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Indianapolis Star
10-07-2025
- Business
- Indianapolis Star
Data centers are inevitable, but why should Indiana pay for their energy demand?
Indiana has given $168 million in subsidies for data centers, which are projected to more than double the state's electricity demand very quickly while only creating a few dozen jobs. As a result, despite its already tight fiscal budget, the state has started planning to massively expand its energy grid, even looking decades into the future to invest in an emerging small modular nuclear reactor industry. It is very problematic that large industries get these massive tax breaks while electricity costs soar for the average consumer in Indiana. Artificial intelligence, after all, is a vital national security asset, the federal government is responsible for regulating interstate commerce and we are competing with geopolitical enemies like China in an arms race to develop it. More: Indiana taxpayers shouldn't subsidize $168M in data center corporate welfare | Opinion If the federal government wants to win that race, it needs to step in and give regular consumers a way to escape energy market volatility or spread the cost of data centers' electricity demand across the nation. The 'Big, Beautiful Bill' phases out energy tax credits, making shielding consumers from energy market volatility much more difficult. This tax credit returned 30% of the cost of a consumer's investment in energy efficiency, including through a solar array for their homes. Such an array could shield consumers from rate increases while their utility companies invest in expanding grid capacity for data centers. The energy tax credits helped more consumers than they should have, to be sure, but could be brought back at a much lower cost if they were limited only to homeowners, rather than larger businesses, as homeowners would likely have a more difficult time obtaining the credit to invest in solar energy without them. In my case, the federal tax credit enabled me to obtain a solar energy loan that costs less per month than my electricity bill otherwise would have been. Another solution would involve a major federal investment in energy infrastructure, akin to the National Interstate and Defense Highways Act of 1956 that built up the interstate as we know it today. The main difficulty preventing the construction of a national interstate highway system was the apportionment of funding between the federal government and the states. The frustration of voters in certain states and localities bearing more of the cost of rapid increases in energy demand due to data center development is the major difficulty preventing the construction of nationwide artificial intelligence infrastructure today. More: Braun's smart IEDC picks must now tackle Indiana's development spending mess | Opinion President Dwight D. Eisenhower, recognizing that an interstate highway infrastructure was a national security issue, nationalized the cost so it would be spread out among all the beneficiaries of the system. The federal government could step in and do the same today to incentivize independent energy producers to fulfill data centers' energy demands rather than investor-owned utilities. This would shield regular consumers from the rapid spike in electricity costs. First, Indiana would have to deregulate their energy supply. Utility monopolies have had complete control over energy distribution in the state in their government-granted service territories since 1983. 'Utilities were fighting over customers and there was no real competition. There weren't independent energy producers or transmission owners… [but] what has happened in the last 20 years is we have had major reforms that have created a competitive wholesale market,' said Kristina Wheeler, former vice president and staff counsel for Indiana Municipal Power Agency and general counsel for the Indiana Utility Regulatory Commission. 'Anyone approved and qualified… [to] build generation or transmission can do so [but] they can't sell directly to any business or home, they have to go through the utilities that existed in 1983.' As such, utilities are able to keep a chokehold on their service territories. Takanock, Inc., for example, aims to develop data centers and provide 'reliable and resilient power solutions for those facilities.' They tried to purchase energy from producers independently from investor-owned utilities, to avoid passing on costs to consumers earlier this year. NIPSCO, however, denied their request, despite allowing many other large-load customers to do so. 'Takanock understands that cost-shifting to 9 other utility customers is a non-starter, and is willing to bear the reasonable costs to extend service to its future data center developments,' Kenneth Davies, founder and CEO of Takanock Inc., wrote in a petition to the Indiana Utility Regulatory Commission. 'We also believe there are reasonable regulatory methods to protect consumers and balance the interests of the significant economic development these projects will bring to Indiana.' Georgia recently resolved this issue by forcing utility companies to allow large-load customers like data centers to buy energy from independent producers. 