Energy policy in Indiana

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Energy policy in {{{State}}}
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Quick facts
Energy department:
Indiana Office of Energy Development (IOED)
State population:
6.5 million
Per capita income:
Energy consumption
Total energy consumption:
2,869 trillion BTU[1][2]
Per capita energy consumption:
440 million BTU
Energy spending
Total state energy spending:
$32,519 million
Per capita energy spending:
Residential natural gas price:
$8.44 per thousand cubic foot
Residential electricity price:
11.55 cents per kWh
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Energy PolicyEnergy policy in the United States • [[Fracking in {{{State}}}]] • Energy and environmental news
Energy policy in Indiana depends on geography, natural energy resources, how electricity is generated, how much energy consumers use, politics and the influence of groups such as environmental and industry organizations. Decisions by policymakers, such as state and local governments, utilities and regulatory agencies, affect all citizens economically and environmentally, and are generally geared toward providing reliable, affordable energy. The cost of energy affects not only home heating and electricity bills, and thus disposable income, but also economic growth, including jobs, investment and the cost of doing business in the state.

How energy is produced and consumed also has an impact on the environment and pollution. Energy policy in Indiana focuses on utilizing all of the state's resources and ensuring a dynamic energy economy.[3]. As the infrastructure for producing and delivering renewable energy sources is not as advanced as it is for energy generation from traditional sources, these policies often require subsidies to make the produced energy affordable, and their effects are difficult to measure.

Energy policy involves trade-offs between providing an affordable, consistent energy supply on the one hand, and limiting pollution and protecting the environment, on the other. How states attempt to balance these two differs between states, and often boils down to costs to consumers versus costs to the environment. This article provides general energy information about the state as the context within which energy policy is made, as well as information about major legislation and public and private groups that play a role in setting energy policy in the state.

See also: Energy policy in the United States for more information on energy policy.

Energy overview

State facts

Below are quick facts about Indiana's energy climate.


  • produces more electricity than it consumes, exporting the remainder to other states.
  • consumes more energy than it produces.
  • has renewable energy in the form of hydropower and wind, as well as some geothermal heating and cooling systems.
  • produces about one-twelfth of the nation's total ethanol.
  • is ranked seventh nationally for the amount of coal it produces.
  • is ranked ninth in the nation for per capita consumption.
  • has 14 ethanol plants, two major coal mines, two major petroleum refineries and no nuclear plants.[4]

In Indiana

  • the industrial sector is responsible for 45.8 percent of total energy consumption.
  • 61.7 percent of homes use natural gas as their main heating source.
  • most of the energy consumed is from coal.
  • almost all of the electricity in the state is generated from coal.
  • the commercial sector consumes the least amount of energy.
  • wind makes up the largest amount of the renewable energy generated within the state.[4]

Available energy resources

Indiana has rich mineral deposits and traditional energy resources. Coal is found throughout the state but concentrated in the southwestern part of the state, and there are pockets of natural gas as well as oil. Indiana imports most of its petroleum and natural gas.[4]

Indiana has renewable energy resources that contributed about four percent of the energy for electricity in 2013 according to the U.S. Energy Information Administration (EIA). Currently the majority of the renewable energy produced by Indiana is from wind farms, and a small part from hydroelectric. The state is beginning the installation of a geothermal heating and cooling system at Ball State University. Indiana ranks 20th in the nation for the amount of farmland it has.[4] The large amount of farmland gives Indiana access to lots of methane gas. Indiana was the eighth largest producer of biogas as of 2010.[5] Indiana is also one of the largest producers of ethanol, and ranked sixth in the nation.[6]

Consumption and prices

As shown by the pie chart to the right, in 2011 almost half of Indiana's energy use was by the industrial sector. The next largest sector was the transportation sector, with about one-fifth of total consumption. The residential sector also consumed about one-fifth of the total energy consumed. The commercial sector consumed the least, with only about 13 percent. Most of the energy used in Indiana is in the form of coal (used primarily for electricity generation), followed by natural gas.[4]

Petroleum is used primarily in the form of gasoline and diesel fuel in Indiana, and prices of both track very close to the national average.[7] According to the EIA February 2014 report, the federal excise tax is 18.40 cents/gallon of gasoline and 24.40 cents/gallon of diesel fuel. In addition to that, Indiana collects a total tax of 19 cents on every gallon of gasoline and gasohol fuel, as well as 17 cents on every gallon of diesel fuel, which ranks it at the seventh highest in the United States.[8][9] Reformulated gasoline is required in the northwestern portion of the state, the Chicago metropolitan area, and near the southeastern border with Kentucky.[4] There are 81 gas stations, and 59 cities with E85 fuel in Indiana.[10]

