This Insight highlights an Indiana Utility Regulatory Commission (IURC) docket (46322) in which Amazon and a regulated utility, Northern Indiana Public Service (NIPSCO), are speedily developing generation to meet Amazon’s data center-related demand. This docket is unique in that:
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It offers a template for how a utility, a tech company, and a state commission can remove impediments to quickly serving megaload customers and insulate other customers from risks associated with that service.
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The IURC has willingly waived some of its jurisdictional authority.
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The 2,400 MW in Amazon data center capacity is among the largest contracted capacity commitments between a utility and a data-center customer in the nation.
Background
In January 2025, a NIPSCO Holdings subsidiary, NIPSCO GenCo, petitioned the IURC to waive some of its jurisdictional authority over GenCo's proposed generating facilities. Specifically, GenCo asserted it did not require a Certificate of Public Convenience and Necessity from the IURC because GenCo would have no obligation to serve retail customers. Put another way, GenCo would not be recovering costs from retail customers through regulated rates.
Rather, GenCo would provide energy exclusively to NIPSCO, an affiliated company under NIPSCO Holdings. GenCo would exist to allow NIPSCO to serve data centers under special contracts: once a special contract is executed between a data center and NIPSCO, then GenCo would enter into a power purchase agreement (PPA) with the latter. NIPSCO would be GenCo’s only customer. Further, GenCo would be distinct from an independent power producer because the generation assets GenCo proposes to build would be grounded exclusively in NIPSCO’s integrated resource plan.
In September 2025, the IURC approved GenCo’s proposal. In November 2025, GenCo and NIPSCO requested approval for:
GenCo would not be a signatory to the special contract, and Amazon Data Services would not be a signatory to the PPA. In addition to IURC approval, this arrangement would also require FERC approval of an inter-affiliate PPA.
Details
In the pending docket, NIPSCO seeks approval for a 15-year special contract to provide service to Amazon Data Services beginning January 2027, with Amazon Data Services' load requirements increasing periodically through the end of 2032, when load is expected to reach up to 2,400 MW. Amazon Data Services has a one‐time opportunity to, by March 2029, reduce its total capacity by 1,200 MW.
In addition:
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There is a parent company guarantee from Amazon.
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Amazon Data Services is required to pay defined costs if it terminates its data center projects.
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GenCo will build two 1,300 MW combined-cycle gas units and a 400 MW, 4‐hour battery energy storage system. In aggregate, 3,000 MW of installed capacity will be constructed to ensure that NIPSCO has sufficient capacity plus a reserve margin to serve Amazon Data Services.
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Since GenCo is not authorized to own and operate transmission assets, NIPSCO would be making transmission investments, but these would be paid for by GenCo (at cost + a reasonable return).
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Amazon Data Services will pay "Shared System Charges" that NIPSCO will pass back on a semi-annual basis to NIPSCO’s existing ratepayers via a Shared System Credit.
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This is the primary compensation that existing NIPSCO customers will receive from Amazon Data Services for its 2,400 MW of load utilization, which could put massive strain on the shared system that has been built and maintained by existing customers. The Shared System Charges, according to NIPSCO, are the result of an agreement between it and Amazon Data Services and are “intended to account for the incidental use of any of existing infrastructure, which is not necessarily limited to transmission and distribution assets.”
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There would be revenue recognition for 100% of construction work in progress (CWIP). CWIP recovery in rates alleviates pressures on cash flow during construction and reduces the amount that must be borrowed. CWIP ratemaking is, in part, a timing mechanism. It does not change the amount of direct construction costs, but it does eliminate the compounding of carrying costs. In this manner, it reduces the total asset cost, which is beneficial to Amazon.
Conclusion
The arrangement approved by the IURC last September allows GenCo to secure the capital to build and operate the generation assets necessary for NIPSCO to serve Amazon Data Services while separating these investments from the rates that NIPSCO’s current customers pay. This is an exercise in “ringfencing” as the IURC stated in its September order: “...while the model’s effectiveness will depend on future special contracts and PPAs, it reflects a forward‐looking approach to risk mitigation.”
To put the magnitude of this arrangement in context, NIPSCO’s current peak load for non‐data center customers is forecast at 2,300 MW in 2028, and the current capacity of its entire electric generating fleet is 3,644 MW. Thus, the utility’s total electric load and total capacity will nearly double as a result of adding Amazon Data Services’ load and GenCo’s new generation assets. The economic impact on the region is also likely to be very significant, as Amazon asserted in a December 2025 technical conference that it will invest $15 billion to build the Indiana data centers, creating thousands of jobs. Similarly, GenCo asserts it will invest $7 billion to build its new generation, also creating jobs and increasing local tax revenues.
While the ultimate effectiveness of this approach remains to be seen, this docket is an example of how a utility and a commission can adapt to the desire of a megaload customer to build data centers as quickly as possible while endeavoring to protect the interests of existing customers.
This blog post is for informational purposes only. The information contained in this blog post is not legal, tax, or investment advice. FactSet does not endorse or recommend any investments and assumes no liability for any consequence relating directly or indirectly to any action or inaction taken based on the information contained in this article.
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