'Everybody should have an opportunity to serve and take on the associated risk, and my concern is what's been happening in Indiana is we're just being very protective of those legacy providers,' Wheeler added. Reliable Energy, Inc. is working toward leveling the playing field in Indiana for independent energy producers, and recently won a settlement requiring Duke Energy to study if their coal plants could be sold to a third party instead of being retired. If our energy supply were deregulated, and the federal government were able to invest in independent energy production facilities, they would likely focus on natural gas-fired power plants, since they are one of the cheapest to build. Just 10 new data centers proposed in the state will likely require 9,700 megawatts of energy. Building natural gas-fired power plants to fulfill this demand would likely cost around $7,954,000,000, or $820 per kilowatt of energy based on national average construction costs from 2022. However, natural gas plant construction by Indiana's legacy utilities routinely runs more than double that amount per kilowatt, likely due to the cost of aging infrastructure. Duke's Cayuga power plant and NIPSCO's R.M. Schahfer gas peaker plant are two such examples. For comparison, data centers built across the country in 2024 only added around 7,000 megawatts of demand to the energy grid. If nationwide trends continue, expanding the grid would only require a $5,740,000,000 yearly investment from the federal government. The federal government is one of the few entities capable of making such large investments, but could easily recoup the cost by requiring these energy producers to return a percentage of plant profits until the capital costs are paid off. The federal government already spends around $20 billion to subsidize the fossil fuel industry simply to lower energy costs, and does not get most of this money back. The Chips and Science Act involved a $52 billion investment in semiconductor manufacturing, so comparatively, it would be a small investment to prepare the energy grid to meet the demand of data centers. It has taken mass blackouts and electricity rationing for China to treat energy production like the national security issue it is. Hopefully, Indiana and the U.S. will take action before then, otherwise the utility monopolies' stranglehold on consumers will continue, and energy will become increasingly unaffordable.
Indianapolis Star
01-07-2025
- Business
- Indianapolis Star
Indiana taxpayers shouldn't subsidize $168M in data center corporate welfare
The next time you see a huge data center pop up in your backyard, enjoy it, because you're paying for it. If the Indiana Economic Development Corp. gets its way, the state will have four new energy-and-water-hogging data centers in high-population areas — all funded by you, the taxpayer. The IEDC recently approved $168 million in tax incentives to attract four data centers. Hoosiers will be subsidizing these monstrosities for up to 50 years. Government leaders claim they will create jobs — a total of 180. For those keeping count at home, that's more than $930,000 in taxpayer money per job being "created." Hicks: Braun's smart IEDC picks must now tackle Indiana's development spending mess Indiana has become a haven for data centers because, in 2019, the state government allowed them a 35-year tax exemption to entice them to plop down in Hoosier cornfields. As Libertarians, we believe in private property rights. You can do what you want with your justly acquired property, as long as you pay for it and you own the property. However, the line is drawn when governments get involved. Governments should not take land from others, nor should it hand out bags of tax money and incentives to give one business a leg up over any other competing uses for a property. Nearly all of these data center projects are in high-growth, high-demand suburban areas, where there would be multiple viable uses for the land. Without incentives, the market prevails — and the data centers likely find less populated areas to locate. We also believe in transparency. These four projects are using code names because they're operating in secrecy to prevent the public from knowing which companies they're throwing your money toward. One of the projects, in Hancock County (or Project Redline), is being proposed by Surge Development LLC. Its principal, Chris King, just happens to be an IEDC board member. This approval doubles down on a data center plan Surge recently withdrew due to intense public opposition. The Republican-led state government claims to be pro-business. It needs to embrace the free market instead. Free markets don't have governments picking winners and losers, nor making deals in secret. Free markets don't use taxpayer incentives to favor one business over another. They don't have governments spending billions to buy land and then turn it over to other private companies, as happened in the controversial LEAP project in Boone County. They don't privatize profits and leave the losses on the backs of the taxpayer. Opinion: Indiana's 201% cigarette tax hike will fuel smuggling, not just revenue For every new state-funded project by the IEDC, taxpayers get the shaft. They have to pay for the road, water and power lines, while the businesses themselves are getting a break from paying sales and property taxes, especially as local governments pile on with tax abatements of their own. That means residents and small businesses who have been in the community for years get to shoulder more of the burden of paying for roads, schools and public safety. If Indiana truly wants to be pro-business, it needs to embrace the free market. No tax abatements, no exemptions, no handouts, no special favors that the common citizen or small business doesn't have access to. Instead, focus on keeping taxes low and having a common-sense regulatory environment. Indiana should abolish the IEDC, as well as local economic development corporations. A business can thrive on its own. It doesn't have to mooch off the taxpayers to do so.