Comparisons tables

The table below compares Indiana's consumption and spending for energy, as well as prices for natural gas and electricity, and carbon emissions to those of Ohio, which has similar population, resources and consumption needs because of climate and geography. These two states have somewhat similar population sizes, and are some of the more populated states in the nation. Also given are the U.S. averages and the state rankings. All rankings are from highest to lowest, so, for example:

  • Indiana's rank of eighth in carbon emissions means that carbon emissions are lower in Indiana than in Ohio, which has a rank of fourth.
  • Likewise, per capita income in Indiana is 40th in the nation, meaning it is somewhat lower than in Ohio, which at 31st ranks nine places behind Indiana.
  • Per capita energy consumption in Indiana (at ninth) is different than in Ohio (at 21st).
  • Per capita spending in Indiana is somewhat similar to Ohio's per capita spending because it ranks 18th compared to Ohio's ranking of 27th.
  • Both states have lower than average natural gas prices, though Indiana's price is significantly lower than Ohio's, which is ranked 33rd, compared to Indiana's 47th ranking (a ranking of 47th means that Indiana has the fourth lowest price in the nation, including Washington DC).
  • Electricity prices are different in Indiana, which was ranked 29th, than Ohio's ranking of 19th (meaning Indiana's price was much lower than Ohio's).
Consumption and Expenditures Comparisons Summary
Type IndianaOhioU.S. Figures
FigureU.S. Rank*FigureU.S. Rank*Totals
Population6.5 million1611.57313.9 million
Per Capita Income Average$36,90240$39,28931$42,693
Total Consumption2,869 trillion BTU103,828 trillion BTU697,301 quadrillion BTU
Per Capita Energy Consumption440 million BTU9332 million BTU21312 million BTU
Total Spending on Energy$32.519 million14$50.996 million6$1,394,088 million
Per Capita Spending on Energy$4,99018$4,41927$4,474
Price of Residential Natural Gas, dollar per thousand cubic feet$8.4447$15.4233$12.48
Price of Electricity, cents per kWh11.552911.991912.31
Total Carbon Dioxide Emissions, million metric tons (2010)219.18249.145,631
*Rank is from highest to lowest.

In Indiana, almost two in three homes employ natural gas to heat their homes, probably due to the low cost of natural gas in the state. Over 27 percent of homes use electricity as their heat source. Only one percent of homes use fuel oil as the primary source of heat.[4]

See also: State Energy Rankings to compare all 50 states
Consumption of energy for heating homes in Indiana
Source Indiana 2011 U.S. average 2011
Natural gas 61.7% 49.5%
Fuel oil 1% 6.5%
Electricity 27.1% 35.4%
Liquid Petroleum Gases (LPG) 7.1% 5%
Other/none 3% 3.6%

Production and transmission

Indiana produced 1,063.4 trillion BTU's of energy in 2011. Of that 79 percent came from coal and about 12 percent from biofuels. Together, coal, crude oil, natural gas and what the EIA classifies as ‘other’ renewable energies, make up 9 percent. Most comes from the other renewable energies such as biomass and hydroelectric energy.[11]

Energy production by type in Indiana, 2011
Type Amount Generated
(trillion BTU)
% of State % of USA
Crude oil 11.5 1.08% 0.1%
Natural gas 9.2 0.87% 0.03%
Coal 841 79.09% 3.81%
Biofuels 130.5 12.27% 6.8%
Other 71.2 6.7% 1%

Electricity produced and consumed in Indiana is primarily from coal, which produces 83 percent of the total electricity. Most of the coal is mined in the state. Nine of the state's 10 largest power plants are coal-fired. Natural gas provides only about 8 percent of electricity, but that makes up the next largest portion after coal. Most natural gas has to be imported through the interstate pipelines. The gas mainly comes from Kentucky and Illinois.[4]

There are 76 electric utilities in Indiana, 67 have withdrawn from the Indiana Utility Regulatory Commission's (IURC) jurisdiction. Those that have withdrawn from the IURC's jurisdiction are regulated by local governments. Five of the utilities are investor owned electric utilities, and 10 are municipal electric utilities. [12][13]

There are 20 natural gas utilities. The larger ones are Citizens Gas, NIPSCO, Vectren North and Vectren South. Of these 20 utilities, 17 have withdrawn from the Indiana Utility Regulatory Commission's (IURC) jurisdiction. These utilities are regulated local government.[14][15]

