Energy and Environment Policy Whitepaper_published

1
THE STATE THAT WORKS:
AFFORDABLE ENERGY, HEALTHY ENVIRONMENT FOR HOOSIER BUSINESSES AND FAMILIES
Policy Goal: Maintain low-cost energy, improve the quality of our environment, and provide
recreation opportunities for Hoosiers.
Vision Plan Goals Served:
Goal #1: Increasing private sector employment
Goal #2: Attracting new investment in Indiana, with emphasis on manufacturing,
agriculture, life sciences and logistics
Goal #6: Improving the health, safety and well-being of Hoosier families, especially
children
Policy Steps:
 Streamline the leadership of Indiana’s state energy policy by relocating energy-related
positions and associated funding to the Office of Energy Development.
 Task the Office of Energy Development with creating a state energy plan that meets
Indiana’s energy needs by removing barriers, creating opportunities for greater consumer
choice, diversifying resources, commercializing new technologies, and pursuing an “all of
the above” energy mix
 Task the Office of Energy Development with establishing a process for coordinating with
research institutions, entrepreneurs, and investors to facilitate the commercialization of
new energy technologies.
 Work with stakeholders to develop strategies for effectively addressing our need to
upgrade our electricity generation and transmission infrastructure.
 Support the Indiana Department of Environmental Management’s effort to ensure that all
92 counties meet air quality standards.
 Direct state agencies responsible for water management to establish a plan for managing
Indiana’s water resources and accelerating efforts to clean up Indiana’s waterways.
 Increase the land acreage preserved for conservation and recreation while maintaining
sensitivity to the needs of local government.
 Establish a wetlands mitigation program that leverages multiple, small wetlands projects
by creating larger wetlands projects.
 Enhance Indiana’s state park lodging system by reviewing the system’s operations to
identify opportunities for greater efficiency and by enhancing recreation opportunities
within our state parks.

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State Price Rank
State Price Rank Ohio 8.88 26
Hawaii 34.85 1 Alabama 8.84 27
Alaska 16.53 2 Missouri 8.83 28
Connecticut 15.53 3 Tennessee 8.81 29
New York 14.73 4 South Carolina 8.7 30
New Hampshire 14.3 5 Nevada 8.57 31
Vermont 14.05 6 South Dakota 8.57 32
Massachusetts 14.05 7 Texas 8.55 33
New Jersey 13.46 8 Minnesota 8.51 34
California 13.02 9 New Mexico 8.46 35
Rhode Island 12.66 10 Mississippi 8.37 36
Disticit of Columbia 12.02 11 West Virginia 8.25 37
Maine 11.58 12 Indiana 8.23 38
Maryland 11.18 13 Montana 8.18 39
Michigan 11.1 14 Oregon 8.17 40
Delaware 10.84 15 Nebraska 7.83 41
Florida 10.57 16 North Dakota 7.83 42
Arizona 10.29 17 Utah 7.82 43
Wisconsin 10.1 18 Oklahoma 7.45 44
Pennsylvania 9.54 19 Iowa 7.42 45
Virginia 9.27 20 Arkansas 7.28 46
Kansas 9.18 21 Kentucky 7.24 47
Georgia 9.13 22 Wyoming 7.18 48
Colorado 9.1 23 Louisiana 6.93 49
Illinois 8.94 24 Washington 6.71 50
North Carolina 8.91 25 Idaho 6.48 51
Average US Electricity Prices
Source: Energy Information Agency
Rationale:
Affordable Energy
Electricity
Historically, Indiana has enjoyed one of the lowest costs of
electricity in the country. Indiana’s average cost of
electricity is lower than the average for both the Midwest
and the United States, ranking 14th
lowest out of the 50
states and 4th
lowest in the Midwest (shown in green
below).1
Our low cost of power has enabled Indiana to be one of the
top manufacturing
states in the
country.2
In these rankings, it
is good to be low.
Unfortunately,
Indiana’s status as a
low-cost energy
state is in danger of
changing. According
to the State Utility
Forecasting Group
(SUFG) at Purdue
University, the cost
of electricity will
increase 34 percent
over the next five
years.3,4
1
All charts generated from electricity data maintained by the Energy Information Agency. See
http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a. Note that the costs identified are the average cost of all types of
electricity consumers. Residential, commercial, and industrial customers will have different rates. The average price of electricity for all consumer
types is a common method of displaying electricity costs for ease of comparison and discussion.
2
See “Indiana as an Energy Exporter” (Revision 1), Center for Coal Technology Research Staff Report, Purdue University (2012).
http://www.purdue.edu/discoverypark/energy/assets/pdfs/cctr/indiana_as_an_energy_exporter-CCTR_rev1_March2012.pdf
3
See “Indiana Electricity Projections: The 2011 Forecast”, prepared by State Utility Forecasting Group, Purdue University (September 2011),
http://www.purdue.edu/discoverypark/energy/assets/pdfs/SUFG/publications/2011%20SUFG%20Forecast.pdf. The 2011 Forecast estimated a 20%
increase in Indiana electricity prices between 2010 and 2017.