Indianapolis Star
26-06-2025
- Business
- Indianapolis Star
Gov. Mike Braun's brand new IEDC board includes several large campaign donors
When Gov. Mike Braun replaced the entire board of the Indiana Economic Development Corp., he gave some of the spots to large donors. His firing of the previous eight board members June 23 is in keeping with Braun's efforts to cut ties with the previous administration and overhaul the beleaguered quasi-state agency that has caught criticism over transparency concerns. Indeed, he has a very different vision for the IEDC: While former Gov. Eric Holcomb's board brokered large high-tech industry deals with companies from outside Indiana, Braun wants to turn the IEDC's attention more toward homegrown, small- to-mid-size "Main Street" businesses. But he differs from his predecessor in another way: Of Braun's nine new appointees, several gave significant sums to his gubernatorial campaign, totaling more than a quarter million dollars. This board reviews and approves billions of dollars worth of economic development projects, investment awards, loans and grants. While some, including Braun, see campaign donations as a nonfactor in appointments like this ― one argument being that it's natural for Braun to pick people he knows to be on such a board, and people he knows are likely to support him ― others concerned with government ethics find the whole setup concerning. It gives an appearance of pay to play, which is "fundamentally problematic," said Abraham Schwab, psychology chair at Purdue University Fort Wayne. "It's possible that this is a happenstance ... but that seems unlikely," he said. Braun said campaign donations did not figure into his decision on appointments. Indiana business executives, among whom Braun counts himself, supported him heavily in the election, and it also is the case that he wanted to pick entrepreneurs for this board. "I pick the people that I've known to be the most entrepreneurial, and when you're mostly supported by them, I'm not going to go after the standard cardboard cutout that would normally get on boards," he told reporters following the first quarterly meeting of his new board. "I'm looking for people that are going to be transformational. I've been clear that on economic development, I'm going to fertilize the field of small businesses and entrepreneurs. He added that he plans to appoint some additional new members. By Indiana law, the governor chairs the IEDC board and can appoint up to 14 board members, at least three of whom must be Democrats. Catch up: Braun overhauls IEDC board, appoints well-known Democrat, over displeasure with state agency Collectively, five of Braun's new appointees had given about $263,000 to his gubernatorial campaign and another $16,650 to his Senate coffers. Other new board members include former Democratic gubernatorial candidate John Greggl Terre Haute entrepreneur Greg Gibson; Don Lamb, director of the state Department of Agriculture; and David Fagan of International Union of Operating Engineers Local 150. None of this shocks outgoing board member Mark Miles, the CEO of IndyCar and Penske Entertainment. It makes sense that Braun would look around among the people he knows in the business world to lead such a board, and also that people he knows in this world could have supported him in his race. "You would hope to fill boards with people you know and who have the skillset," he said. "In my mind someone would be crazy to make a donation to be on the IEDC board, which is unpaid." Previous IEDC board members did not, at least under their own names, give in nearly comparable sums to the two previous governors. Even if this isn't quid pro quo, it's an example worth noting of the power of money and relationships at this level, said Laura Wilson, politics professor at the University of Indianapolis. It makes sense to her, given the politicization of this agency, that Braun would want to choose some supporters. "The IEDC's been a political football for over 12 months," she said. "It's not just an innocuous small board on the periphery that no one's ever heard of." Even if this seems like the norm, that doesn't make the norm ethically sound, Schwab said. It not only gives the appearance that this administration may reward people who give during campaign season, he said, but raises the question of whether the board's decisions will be in the public's interest or Braun's. "Anybody who might challenge Braun's views on economic development," he said, "we get rid of them so we can have a bunch of 'yes' people."
