Indiana Electricity Rates
Indiana’s average residential electricity rate is 17.9¢/kWh. That’s 6% below the national average. Indiana is primarily a regulated state, but customer choice already exists for Indiana Michigan Power customers. Two new deregulation bills are advancing in the 2026 legislature. With five major utilities spanning a $78/month rate spread, a coal-to-clean transition underway, and billions in new EV manufacturing driving demand, Indiana’s electricity market is at an inflection point.
Indiana’s Quiet Push Toward Electricity Choice
Indiana is officially a regulated electricity state. But the ground is shifting. In the 2026 legislative session, two Republican-sponsored bills would open Indiana’s electricity market to competition.
These bills would allow businesses (and potentially households) to purchase power from alternative suppliers rather than being locked into their assigned utility. The Retail Energy Advancement League and major industrial consumers are lobbying hard for electricity choice.
What makes Indiana different from other regulated states is that customer choice already exists here. It just isn’t statewide. Indiana Michigan Power (AEP), which serves northeast Indiana including Fort Wayne and Muncie, operates an active customer choice program for both residential/small commercial and large business customers.
Alternative supplier lists are published, and customers can switch today. NIPSCO has separately allowed large industrial users in northern Indiana to shop for power through regulatory arrangements.
The legislative push is being driven in part by Indiana’s massive EV and battery manufacturing buildout. Companies like Toyota, Samsung SDI, and Stellantis are investing billions in new Indiana factories that will consume enormous quantities of electricity. They want the ability to negotiate competitive supply contracts rather than paying regulated tariff rates.
Indiana’s Existing Choice Programs
Indiana Michigan Power (AEP) already allows electricity choice in its service territory. Both residential/small commercial customers and large business customers can select an alternative electricity supplier from I&M’s published supplier list. To participate, contact Indiana Michigan Power directly or visit their customer choice portal to view approved alternative suppliers and initiate a switch.
This makes I&M’s territory the only area in Indiana where households can shop for electricity—a model that deregulation proponents want to extend statewide. If you live in Fort Wayne, Muncie, Marion, or other I&M service areas, you may already have electricity choice.
For customers served by AES Indiana, Duke Energy, NIPSCO, or CenterPoint Energy, supplier choice is not yet available—but the 2026 legislative bills could change that. States like Texas, Ohio, and Pennsylvania offer models of how full retail competition works.
Indiana’s Five Major Electric Utilities
Indiana is served by five investor-owned electric utilities, each with distinct service territories, rate structures, and generation portfolios. The rate spread between the cheapest and most expensive IOU is $78 per month for the same 1,000 kWh of usage. That’s one of the widest gaps of any state in the country.
AES Indiana (formerly Indianapolis Power & Light) is the dominant utility in the Indianapolis metro area and central Indiana. AES is actively retiring coal generation and investing in battery storage—planning up to 820 MW of battery capacity by 2032. The utility is transitioning its generation fleet while maintaining rates near the state average.
Duke Energy Indiana offers the lowest rates among Indiana’s investor-owned utilities, serving much of southern and central Indiana including Bloomington, Terre Haute, and portions of the Indianapolis suburbs. Duke’s relatively diversified generation mix and efficient operations keep it as the cost leader among Indiana’s IOUs.
Indiana Michigan Power, an AEP subsidiary, serves northeast Indiana including Fort Wayne, Muncie, and Marion. I&M is unique among Indiana utilities: it operates an active customer choice program allowing both residential and business customers to select alternative electricity suppliers. I&M also operates the Cook Nuclear Plant in Bridgman, Michigan, providing carbon-free baseload generation.
NIPSCO serves northern Indiana’s industrial heartland—Gary, Hammond, South Bend, Michigan City, and Valparaiso. Despite serving an area historically tied to heavy industry and cheap coal power, NIPSCO now has the highest rates among Indiana’s IOUs. The utility is aggressively retiring all coal plants by 2028, replacing them with wind and solar, but the transition costs are hitting ratepayers hard.