Where electricity comes from in Indiana[16]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 11,000 0.13% 0.04%
Natural gas-fired 762,000 8.73% 0.08%
Coal-fired 7,378,000 84.49% 0.43%
Hydroelectric 42,000 0.48% 0.01%
Other renewables 324,000 3.71% 0.16%
Total net electricity generation 8,732,000 100% 0.21%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

Energy policy

Policy Issues
Indiana's state Renewable Portfolio Standard requires 10 percent of total electricity consumed to be supplied by renewable energy sources by 2025. This standard only applies to public utilities however.[17]
See also: Fracking in Indiana

Energy policy is made, executed and influenced by many organizations, both public and private, and is codified in the laws and regulations of the state. Indiana was ranked 27th in energy efficiency by the American Council for an Energy-Efficient Economy.[18] Indiana has a Clean Energy Portfolio Goal which is a form of renewable portfolio standard (RPS) legislation. The legislation was enacted in 2011 and sets a voluntary goal of 10 percent of total electricity consumed supplied by clean energy by 2025. Only public utilities may apply for the RPS, unlike most states. Utilities have to apply, and the application must include a plan to meet the goals that includes a specific business plan for projects that will be implemented. The process is more selective because the utilities that meet the goals are eligible for incentives that can be used to pay for the compliance projects. Clean energy technologies include wind, solar energy, dedicated crops grown for energy production, organic waste biomass, hydroelectric power, geothermal energy and demand side management or energy efficiency initiatives.[19] There are differing estimates about the economic impact of these mandates in terms of costs that may affect prices and jobs, as well as the impact on the environment and pollution. Thus, for example, there are many new studies of what is called the "rebound effect" which refers to the fact that "some of the theoretically estimated gains in energy efficiency will be eroded as consumers consume additional goods and services."[20][21]

Major legislation

  • Senate Bill 251 (2011) created a voluntary RPS program that allows public utilities that provide 10 percent of their energy from renewable sources to receive incentives that help pay for the projects that the utility implemented in order to meet the 10 percent goal. The application process requires a detailed business plan that outlines what projects the business is considering.[22]
  • The Indiana Utilities Regulatory Commission Cause No. 42693 (2009) mandates that utilities establish demand-side management (DSM) electric savings goals leading to 2 percent reduction in electricity sales by the year 2019. Utilities under the Indiana Utilities Regulatory Commission's (IURC) jurisdiction must file DSM plans, which explain the plans the utilities have for reaching the savings targets.[23][24]
  • House Bill 1324 (2013) is effective as of the January of 2014. The legislation allows for entities and individuals that use a natural gas vehicle (NGV) that has a gross weight of over 33,000 pounds to apply for a tax credit for 50% of the incremental cost of the NGV, up to $15,000. The credit is capped at $150,000 per year.[25]
  • Executive Order 05-21 (2005) requires that all fleet vehicles based in Indianapolis capable of using the E85 fuel blend must use the renewable fuel whenever feasible. The executive order also encourages the use of all other bio-based fuels and oils.[26]
  • Indiana Code 5-28-16-2 provides grants and loans to give economic support to companies that develop fuel-efficient vehicles, produce fuel-efficient vehicles, or create alternative fuel technologies. The Indiana Economic Development Corporation is in charge of administering the Indiana 21st Century Research and Technology Fund which provides the money for the grants and loans.[27]

Government agencies and committees

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Energy and Environmental News

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  • The Indiana Utility Regulatory Commission (IURC) is a five-member board in the Indiana state government. The commission acts as an impartial fact-finding body with respect to the public and the utility companies. They rule in cases that are presented to them, taking into account Indiana state regulations. The IURC is required to be neither for the utilities nor for the public, but instead to take into account all of the interests impacted by their decisions.[28]
  • The Indiana Office of Energy Development (OED) was created in order to lead the state towards achieving the state's energy plans and goals. The OED strives to create a reliable energy framework in order to remain economically competitive. Affordable energy is vital to maintaining an environment in which Indiana's families can grow and thrive. The OED receives funds from the U.S. Department of Energy that are to be given out to promote the use of alternative fuels and power.[29]