Chicago Tribune
24-06-2025
- Business
- Chicago Tribune
Critical of economic agency, Braun removes 9 board members
Gov. Mike Braun dumped nine members off the Indiana Economic Development Corp. on Monday and replaced them with new members, including two men from Porter County — businessman Gus Olympidis and union officer David Fagan, of Portage. Olympidis, a past member of the board of directors of the Northwest Indiana Regional Development Authority, owns a network of Family Express convenience stores/gas stations. Fagan is financial secretary for the International Union of Operating Engineers Local 150 and is a commissioner on the board of directors at the Ports of Indiana. Braun didn't retain any of the previous members in the quasi-state agency that he's heaped criticism on for its lack of transparency. Among those removed were Newton County's Fair Oaks Farms cofounder Sue McCloskey. 'I spent my life building a business here in Indiana, and I know that having an entrepreneurial, high-energy team in your corner makes all the difference,' Braun said in a release. As governor, Braun chairs the IEDC board. One of Braun's new appointments, John Gregg, is a former Democratic gubernatorial candidate and former Indiana House Speaker. Improving transparency on the IEDC board was one of Braun's campaign pledges last year. In April, Braun ordered a forensic audit of the IEDC's private fundraising foundation. Braun also signed an executive order seeking financial disclosures from the foundation. The foundation, which has been exempt from IRS disclosure filings since 2012, funded many of former Gov. Eric Holcomb's overseas trips. It's declined to provide information on money spent on the trips, saying no public money was used. Some foundation donors have also not been disclosed. The foundation's website, however, lists five 'contributors,' including the Northern Indiana Public Service Co. Like many states, Indiana had a traditional commerce department until 2005. Former Gov. Mitch Daniels established the IEDC with legislation stating it wasn't a state agency. The IEDC board was allowed to create the foundation. Other new board members include, George Thomas, a Granger entrepreneur of the companies Adorn, Duo-Form and more; Billie Dragoo, of Indianapolis, RepuCare founder and CEO; Greg Gibson, of Terre Haute, a commercial real estate, food service, and waste industry entrepreneur; Richard Waterfield, Waterfield Enterprises and Asset Management chairman; Runnebohm Construction vice president Chris King of Shelbyville; and Indiana State Department of Agriculture leader and farmer Don Lamb.
Indianapolis Star
23-06-2025
- Business
- Indianapolis Star
Braun overhauls IEDC board, appoints well-known Democrat, over displeasure with state agency
Indiana Gov. Mike Braun has completely overhauled the leadership of the state's economic development arm, the latest of several moves that signal Braun is departing from his predecessors in the operation of the Indiana Economic Development Corp. Braun announced June 23 that he appointed nine new members to the IEDC's board, including entrepreneurs, business owners, a union representative, and even a Democrat: former gubernatorial candidate John Gregg. None of the prior members were retained. 'I spent my life building a business here in Indiana, and I know that having an entrepreneurial, high-energy team in your corner makes all the difference," Braun said in a statement. Braun said "each of them knows the importance of growing wages and creating job opportunities for Hoosiers because they've done it in their own communities." Braun told reporters to expect a full overhaul of the board, which oversees how millions of dollars worth of economic development incentives are doled out. The quasi-state agency has been criticized in the past by both Republicans and Democrats for not operating with enough transparency in its dealings. "I think that board got to be maybe not as active as it should have been and I've got a lot of people interested in it," Braun said last week. The former board members include Penske Entertainment Corp. president Mark D. Miles, executive chairman of Lake City Bank Michael Kubacki and Fair Oaks Farms cofounder Sue McCloskey, among others. Braun thanked prior members for their service, which ended with the appointment of new members, in a statement sent June 23. The new members to the IEDC board include: Gregg, who is also the former Indiana House Speaker; Family Express convenience stores owner Gus Olympidis of Valparaiso; George Thomas, a Granger entrepreneur of the companies Adorn, Duo-Form and more; RepuCare founder and CEO Billie Dragoo of Indianapolis; International Union of Operating Engineers Local 150 member David Fagan; commercial real estate and waste industry entrepreneur Greg Gibson; Waterfield Enterprises and Asset Management chairman Richard Waterfield; Runnebohm Construction vice president Chris King of Shelbyville; and Indiana State Department of Agriculture leader Don Lamb. This story will be updated.
