When Indianapolis Power & Light Co. announced plans last summer to stop burning coal at its huge Harding Street power plant, it won praise from neighbors, consumer groups and environmentalists.

But now, it has an unexpected fight on its hands from a small railroad that hauls millions of tons of coal a year to the plant.

The Indiana Rail Road Company, which shuttles coal and other goods on 500 miles of track in Indiana and Illinois, stands to lose a huge chunk of its business when IPL stops burning coal at the plant next year.

IPL is the railroad’s largest customer. Last year, the railroad hauled more than 1 million tons of coal to the Harding Street plant.

But that business is now up in the air. IPL wants to convert the plant from coal-fired to natural gas — a decision it says is the best option for helping it meet clean-air regulations. Coal is widely seen as a dirty fuel that requires expensive technology to reduce harmful emissions.

The railroad says such a move would put a big dent its business. “This conversion would have a substantial, adverse financial impact [on us],” it wrote in a recent filing to the Indiana Utility Regulatory Commission.

It’s unclear how hard the railroad will fight the plant’s conversion from coal to natural gas. But it is already making its opening moves. The company recently asked state regulators to designate it as an intervenor in the matter. Regulators granted the request, a move that will give the railroad’s lawyers the right to cross-examine IPL and other parties during proceedings, and to receive reams of information about the conversion process.

The railroad, based in Indianapolis, declined to say whether it ultimately plans to try to block the conversion, or otherwise force the plant to keep burning coal.

“I can’t offer a statement on behalf of the company since the matter is ongoing. I’m sorry,” company spokesman Eric Powell said in an email.

IPL, in response, said it “values the feedback of all of our stakeholders,” but said it decided to convert the plant to natural gas “after much analysis.”

The ongoing discussion concerns the largest unit at the plant, which last year burned nearly 2 million tons of coal, according to SNL Financial.

Last year, the IURC approved a similar plan for IPL to convert two smaller units at the Harding Street power plant from coal to natural gas.

Altogether, the conversion would reduce IPL’s dependent on coal from 79 percent in 2007 to 44 percent in 2017. The company also has coal-burning plants in Martinsville and Petersburg.

Some environmental and consumer groups are keeping an eye on the Harding Street situation but are still trying to figure out the railroad company’s aims.

“We are hopeful that the intervention of the Indiana Rail Road does not prevent IPL from following through with their commitment to stop burning coal in Marion County,” said Kerwin Olson, executive director of Citizens Action Coalition of Indiana.

Another wild card is that one of the railroad’s top executives is James Merritt, who is also a powerful state senator from Indianapolis and chair of the Senate Utility Committee.

The railroad company said Merritt has “removed himself from the discussion” and will have no role in the Harding Street power plant matter.

In a recent interview, Merritt pledged to remain far from the discussion. He said he did not know what the company’s plan involved in intervening in the matter.

“They’ve kept me purposely in the dark,” said Merritt, who is the railroad’s vice president of community engagement. “I will have nothing to do with that whatsoever.”

Even so, the Sierra Club said it is concerned that the chairman of the Senate Utility Committee has a financial stake in the matter, through his employer.

“When the Indiana Rail Road intervenes in a case where IPL seeks to stop burning coal in Indianapolis, it puts the commissioners and staff in an untenable position of being judge and jury over the employer of a senator who has great power over their activities,” said Jodi Perras, an official with the Sierra Club’s Indiana Beyond Coal movement.

Call Star reporter John Russell at (317) 444-6283 and follow him on Twitter @johnrussell99.

Click HERE to read their petition to intervene:

44540 IPL CPCN Indiana RR Corp Petition to Intervene_filed 2015-03-15