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Average gas prices in Indiana approached $4 per gallon in late Spring.
The causes of the increase are easy to identify:
 Indiana’s economy will demand an increasing quantity of electricity as our manufacturing
plants and housing industry come back to life.
 Indiana’s electricity generation plants are getting old and nearing the end of their useful
life. Nearly one-half of those plants could be retired within the next decade.
 Extending the life of those plants or constructing new power plants will be expensive,
made even more expensive by an onslaught of new, more stringent regulations from the
U.S. Environmental Protection Agency.
The result is a gap between our demand for electricity and our ability to produce it. The SUFG
estimates that our demand will equal the generating capacity of nine large power plants over the
next 15 years.5
We will also need to upgrade our aging electricity transmission grid to deliver the
electricity demanded. Conquering this challenge will require a coordinated effort from a broad
range of stakeholders, and leadership from the next governor.
Vehicle Fuel
Electricity is not our only
affordable energy issue. Hoosiers
also want affordable gas at the
pump, but we know all too well
that the price at the pump has been
tough to bear.
We need to find ways to put
downward pressure on gas prices,
but it is a tough challenge. Most of
the price of gas is directly tied to
the price of oil, and the price of oil
is established in international
markets controlled by a handful of
4
See “The Impacts of Federal Environmental Regulations on Indiana Electricity Prices”, prepared by State Utility Forecasting Group, Purdue
University (January 2012). http://www.purdue.edu/discoverypark/energy/assets/pdfs/SUFG/publications/EPA%20regulations%20impact.pdf. This
report estimated an addition 14% increase in Indiana electricity prices in addition to the 20% estimated by The 2011 Forecast due to the impact of
pending clean air regulations.
5
The 2011 Forecast estimates that Indiana will need at least 5,400 Megawatts of electricity generation capacity to meet rising demand over the next
15 years. See “Indiana Electricity Projections: The 2011 Forecast”, prepared by State Utility Forecasting Group, Purdue University (September
2011). http://www.purdue.edu/discoverypark/energy/assets/pdfs/SUFG/publications/2011%20SUFG%20Forecast.pdf.

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countries, many of whom are not friendly to American interests.
Our oil policy is a national concern that will be determined almost exclusively by policy makers in
Washington, D.C. We will work with our Indiana Congressional delegation to lead the creation of
a national energy policy that reduces our dependence on unfriendly oil, forges partnerships with
friendly oil countries like Canada, and opens up our own domestic oil resources for exploration
and utilization.
“All of the Above” Energy Resources
Indiana has substantial resources we can use to meet
our energy challenges. We have enough coal to last for
the next 300 years.6
We have outstanding wind
resources. Our agriculture industry produces corn and
soybeans that our 18 biofuel refineries stand ready to
process into ethanol and biodiesel.7
We have biomass
and municipal solid waste resources that can power our
electrical grid along with coal.
We also have oil and natural gas resources (See Map
1).8
Southwest Indiana sits within the Illinois Basin, a
geological formation with an estimated 214 million
barrels of oil and 4.65 trillion cubic feet of natural gas,
a substantial part of which is estimated to be in
Indiana.9
We have natural gas reserves locked away as
shale gas, coal bed methane, biogas, and landfill gas.
The sun and our rivers provide opportunities to
generate electricity, and the earth can help heat and
cool our buildings.10
6
See “Indiana and Coal: Keeping Indiana Energy Cost Competitive”, prepared by Science Applications International Corporation for Indiana
Center for Coal Technology Research (June 2010). http://www.purdue.edu/discoverypark/energy/CCTR/researchreports.php#Special
7
See “Fact Sheet: Biofuels Plants in Indiana”, http://www.in.gov/isda/biofuels/factsheet.pdf. Indiana has 13 ethanol plants and 5 biodiesel plants.
8
See Indiana Department of Natural Resources, Division of Oil and Gas, “History of Indiana’s Oil and Gas Fields”,
http://www.in.gov/dnr/dnroil/files/og-OilGas_in_Indiana.pdf.
9
See “Assessment of Undiscovered Oil and Gas Reserves of the Illinois Basin”, USGS (2007) http://pubs.usgs.gov/fs/2007/3058/fs2007-3058.pdf.
10
See “2011 Indiana Renewable Energy Resources Study”, prepared by State Utility Forecasting Group, (September 2011)
http://www.purdue.edu/discoverypark/energy/assets/pdfs/SUFG/publications/RenewablesReport_2011.pdf for information on Indiana’s renewable
energy resources.
Map 1: Indiana’s oil and gas fields and gas
storage fields.

