Residents are already seeing increases to their electricity bills this summer as air conditioners ramp up to keep homes cool. But those price hikes could get even worse if a local utility company spends billions on infrastructure improvements in order to serve high-energy businesses like data centers.
AES Indiana, an electric utility company that serves Indianapolis, recently announced that it’s looking for thermal developers to construct new fossil fuel generators at two of its facilities — one of which could serve a data center in Franklin Township if a new zoning application is approved.
The generators would use natural gas to fuel more electricity and would allow the company to provide more power to large energy consumers. But environmental advocates say it could double AES’ carbon emissions by the end of the roughly five-year construction period, further exacerbating the climate crisis. It could also hike up residential utility bills, in addition to creating a slew of health risks, such as difficulties breathing and respiratory issues.
New natural gas generators cost around $4.4 billion. It’s unclear how much funding AES has to construct these projects, or how much it still requires, but the company is looking for a partner who can “support AES’s project financing needs,” according to the AES request for proposals.
Community members can submit questions about the proposals on AES’ website.
Plans for future electricity usage have to be presented to the public to give utility customers a chance to weigh in. AES, however, has paused public stakeholder meetings that are required by state law and has not announced when they will resume.
What’s at stake
If the proposal is approved, the thermal developers would construct generators located at Petersburg Generating Station in southwest Indiana, and another at either Eagle Valley Generating Station in Morgan County or Harding Street Station on the southwest side. AES’s goal is to operate one facility starting around 2030 and the other near 2032, according to AES’ request for proposals.
Mallory Duncan, AES Indiana’s director of communication, wrote in an email that the request for proposals “is to collect data that may inform gas generation pricing; the issuance of a request for proposals is not a commitment to build generation.”
If AES moves forward with its plans, the south side could be closer to joining the tech boom. Utility companies could make a pretty penny by serving businesses that need a lot of power. Additionally, some community members support building a data center that could bring more jobs.
However, Indiana already has some of the highest carbon dioxide emissions in the country, according to data from the U.S. Energy Information Administration.
Duncan’s email didn’t clarify how new generators could impact AES’ goals to reduce its carbon emissions by 70% by 2030, or whether the company considered using renewable energy sources instead.
How a new law could affect consumers
Recent legislation has made it even easier and cheaper for utility companies to cater to businesses, such as data centers, to build more electricity sources.
This year, Gov. Mike Braun signed House Enrolled Act 1007, which requires large load manufacturers to pay at least 80% of the costs for new energy infrastructure needed to power certain buildings, like data centers.
Residents would be stuck paying the rest, advocates say. But even those numbers aren’t so straightforward.
Ben Inskeep, program director for the Citizens Action Coalition environmental advocacy group, said utility companies only charge data center customers a small percentage of the overall costs of building new power infrastructure. So it’s possible community members could end up footing even more of the bill.
“It could build a $10 billion power plant and maybe only 10% of that is assigned to the data center customer,” Inskeep said. “And then under this bill, only 80% of that 10% would actually be paid by the data center.”
The new law also removes some red tape and makes it easier for the Indiana Utility Regulatory Commission to approve construction to power data centers. Critics say this could saddle community members with the expensive costs and make utility payments unaffordable.
“What it’s really doing is giving utilities the ability to ram new resources through our utility regulator, giving them very little oversight, giving them very little discretion to say no to poorly designed new power plants or power plants that are super expensive,” Inskeep said.
It’s unclear how much utility bills could increase if a data center, or another high-energy facility, is approved to use the generators. But residents in other states have reported substantial increases after a data center was built in their area.
Get the backstory
Every three years, state law requires AES Indiana and other investor-owned utility companies to host three public meetings to discuss what should be included in its integrated resource plan — an outline of potential electricity needs over the next 20 years, which is submitted to the Indiana Utility Regulatory Commission.
AES was scheduled to hold five public meetings this year to discuss the process. A meeting was previously held on Jan. 29, but dates haven’t been announced for future public comment sessions.
Duncan, the AES spokesperson, said the company put the public input process on hold during the legislative session.
“With the passing of HEA 1007, AES Indiana is currently evaluating the 2025 (integrated resource plan) in conjunction with other resource planning activities and possible regulatory filings,” Duncan said in an email to Mirror Indy.
AES did not say when it will hold more public meetings.
What’s next
AES plans to select developers by the end of the summer to complete the project.
Charles River Associates, an international consulting firm headquartered in Massachusetts, created documents for the request for proposals and will continue to manage the process by soliciting responses and providing third party evaluations, according to the AES website.
- Proposals due: June 6
- Bidder notification: June 20
- Filing with state commission: Oct. 31
- Anticipated commercial operations date: 2030 and 2032
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Mirror Indy reporter Elizabeth Gabriel covers the south side of Marion County. Contact her at elizabeth.gabriel@mirrorindy.org. Follow her on Facebook at Elizabeth Gabriel, Southside Reporter and on X at @_elizabethgabs.
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