CenterPoint Energy Indiana South (formerly Vectren) serves southwestern Indiana including the Evansville metropolitan area. CenterPoint has the second-highest residential rates among Indiana’s IOUs, with costs driven by generation fleet investments and infrastructure upgrades across its relatively compact but aging service territory.
$78/Month Rate Spread: Same State, Very Different Bills
A household using 1,000 kWh per month pays roughly $156 with Duke Energy Indiana but $234 with NIPSCO—a $78 monthly difference, or $936 per year, for the exact same electricity consumption. This is one of the widest intra-state utility rate spreads in the country and underscores why Indiana businesses and consumers are pushing for the ability to shop for competitive supply.
Municipal Utilities & REMCs
Beyond the five IOUs, Indiana has approximately 70 municipal electric utilities and 38 Rural Electric Membership Cooperatives (REMCs). Municipal utilities—including those in Richmond, Crawfordsville, Frankfort, and Logansport—set their own rates and are governed by local officials. REMCs serve rural Indiana communities and purchase wholesale power through organizations like Hoosier Energy and Wabash Valley Power Alliance, often offering rates competitive with or below the IOUs.
The Coal-to-Clean Transition
Indiana remains one of the most coal-dependent states in the country, with coal still generating 41% of the state’s electricity. But the transition is accelerating. Economics are driving the change as much as environmental policy. Natural gas and renewables are now cheaper to build and operate than maintaining aging coal plants, and every major Indiana utility has announced coal retirement plans.
NIPSCO is leading the charge, with plans to retire all coal generation by 2028 and replace it with wind, solar, and battery storage. The utility’s Schahfer Generating Station has already been partially retired, with remaining units scheduled for shutdown. NIPSCO’s aggressive timeline has contributed to its high current rates. Customers are paying for both the retiring coal plants and the new renewable capacity at the same time.
AES Indiana is retiring coal units at its Petersburg Generating Station and investing heavily in battery storage. The utility has announced plans for 40 MW of battery storage by 2027, scaling to as much as 820 MW by 2032—one of the largest utility-scale battery deployments in the Midwest. Battery storage will help AES manage peak demand and integrate intermittent renewable generation.
Duke Energy Indiana is also transitioning, with coal retirement plans extending through the late 2020s and early 2030s. Duke’s Gallagher and Cayuga stations are slated for conversion or retirement.
Wind energy is growing rapidly, already accounting for 9% of Indiana’s generation. Large-scale wind farms are concentrated in northwestern Indiana, where flat agricultural terrain and consistent wind patterns from the Great Lakes create strong capacity factors. Solar is smaller at 5% but growing as costs continue to decline.
Indiana’s Coal Crossroads
Indiana’s relationship with coal runs deep. The state sits atop the Illinois Basin coal seam, and coal mining has been a significant employer in southwestern Indiana counties like Gibson, Pike, and Warrick for over a century. Coal provided cheap, reliable power that helped attract the steel mills of Gary and Hammond, the auto plants of Kokomo and Fort Wayne, and the manufacturing base that defines Indiana’s economy.
But the economics have flipped. New-build wind and solar are now cheaper than operating existing coal plants in most cases. NIPSCO’s own analysis showed that retiring coal and building renewables would save ratepayers $4 billion over 30 years compared to maintaining coal operations. AES Indiana and Duke Energy have reached similar conclusions.
The tension is real: coal plant closures mean job losses in communities that have few alternatives, even as the statewide grid becomes cleaner and, eventually, cheaper. Indiana’s legislature has pushed back on aggressive timelines—a 2024 law gave the Indiana Utility Regulatory Commission (IURC) greater authority to slow or block coal retirements if reliability concerns aren’t adequately addressed.
Indiana’s EV & Manufacturing Electricity Boom
Indiana is ground zero for America’s EV supply chain buildout. The state’s central location, existing automotive manufacturing infrastructure, and low electricity costs have attracted billions of dollars in new battery and EV component factories. These investments are reshaping Indiana’s electricity demand profile and driving the push for electricity deregulation.