Major organizations

  • The Indiana Energy Association plays the part of energy policy advocate when policies are under consideration. The association promotes the general welfare of the energy industry to enhance its ability to improve the economy and the quality of life of Indiana residents. The organization provides breakdowns of energy issues and publishes news articles on their website to help provide information to the public.[31]
  • The Indiana Distributed Energy Alliance is a non-profit corporation. The alliance intends to create a broad coalition effort amongst businesses, individuals, elected officials, local units of government, colleges and universities, labor unions, economic development groups as well as environmental and consumer organizations in order to promote renewable energy. The Alliance provides new articles and commentary on legislation, as well as general information about energy policies.[32]
  • The Indiana Renewable Energy Association (InREA) was established for the purpose of representing businesses which produce renewable energy, and to serve consumers who use renewable energy in Indiana. The association is a non-profit organization that focuses on service and public education awareness. InREA promotes the use of renewable energy technologies, environmental sustainability and economic development in the State of Indiana. InREA hosts events to educate the public and also provides education resources.[33]
  • The Hoosier Environmental Council has been the voice of those who are concerned about the environment for 30 years. The Hoosier Environmental Council is one of Indiana’s leading educators and advocates for environmental issues and policies. The council shapes the state's environmental future by protecting forests, and water throughout Indiana. The council provides educational events and methods to campaign for the positive advancement of environmental protection.[34]

In the news

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See also

External links


  1. These figures come from the U.S. Energy Information Administration State Profiles and Energy Estimates, Indiana Overview. Statistics for population and per capita income are for the year 2012; consumption and spending estimates are for 2011; and prices are for October 2013. Updated pricing information is available on the state's EIA profile. Prices will be updated on this page biannually.
  2. U.S. Energy Information Administration, "Indiana Overview", accessed February 5, 2014
  3. Indiana Office of Energy Development, "Overview," accessed March 4, 2014
  4. 4.0 4.1 4.2 4.3 4.4 4.5 4.6 4.7 U.S. Energy Information Administration, "Indiana Profile Analysis," December 18, 2013
  5. Natural Resources Defense Council, "Indiana," accessed March 4, 2014
  6. American Council on Renewable Energy, "Renewable Energy in Indiana," updated August 2010
  7. To compare current gasoline prices in to the U.S. averages, go to
  8. U.S. Energy Information Administration, "Petroleum Marketing Monthly" February 2014, accessed March 4, 2014
  9. The ranking comes from the Tax Foundation website accessed February 14, 2014
  10. E85 Locator, "Indiana E85 Gas Stations," accessed March 4, 2014
  11. U.S. Energy Information Administration, "State Energy Data System, Production,” accessed February 18, 2014
  12. Indiana Office of Utility Consumer Counselor, "Municipal Utilities - A Brief Regulatory Overview," accessed March 4, 2014
  13. Indiana Office of Utility Consumer Counselor, "Electric Cases of Note," accessed March 4, 2014
  14. Indiana Office of Utility Consumer Counselor, "Natural Gas Cases of Note," accessed March 4, 2014
  15. Indiana Office of Utility Consumer Counselor, "Municipal Utilities - A Brief Regulatory Overview," accessed March 4, 2014
  16. These figures come from the EIA State Profiles and Energy Estimates U.S. Energy Information Administration, Indiana Overview, accessed February 5, 2014
  17. Database of State Incentives for Renewables and Efficiency, "Clean Energy Portfolio Goal," September 13, 2012, accessed March 4, 2014
  18. American Council for an Energy-Efficient Economy, "Indiana," November 8, 2013, accessed March 4, 2014
  19. Database of State Incentives for Renewables and Efficiency, "Clean Energy Portfolio Goal," September 13, 2012, accessed March 4, 2014
  20. International Risk Governance Council, "The Rebound Effect: Implications of Consumer Behavior for Robust Energy Policies," accessed March 3, 2014
  21. Scientific American, "How Bad Is the Rebound from Energy Efficiency Efforts?," May 21, 2013, accessed March 3, 2014
  22. Database of State Incentives for Renewables and Efficiency, "Clean Energy Portfolio Goal," September 13, 2012, accessed March 4, 2014
  23. Database of State Incentives for Renewables and Efficiency, "Electric Efficiency Standard," October 30, 2012
  24. Indiana Government, "Cause No. 42693," December 9, 2009
  25. Alternative Fuel Data Center, "Natural Gas Vehicle (NGV) Tax Credit," accessed March 4, 2014
  26. Alternative Fuel Data Center, "E85 Use," accessed March 4, 2014
  27. Alternative Fuel Data Center, "Vehicle Research and Development Grants," accessed March 4, 2014
  28. Indiana Utility Regulatory Commission, "IURC Home," accessed March 4, 2014
  29. Indiana Office of Energy Development, "Overview," accessed March 4, 2014
  30., "Indiana Department of Natural Resources," accessed December 14, 2012
  31. Indiana Energy Association, "About Us," accessed March 4, 2014
  32. Indiana Distributed Energy Alliance, "About," accessed March 4, 2014
  33. Indiana Renewable Energy Association, "About," accessed March 4, 2014
  34. Hoosier Environmental Council, "Home," accessed March 4, 2014