LAFAYETTE, IN — At a time when utility bills are rising around the country, leaders of Indiana’s power providers say they are struggling to keep up with growing infrastructure needs because of supply chain issues.
A panel discussion hosted by Greater Lafayette Commerce on Tuesday offered leaders from Duke Energy, Centerpoint Energy, Tipmont and Lafayette’s Water Works the chance to speak on what the future holds for Indiana’s utilities networks.
When it comes to maximum power output, Duke Energy President Stan Pinegar said he could give an all-day seminar on how the company’s capacity has changed just in the last 10 years.
As counties like Tippecanoe continue to grow, adding new neighborhoods and subdivisions to meet housing needs, Pinegar said large loads can create a strain on the existing network grid, requiring new substations.
But building those new substations isn’t quick and easy.
“We’re in supply chain hell right now, just to be honest,” Pinegar said. “Larger transformers that are needed for larger loads and other components are still, even though we’re four years past the pandemic, there’s still a lot of wait times and long lead times for certain components that we need to be able to serve particularly larger loads.”
Pinegar said typically the company would forecast the next 20 years to understand infrastructure growth demands, but that time frame has become “next to impossible.” Duke now works with a three-year plan.
“If we were to imagine that every industrial park, every area of our service territory that we serve was going to grow, you couldn’t afford our bill, because we need to plan better and more exact where we know growth is coming,” Pinegar said. “If we overbuild, we risk what’s called a ‘stranded asset,’ where it’s just not being used, and that’s not fruitful for anyone. So we spend a lot of time planning where we know growth is coming and focus our efforts on both the generation capacity as well as the local capacity that’s needed to serve.”
Steve Moore, Lafayette Water Works superintendent, said the growth Lafayette has seen in recent years is substantial. In 2021, Lafayette pumped about 8 million gallons of water a day to meet customer needs. In 2026, the city is pumping about 11 million gallons a day.
The increase in water needs has pushed the city to increase water rates, with local residents bills expecting to grow by more than 58% by 2027. The rate increase is expected to assist in paying the $88 million price tag for necessary infrastructure improvements as the city and its businesses continue to grow.
Jeremy Konkle, CEO of Tipmont, said that from 2005 to 2020, the company saw a minimal increase in electricity demands. But in 2020, a major jump in services occurred, due in part to electric vehicles, AI and other “hyperscalers.”
“There was a lot of economic growth that took place in 2021 and 2022, and there’s been a lot of demand for the components that lead these projects,” Konkle said. “Those are supply chain components, skilled labor components, and engineering.”
But alongside the challenges of managing infrastructure and a workforce, Konkle said utility companies are no longer competing just with one another. They’re often competing with other large-scale businesses.
“We might be competing with Eli Lilly for resources or competing with other major projects in a multi-county region,” Konkle said.
Working with increasingly larger businesses has forced companies like Tipmont to rethink its services based on the scale of a project site, Konkle said. A smaller development, such as a second branch location for a bank, would require a new transformer and some wire, taking about 12 weeks to bring online. A larger development, like a hospital, could take a year or more, as consideration for a new substation and new wiring comes into play.
Natalie Hedde, Centerpoint Energy vice president of strategic business growth, said natural gas operates a bit differently than other utility providers, given that the company has no control over the price of natural gas. Those rates are set by the Indiana Utility Regulatory Commission.
Center Point Energy owns and operates more than 1,000 miles of transmission pipelines and 22,000 miles of distribution pipelines, Hedde said, serving more than 775,000 customers just in Indiana. Pointing to new developments in West Lafayette, those service line numbers are scheduled to grow in the coming years.
The SK hynix semiconductor plant will require the installation of more than 7,000 feet of 6-inch high-pressure steel, which was funded by the Indiana Utility Regulatory Commission. Nearby, the new Millbrook development, encompassing 345 acres, will require more than 6,000 feet of 6-inch steel. The new IU Health Arnett campus will also require new infrastructure, Hedde said.
That sort of planning ahead with local partners is crucial, Hedde said, as utility providers prepare for growth.
Several communities across Indiana have voiced concerns for growth as data centers have announced plans in rural communities. But Pinegar said infrastructure needs that come with data centers should not be passed onto community members.
“When we entertain a data center prospect, we’re going to expect that prospect to pay all the costs associated with the generation, the transmission, and leave our incumbent customers harmless,” Pinegar said. “In fact, our modeling, like some of our peers, has shown that if you land one of these hyperscale projects or two, or three, you get to a point where the fixed costs that we all deal with in our industry are such a high level that it can have certainly a positive impact for incumbent customers.”
As new businesses and large-scale developments continue to arrive in Indiana, Pinegar said local customers should expect to reap the benefit of added infrastructure.
“Our state legislature has been very active in reacting to some of the issues. One in particular has been recognizing the need to get generation through the regulatory process much more quickly than what it ordinarily would take,” Pinegar said. “You’ve got to make your case, and you’ve got to show that you have a need. Our ability to get that generation to serve those loads more quickly is hugely important.”
Jillian Ellison is a reporter for the Journal & Courier. She can be reached via email at jellison@usatodayco.com.
This article originally appeared on Lafayette Journal & Courier: Indiana power grid struggles to keep up with growth, utility leaders say
Reporting by Jillian Ellison, Lafayette Journal & Courier / Lafayette Journal & Courier
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By Jillian Ellison, Lafayette Journal & Courier | USA TODAY Network
