantly, the work will result in more reliable energy supplies throughout the year, ensuring northern Indiana will remain an attractive place to live and work, said Mike Hooper, NIPSCO senior vice president for major projects and electric field operations.
"A lot of our equipment was built post-World War II," Hooper said. "It was put in from the late 1940s through the early 70s. For equipment that has anywhere from a 20 to 50 year expected life, a lot of this equipment -- we've just gotten the good out of it."
NIPSCO has 468,000 electric and 821,000 natural gas customers spread across northern Indiana. It is a subsidiary of Merrillville-headquartered NiSource Inc., a multi-state energy company.
The modernization projects are in addition to $850 million in pollution control projects underway at NIPSCO power plants. The utility is also planning two high-voltage transmission line projects that will entail $500 million in spending on NIPSCO's part.
Indiana employment attributable to just the electric modernization project will peak at about 1,900 jobs in 2019, according to engineering studies prepared for NIPSCO. Hooper estimates more than 1,000 construction workers could be in the field working by that time.
International Union of Operating Engineers Local 150 has had about 75 to 100 members working on NIPSCO projects for the past year, said Local 150's Dave Fagan. That number should swell as the modernizations ramp up, increasing the demand for heavy equipment operators.
"Our members have the skill and ability to do this work safely and efficiently," Fagan said. "And it also adds value to the communities where our members live because they are consumers in their communities."
The NIPSCO projects, along with road projects in Indiana and Illinois, are helping fill the gap created when the BP Whiting refinery project wound down last year, Fagan said. From 2008 through last year, Local 150 had about 600 members working at the refinery, as part of a contingent of union trades workers that peaked at about 6,000.
The BP Whiting refinery expansion, which took place from 2008 to 2013, was touted as the single largest private investment in state history.
NIPSCO projects will take place across a wide swath of northern Indiana in cities, towns and rural areas.
NIPSCO's job-creation figures for its electric modernization appear to be comparable to the rule of thumb developed for calculating employment created under the American Recovery and Reinvestment Act, according to Micah Pollak, an associate professor of economics at Indiana University Northwest.
He acknowledged a surcharge on customer bills to pay for the project will lighten NIPSCO customers' wallets. But that should be offset by the jolt the local economy will get from all that spending over such a short time. That's because of the multiplier effect, where every $1 spent on the project generates more spending in the wider economy.
"People tend to be leery of these things because they notice that money is not in their pocket anymore," Pollak said. "But what they don't notice as much is the increase in construction activity, the increase in restaurant activity, the increase in retail activity."
Hooper outlined the massive modernization program and the others underway a few weeks ago at a new NIPSCO substation under construction in southern Porter County.
Behind him, a crane swung posts into place as NIPSCO linemen fastened them to concrete pedestals in the dirt. Close by, construction workers put the finishing touches on holes where concrete bases are being poured to hold transformers and switching equipment.
In some ways, the substation project is a microcosm of the entire modernization, Hooper said.
In all, the $1.1 billion electric modernization will replace about 10 percent of NIPSCO's electric transmission system. But it will reduce the overall risks of blackouts and other calamities by about 30 percent, Hooper said.
The greatest benefit may come from new technology that will be installed throughout the system.
"When there is an outage we will be able to use technology to get people back on more quickly, rather than just brute force manpower," Hooper said.
There has recently been a shift toward spending more on distribution systems after a decade of up and down spending, according to Otto Lynch, the American Society of Civil Engineers' energy representative.
NIPSCO's electric modernization appears to reflect that shift, with 64 percent of the money spent on distribution assets and 36 percent on transmission.
Even so, it would take $57.4 billion in additional spending to bring the United States' distribution system up to snuff by 2020, according to a study by the engineers society. The lack of any long-term national energy policy is the main culprit, Lynch said.
Each state is taking its own approach to the problem.
"Basically we have to rewire America," Lynch said. "We have been making some strides in doing improvements, but because our energy sources are changing every day, basically our backs are against the wall."