Indiana IURC Approves NIPSCO GenCo as First U.S. Limited-Regulation Utility Affiliate for Data Center Generation (Cause 46322)

Opening

On September 24, 2025, the Indiana Utility Regulatory Commission (IURC) approved NiSource subsidiary NIPSCO’s petition to create NIPSCO Generation LLC (“GenCo”) as a limited-regulation affiliate — the first such entity in the United States authorized to build dedicated generation for hyperscale data center customers outside a regulated utility’s standard ratebase. The IURC reaffirmed the decision on November 19, 2025, in IURC Cause No. 46322.

What Happened / Key Facts

The legal theory that enabled approval: GenCo petitioned the IURC in January 2025 to waive some jurisdictional authority, asserting it did not require a Certificate of Public Convenience and Necessity (CPCN) because GenCo would have no obligation to serve retail customers directly and would not recover costs from retail customers through regulated rates. GenCo would provide energy exclusively to NIPSCO — its affiliated regulated utility — via a power purchase agreement. The IURC accepted this theory, granting GenCo limited-regulation status.

The structural design: GenCo sits between NiSource (parent) and NIPSCO (regulated utility), building and owning generation dedicated to data center load. GenCo sells power to NIPSCO via a PPA; NIPSCO serves data center customers under individually negotiated “special contracts,” each requiring separate IURC approval. The special contract terms with data center customers are confidential — not part of the public IURC record.

Formal opposition filed with the IURC:

• Citizens Action Coalition (CAC): raised concerns that GenCo’s financial risks could reach retail ratepayers if NiSource issues parent-level debt to capitalize GenCo or if GenCo’s debt is cross-collateralized with NIPSCO assets.
• Clean Grid Alliance: stated the approval “threatens competitive energy landscape,” citing GenCo’s structural advantages — guaranteed buyer, guaranteed demand, expedited approvals, and absence of rate-of-return regulation — over competing independent power producers.
• LaPorte County Board of Commissioners: opposed the scale of the industrial gas buildout.
• Takanock Beckham (competing data center developer): opposed the competitive advantage the arrangement provides Amazon.
• Indiana’s consumer advocacy office: raised risk that GenCo failure could reverberate through the parent and reach retail ratepayers.

Why no comparable structure existed previously: Per NIPSCO’s CEO during proceedings, he was “not familiar with this structure being proposed anywhere else in the country.” NIPSCO did not survey best practices in other states when designing the GenCo model. Indiana is unique in having simultaneously: (1) a vertically regulated utility with large data center demand, (2) access to both PJM and MISO wholesale markets, and (3) an IURC willing to accept the limited-regulation affiliate theory without CPCN review.

Alternative structures the IURC did not require: Duke Energy Indiana contracts with independent power producers under market conditions (no dedicated affiliate needed). Indiana Michigan Power uses amended tariffs with standardized floors including minimum contract terms and exit fees. The IURC’s choice to approve the GenCo structure over these models is the precedent-setting element.

Why This Event Matters

The September 24, 2025 IURC approval is the first instance in U.S. utility regulation where a state commission accepted the theory that a utility affiliate with a captive affiliated buyer is functionally equivalent to an independent power producer and therefore entitled to bypass the CPCN process. If this theory holds on appeal (no published judicial challenge as of May 2026), it establishes a replicable pathway: any vertically regulated utility can create a generation affiliate, contract exclusively with itself, and argue it is exempt from standard regulatory review.

The ratepayer-protection claim rests on an unverifiable premise: that Amazon is paying full cost of service under the confidential special contract. No public IURC document confirms this. Citizens Action Coalition’s intervention — cross-examining NIPSCO’s president on the absence of evidence for customer benefit claims — establishes an adversarial record, but the confidential contract structure means the core verification question may be unanswerable from public sources.

Broader Context

The September 2025 IURC approval followed NIPSCO’s June 2025 general rate case settlement (Cause 46120), which approved a $257 million annual revenue increase — a $23/month (16.75%) residential rate increase, the highest NIPSCO rate increase in 20 years. The rate case closed before the Amazon deal was finalized, leaving the data center cost question to Cause 46322. Blackstone Infrastructure Partners holds a 19.9% non-controlling equity interest in NIPSCO (acquired January 2024, $2.16 billion), providing private equity capital for NIPSCO’s energy transition — including GenCo’s buildout.

Indiana’s data center build is projected to add 2,600–8,600 MW of new load by 2035, primarily from data centers. As of May 2026, IURC complaint volume about NIPSCO already exceeded all 2025 complaints combined, with more than half of 2026 complaints focused on the utility.

Research Gaps

• Full IURC Order text for Cause 46322 (September 24, 2025): the specific findings of fact and conclusions of law on the CPCN waiver theory
• Whether any party filed a petition for reconsideration or judicial appeal of the September 24 order
• IURC’s standard for accepting GenCo’s cost-of-service assertion without requiring public evidentiary support for the Amazon contract terms

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