Toyota Battery Plant
Toyota is building a massive battery manufacturing facility in Princeton, Gibson County—one of the largest single investments in Indiana history. The plant will produce batteries for Toyota’s growing lineup of hybrid and electric vehicles.
Samsung SDI & Stellantis
Samsung SDI is constructing a battery cell factory in Kokomo, while Stellantis is converting its existing Kokomo transmission plants for EV component production. Together, these investments are transforming Howard County into an EV manufacturing hub.
Subaru & GM
Subaru’s Lafayette plant—the only Subaru factory outside Japan—is expanding for EV production. GM’s Fort Wayne Assembly produces the Chevrolet Silverado and GMC Sierra, with electrified variants in the pipeline.
These factories don’t just build things. They consume enormous quantities of electricity. A single battery gigafactory can draw 200–500 MW of continuous power, equal to a small city. This surge in industrial demand is a key reason why Indiana’s largest manufacturers are lobbying for electricity deregulation. They want to:
- Negotiate competitive supply contracts
- Lock in long-term pricing
- Source renewable energy directly
Data center development is also growing along the Indianapolis-to-Fishers corridor, adding another layer of demand for reliable, competitively priced electricity. Indiana’s position as the “Crossroads of America” gives it logistical advantages. The state has more interstate highway miles per square mile than any other state, benefiting both manufacturing and data center operations.
Indiana Business Electricity Rates
Indiana’s commercial electricity rate of 13.78¢/kWh is competitive for the Midwest and well below the national average. Combined with the state’s central location and deep manufacturing workforce, relatively affordable power is a key part of Indiana’s economic pitch to employers.
Logistics & Distribution
Indiana calls itself the “Crossroads of America” for good reason—the state has more interstate highway miles per square mile than any other state. Major distribution centers for Amazon, FedEx, and Walmart take advantage of same-day reach to most of the eastern U.S. population. Cold storage and automated warehouse facilities are significant electricity consumers.
Pharmaceuticals & Life Sciences
Eli Lilly’s global headquarters in Indianapolis anchors a thriving pharma and life sciences corridor. Roche Diagnostics, Catalent, and numerous biotech firms operate energy-intensive research labs, cleanrooms, and manufacturing facilities. Pharmaceutical manufacturing requires extremely reliable power for temperature-controlled processes.
Steel & Heavy Industry
Northwest Indiana’s steel corridor—anchored by U.S. Steel’s Gary Works and Cleveland-Cliffs’ Burns Harbor complex—is one of the most energy-intensive industrial zones in the United States. Electric arc furnaces, rolling mills, and finishing lines consume massive amounts of power. These industrial giants served by NIPSCO are among the loudest voices pushing for electricity choice in Indiana.
How to Lower Your Indiana Electricity Bill
Indiana’s below-average rates are a starting advantage, but the wide spread between utilities means some Hoosiers are paying significantly more than others. Here are strategies to reduce your electricity costs:
Check for Customer Choice (I&M Customers)
If you’re served by Indiana Michigan Power, you may be eligible to choose an alternative electricity supplier through I&M’s active customer choice program. Review the approved supplier list on I&M’s website and compare rates against your current tariff. This is the only area in Indiana where residential customers currently have supplier choice.
Compare Rate Plans
All five Indiana IOUs offer multiple rate plan options. Time-of-use plans can save money if you shift high-consumption activities to off-peak hours. With a $78/month spread between the cheapest and most expensive utility for the same usage, understanding your specific utility’s rate structure is critical to managing costs.
Go Solar
Indiana offers net metering for residential solar installations, allowing you to receive credit for excess generation sent back to the grid. Combined with the 30% federal Investment Tax Credit (ITC), rooftop solar economics are increasingly favorable in Indiana. Typical payback periods run 8–11 years depending on your utility’s rates and your roof’s orientation.
