NIPSCO: The Backup Units Were Offline During the Largest Outage in Company History

NiSource shares rose 9.5% last week. Do not let that number substitute for an actual risk assessment of what happened on the ground.

During the August derecho: the event that caused the largest outage in NIPSCO's company history, with more than 60% of its 500,000 electric customers losing power, NIPSCO's Schahfer coal units were offline for unplanned boiler and turbine repairs. These are the same units the Department of Energy ordered kept open through September 19 as a grid reliability backstop. The federal backup-capacity guarantee and the physical availability of that capacity were in direct contradiction during the worst outage the utility has ever recorded.

That contradiction did not emerge from nowhere. On August 7, the Indiana Utility Regulatory Commission unanimously rejected NIPSCO's $741 million gas infrastructure TDSIC plan. NIPSCO simultaneously filed at FERC to recover $38 million in first-quarter forced coal-run costs, a filing Earthjustice is actively contesting in federal court. And the NIPSCO Industrial Group, which includes U.S. Steel, is before the Indiana Supreme Court challenging NIPSCO's use of TDSIC trackers for inflation cost recovery. A ruling against the utility could constrain the capital plan underlying NIPSCO's grid-modernization agreements with Amazon and Alphabet, with a January 2027 GenCo milestone now at risk.

For northwest Indiana manufacturers specifically: the honest question for your capital planning is what your facility's actual tolerance for a multiday outage is, and whether you have quantified restart, re-qualification, and spoilage costs before any insurance reimbursement arrives. The largest outage in NIPSCO's history happened on a week when the backup units were unavailable. That is the condition your outage tolerance assumption needs to be tested against.

Questions for Your Morning Huddle

Q: Why were NIPSCO's backup units offline during the largest outage in company history?

A: NIPSCO's Schahfer coal units were offline for unplanned boiler and turbine repairs during the August derecho, the same units the Department of Energy ordered kept open through September 19 as a grid reliability backstop. The federal order guarantees those units remain available; it does not guarantee they are mechanically capable of running when called. Unplanned maintenance outages are not covered by a federal reliability designation.