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Not to be left out, we have next generation nuclear power technology under development right
here in Indiana. Known as small modular reactors, this technology is less expensive and easier to
deploy than older generations of nuclear power. Nuclear power should be a part of our
conversation as we explore strategies for meeting our future energy needs.
In short, Indiana is blessed with significant energy resources, and we need to utilize all of our
energy resources to provide Indiana with a diverse, “all of the above” energy mix. That, too, will
require leadership from our next governor.
Our Plan
We will streamline the Indiana Office of Energy Development (OED) and strengthen its role as
the leader of Indiana’s energy policy. Historically, OED’s primary function was to administer
federal grant funds. That role will continue, but we need OED to do more.
We will strengthen OED by relocating energy-related functions to it. Relocated staff and funding
will allow OED to assume the mantle of “energy hub” for the State. We will task the newly
constituted OED with creating a new energy plan for Indiana. The Daniels’ Administration
prepared the Homegrown Energy Plan in 2006.11
It is time to update that plan and build a new
vision for Indiana’s energy future.
The central organizing principles of Indiana’s new
energy plan will be breaking down barriers and
providing opportunities for consumer choice. The
two over-arching goals will be diversification of
Indiana’s energy mix and commercialization of new
energy technologies. Barriers to diversification and
commercialization can take many forms. Indiana’s
new energy plan will identify the barriers and
develop strategies for breaking down those barriers.
Diversification of Indiana’s energy mix will protect
energy prices against market fluctuations in any
particular market. Just like smart financial investing requires diversification of investments to
hedge against risk of loss, a diverse energy mix will give consumers a greater choice of energy
11
See Indiana Office of Energy Development, Indiana Energy Overview. http://www.in.gov/oed/2385.htm.
Relocated energy functions shown in orange.

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resources, providing opportunities to select the most affordable and reliable option, and keeping
Hoosiers’ energy costs lower (see Table 1).12
Commercialization is the long-term
solution to diversifying our energy mix and
keeping energy prices low through
competition. Not all of our energy
technologies are able to compete in the
marketplace…yet. Unfortunately, as a
nation, we have tried to take economically
uncompetitive technology and put it in
service using mandates, subsidies, and
incentives. The result: when the subsidy
ends, the market for the technology fades.
If there were no need for subsidy and the
technology could compete on price, the
market for the technology would have a
longer life. That is where we need to focus
our efforts.
We will task OED with collaborating with
inventors, entrepreneurs, and investors to
assist them in moving energy technologies
out of the laboratory and into the
marketplace. We will work with our universities and other research and technology focused
organizations to identify the technologies ready for commercialization, and we will direct OED to
develop strategies for removing the barriers to commercialization of that technology – and
eventually house this effort in the new Indiana Applied Research Enterprise (IARE).
Diversifying Indiana’s energy mix will take time. Innovations in energy technologies need time to
evolve, so we must realize that by focusing on diversification through commercialization we are
taking the long-term view. In the short-term, we will also work with stakeholders to develop
strategies for effectively addressing our need to upgrade our electricity generation and
transmission infrastructure.
12
See summary of levelized cost of new electricity generation compiled by the Nuclear Energy Institute with information from the Energy
Information Administration, Annual Energy Outlook, April 2009 SR-oiaf/2009-03.
http://www.nei.org/resourcesandstats/documentlibrary/reliableandaffordableenergy/graphicsandcharts/levelized-cost-of-new-electricity-generation .
The levelized costs accounts for construction, operation, and decommissioning costs of various electricity generation technologies. The levelized
cost is intended to serve as a tool for comparing the relative cost of one technology to the next over the lifecycle of a particular generation plant.
Table 1: Estimated lifetime cost of electricity of different
generation technologies.