Utility Efficiency Rebates
Indiana utilities offer rebates on energy-efficient upgrades including insulation, HVAC systems, smart thermostats, and LED lighting. AES Indiana, Duke Energy, and NIPSCO all operate efficiency incentive programs. A home energy audit—often available free or at reduced cost through your utility—can identify the highest-impact improvements for your home.
States Where You Can Freely Choose Your Electricity Provider
While Indiana’s deregulation bills work their way through the legislature, customers in these states can already shop for competitive electricity rates with full retail choice:
Texas · Pennsylvania · Ohio · Illinois · Michigan (partial, 10% cap)
Frequently Asked Questions About Indiana Electricity
What is the average electricity rate in Indiana?
Indiana’s average residential electricity rate is 17.9¢/kWh as of July 2026—approximately 6% below the national average of 18.83¢/kWh. Commercial rates average 13.78¢/kWh. Indiana benefits from relatively low-cost coal and natural gas generation, keeping rates competitive compared to neighboring states like Michigan (21.20¢/kWh) and Ohio.
Is Indiana a deregulated electricity state?
Indiana is primarily regulated, but with important exceptions. Indiana Michigan Power (AEP) operates an active customer choice program allowing both residential and commercial customers to select alternative electricity suppliers. NIPSCO has allowed large industrial users to shop for power. In 2026, two Republican-sponsored bills in the legislature aim to expand electricity choice to businesses and potentially households statewide. Indiana is closer to deregulation than most “regulated” states.
Can I choose my electricity provider in Indiana?
If you’re served by Indiana Michigan Power (AEP) in northeast Indiana—including Fort Wayne, Muncie, and Marion—yes, you can participate in I&M’s active customer choice program and select an alternative supplier. Customers of AES Indiana, Duke Energy Indiana, NIPSCO, or CenterPoint Energy do not currently have supplier choice, though 2026 legislative efforts aim to change that. In fully deregulated states like Texas and Pennsylvania, all eligible customers can choose their provider.
Who are the major electric utilities in Indiana?
Indiana has five major investor-owned electric utilities: AES Indiana (~530,000 customers, central Indiana/Indianapolis), Duke Energy Indiana (southern and central Indiana), Indiana Michigan Power/AEP (~470,000 customers, northeast Indiana), NIPSCO (northern Indiana including Gary, Hammond, South Bend), and CenterPoint Energy Indiana South (southwestern Indiana, Evansville area). The state also has approximately 70 municipal electric utilities and 38 Rural Electric Membership Cooperatives (REMCs).
Why is there such a big rate difference between Indiana utilities?
Indiana has one of the widest intra-state utility rate spreads in the country. Duke Energy Indiana charges roughly $156/month for 1,000 kWh while NIPSCO charges approximately $234/month for the same usage—a $78 monthly difference ($936/year). This reflects differences in generation mix, infrastructure age, service territory density, and capital investment programs. NIPSCO’s rates are elevated by its aggressive coal-to-renewables transition, while Duke’s diversified portfolio keeps costs lower.
Is Indiana transitioning away from coal?
Yes, but Indiana is still 41% coal-dependent—one of the highest rates in the nation. NIPSCO plans to retire all coal by 2028, replacing it with wind and solar. AES Indiana is retiring coal units and adding up to 820 MW of battery storage by 2032. Duke Energy Indiana is also transitioning. However, coal remains politically significant due to mining jobs in southwestern Indiana, and a 2024 law gives the IURC authority to slow coal retirements if reliability concerns arise.
What EV and battery plants are being built in Indiana?
Indiana is a major EV supply chain hub. Toyota is building a $3.8 billion battery plant in Princeton (Gibson County). Samsung SDI is constructing a battery factory in Kokomo. Stellantis is converting Kokomo plants for EV components. Subaru’s Lafayette plant is expanding for EV production. GM’s Fort Wayne Assembly builds the Silverado and Sierra. These investments total over $8 billion and are driving massive growth in industrial electricity demand across the state.