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All 92 counties met clean air
standards in 2009.
These and other strategies for breaking down barriers to consumer choices will be identified by
our new state energy plan. By breaking down the barriers to consumer energy choices, we will
diversify our energy mix, keep prices lower, and support Indiana’s businesses and families.
Healthy Environment
President Theodore Roosevelt once said,
“Conservation means development as much as it does protection. I recognize the
right and duty of this generation to develop and use the natural resources of our
land; but I do not recognize the right to waste them, or to rob, by wasteful use, the
generations that come after us.”
In much the same way, while we pursue the responsible utilization of Indiana’s natural resources
to meet our energy needs, we will also be mindful of the generations that come after us.
Maintaining a healthy environment is not an easy task when your economy relies heavily on
manufacturing and agriculture, but, thanks to the hard work of industry stakeholders, interest
groups, the Indiana Department of Environmental Management,
and the Indiana Department of Natural Resources, we are showing
the world that you can build things, grow things, and have a clean,
healthy environment.
Clean Air
Indiana’s air quality is a great example of an effective economy-
environment connection. In 2009, all of Indiana’s 92 counties met
clean air standards for the first time since air standards were first
enacted, and, by the end of 2010, Indiana was one of only 20 states
to meet all clean air standards.13
This achievement is a testament to
an enormous effort by all stakeholders. It is an achievement of
which we should be proud, and we should use it as we market
Indiana to business and families looking for a place to call home.
13
See Indiana Department of Environmental Management, “25th
Anniversary State of the Environment 2011”,
http://www.in.gov/idem/files/state_of_environment_2011.pdf.

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Map 2: The 2012 drought has highlighted
the need for a water management plan.
Darker shades of red show areas of greater
drought as of early August 2012.
We should also be sure that we do not go backward. Meeting clean air standards is not a one-time
event. It will require an ongoing effort to keep our air clean, and we must remain diligent to ensure
that our clean air achievement is long lasting.
Abundant, Clean Water
Water is essential to life, and Indiana has historically enjoyed
abundant water resources and over 40 inches of rainfall each year.
However, increasingly dense population centers, like those in
Central and Southwestern Indiana, will challenge water supplies
in the future, and areas with challenged water supplies will find
their lack of water to be an impediment to economic growth (see
Map 2)14
.
Many stakeholders have identified water supply management as a
critical issue facing the state. Last spring, the General Assembly
directed the Indiana Utility Regulatory Commission (IURC) to
begin gathering data regarding water supply and usage.15
Once the IURC has collected a sufficient quantity of data, we will
work with stakeholders from across the state to establish a first
ever, comprehensive water resource management plan. Without
the data, we cannot know what such a plan will look like, but we know that we need to better
manage our water resources to ensure that Hoosiers have a sufficient quantity of water for
business, industry, recreation, and life.
Our emphasis on water is not limited to water quantity. We will also emphasize improving water
quality. Indiana’s waterways are the cleanest they have been in years due to the effort and
commitment of state government, the agriculture community, industry, and environmental
organizations. Strategies have been put in place for continued improvement, but we must be
mindful that cleaning our water is a complicated, long-term proposition.
With water, the flow of contaminants can stop, but existing contaminants will remain in place until
cleaned-up. Non-point source pollution such as run-off from developed areas is even more
difficult to address because there is no single source of pollution. Improving the health of our
water is a time consuming endeavor, but we can do more.
14
See U.S. Drought Monitor, http://droughtmonitor.unl.edu/.
15
See Senate Bill 0132, 2012 Second Regular Session of the Indiana General Assembly.

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Map 3: Healthy River Initiative has added
69,000 acres (in red) to the 500,000 acres (in
green) managed by the Indiana Department of
Natural Resources.
There are multiple state agencies with a responsibility related to water. The Indiana Department of
Natural Resources, the Department of Environmental Management, the Department of
Agriculture, and the State Department of Health all have various resonsibilities to manage our
water resource quality. We will direct these agencies to coordinate their efforts and will work with
the General Assembly to identify funding sources
for waterway clean-up. Greater coordination of
funding and resources will ensure that clean-up
projects have a greater impact.
Protected Water and Land
Preservation of water and land for conservation
will be a lasting legacy of the Daniels’
Administration. The Healthy Rivers Initiative
added 69,000 acres16
(see Map 3)17
, and the
Indiana Heritage Trust added another 8,300 acres
for the Goose Pond Fish & Wildlife Area.18
Along with the Bicentennial Nature Trust,
Indiana has a variety of tools to add to the
500,000 acres of water and land that the
Department of Natural Resources manages for
conservation and recreation.
We will create another tool for conserving
waterways called the Indiana Wetland and Stream
Mitigation Program. Under the Clean Water Act,
a project that affects streams or wetlands (e.g.,
highway construction, mining, development) is
required to mitigate and minimize the impact of
the project on streams and wetlands. For purposes
of illustration, a highway project that disrupts a
two-acre wetland must re-establish that wetland somewhere else in the same watershed. The
purpose of the requirement is flood control, but there is an ecological effect as well. A long stretch
of highway could result in a series of two-acre wetlands.
16
See Healthy Rivers Initiative Overview, http://www.in.gov/dnr/healthyriver/6580.htm.
17
See Indiana Healthy Rivers Initiative Overview Map, http://www.in.gov/dnr/healthyriver/files/he-Gov_Initiative_overview.pdf.
18
See Indiana Heritage Trust overview, http://www.in.gov/dnr/heritage/4422.htm.

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Fort Harrison State Park Inn
The Indiana Wetland and Stream Mitigation Program will leverage the mitigation requirement by
creating the opportunity to combine multiple small wetlands into one large wetland. So, instead of
a series of two-acre wetlands, a long highway project would result in a large 16-acre wetland. That
16-acre wetland could then be combined with a land conservation project to enhance the
ecological, environmental, and recreational opportunities available in that conservation project.
With a full conservation toolbox in hand, we will increase the water and land available for
conservation and recreation. We will seek to increase the size of existing state parks and recreation
areas. We will work to connect additional segments of the Indiana Trails Plan,19
and we will
coordinate conservation projects with clean water projects to preserve the progress made in water
quality.
Indiana is a beautiful state. We have all enjoyed breathing in the splendor of Indiana’s natural
beauty, and it is incumbent upon us to protect that beauty for future generations to enjoy as well.
Recreation Opportunities
Our state parks offer great opportunities for recreation. We will work to increase the acreage we
have preserved for conservation and recreation in a
manner that is also sensitive to the needs of local
government. We will also seek to increase opportunities
for Hoosiers to enjoy our protected lands.
Our system of state park lodges and inns provides a
welcoming gateway to our protected lands, and our
campgrounds, fishing ponds, swimming pools, picnic
pavilions, and other amenities invite Hoosiers to explore
our natural world. To give Hoosiers more opportunities to
enjoy our state parks, we will enhance our recreational
amenities and investigate adding more lodges, inns and/or
campgrounds to our state park system to give all Hoosiers quality access to the Hoosier outdoors.
To design, construct, and operate the new recreational opportunities, we will explore all options,
including private developers through a public/private partnership. In the past, our design standards
and our procurement process have proven to be an obstacle to such projects. To remove this
19
See “Hoosiers on the Move – The Indiana State Trails, Greenways & Bikeways Plan”, http://www.in.gov/dnr/outdoor/files/trailsplan2006.pdf.

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obstacle, we will review our design standards and our procurement process to balance cost-
effectiveness, aesthetic integrity and efficiency in the procurement process.
Finally, we will review the operational efficiency of our state parks. We want to be sure that
Hoosiers receive the best service, in the best environment, for the best price, when they are guests
at our state parks, whether staying at a lodge, an inn or a campground.

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