What Northwest Indiana’s Power Outages Reveal About the Next Economy

I’ve been following the reporting on the power outages in Northwest Indiana closely over the past week.

Partly because Gary is my hometown. Partly because I spend a lot of time thinking about how investment and infrastructure shape cities. But also because I have been struck by how quickly a complicated infrastructure failure can be interpreted through familiar questions about race, disinvestment and who gets left behind.

Thousands of people have spent days without electricity. Families have lost food. Businesses have lost revenue. People have been dealing with damaged homes, fallen trees and the basic difficulty of navigating everyday life without power.

When your refrigerator has been without electricity for days and you are throwing away groceries you may not be able to easily replace, you are not thinking about data center policy or utility regulation.

When the gas station you rely on cannot pump fuel because it does not have power, but you still have to figure out how to get to work, you are not thinking about gigawatts of new electricity demand.

Those costs are especially significant right now. In the Midwest, grocery prices were 2.2 percent higher in July than a year earlier, gasoline prices were 23.1 percent higher, and electricity prices were up 8.1 percent.

The financial consequences of an extended outage do not necessarily end when the lights come back on either. Spoiled food has to be replaced. A missed work shift can mean lost wages. Hotel rooms, restaurant meals, transportation and portable generators can turn a power outage into a significant unexpected household expense very quickly.

Those immediate consequences matter on their own. The policy questions I am interested in do not replace them. They begin with them.

As the outage stretched from hours into days, and now more than a week in parts of Northwest Indiana, another question is emerging: Why are these communities still without power?

It is an understandable question. Gary and Hammond are two of the largest cities in Lake County. Both are communities where race, disinvestment and uneven patterns of public and private investment have long shaped how residents experience and interpret infrastructure. Given the history of racial and economic inequity in American infrastructure, it is reasonable to ask whether communities like these are receiving the same level of service and investment as others.

But asking the question is different from assuming the answer. In this case, there is a broader infrastructure story underneath the outage, one that raises important questions about how the region is preparing for its next phase of economic growth.

This was not a normal storm

What hit Northwest Indiana on August 11 was a derecho, a widespread, long-lived windstorm associated with fast-moving thunderstorms. The National Weather Service says the system produced widespread straight-line winds of 70 mph to more than 100 mph across northeastern Illinois and Northwest Indiana.

At Gary/Chicago International Airport, the recorded peak wind gust was 99 mph. The system brought destructive winds across Northwest Indiana, damaging trees, utility poles, power lines and other infrastructure in multiple communities.

At its peak, more than 300,000 NIPSCO customers were affected, with restoration work continuing across the region for more than a week. However, demographics alone cannot tell us why one neighborhood was restored before another.

The severity of the storm does not put the utility or the existing system beyond scrutiny either. A derecho can explain why so much infrastructure failed at once. It does not, by itself, tell us whether the system was adequately prepared, whether infrastructure investment has kept pace with the risks facing the region, or whether restoration could have happened differently.

The equity question may be bigger than restoration

What if the most important equity issue exposed by this outage is not simply who received power first, but the resilience and affordability of the system itself?

At the same time Northwest Indiana is recovering from this storm, something very different is happening to the region’s electricity system. Northern Indiana is becoming a major destination for data centers and artificial-intelligence infrastructure.

In 2024, Amazon announced an $11 billion AWS investment in St. Joseph County, described at the time as the largest capital investment in Indiana history. In November 2025, Amazon announced an additional $15 billion investment in Northern Indiana to build more data center campuses, adding approximately 2.4 gigawatts of capacity. In April, NiSource announced a long-term energy agreement with an Alphabet subsidiary to support another large-scale data center in Northern Indiana.

To be very clear: There is no evidence that data centers caused this outage, caused the storm damage, or were responsible for the pace of restoration. The connection is not causation. It is infrastructure planning.

Nothing illustrates this planning divergence better than what happened in Northwest Indiana during the storm. While entire neighborhoods sat in the dark, local data facilities experienced zero downtime, instantly pivoting to massive on-site diesel generators designed to run independently of the grid for weeks. The point is not that computing infrastructure should not have backup power; it is the stark reality of building hyper-resilient micro-systems for data, while leaving neighborhood distribution grids vulnerable to days of collapse.

The state is helping drive this next wave of demand

Indiana has made attracting data centers an explicit economic development strategy. Under the state’s Data Center Sales Tax Exemption, qualifying operators can receive exemptions from sales and use taxes on eligible equipment and the energy used to operate their facilities. For investments exceeding $750 million, the Indiana Economic Development Corporation can approve exemptions for up to 50 years.

There are legitimate reasons for Indiana to pursue these projects. They bring capital investment, construction activity, and permanent jobs while positioning the state to participate in the rapid buildout of cloud infrastructure. But tax incentives are policy choices, and every major public incentive raises a corresponding question: What is the public getting in return?

Electricity is not simply another production input. It is foundational infrastructure.

How NIPSCO says it plans to manage demand

NiSource, NIPSCO’s Merrillville-based parent company, has created a separate generation structure, GenCo, to serve major new data center loads. The company says this model is intended to insulate existing residential and business customers from the costs of serving those facilities, estimating $1.4 billion in savings for existing NIPSCO customers.

Whether those projected savings materialize is something worth watching closely. But protecting existing customers from the cost of serving data centers is not the same thing as ensuring existing communities benefit from the broader infrastructure transformation taking place around them.

There is a fundamental difference between cost allocation and public value.

The infrastructure bargain

I keep coming back to what I think of as the infrastructure bargain. When states offer significant public incentives to attract private investment that requires major new infrastructure, what should communities reasonably expect in return?

Jobs matter. Tax revenue matters. Investment matters. But so do reliability, resilience, and affordability.

If billions of dollars of generation and transmission infrastructure are going to be built to power the next generation of computing, there is an opportunity to ask whether that transformation can make the wider regional system stronger and more affordable for the communities already here.

There is a critical distinction between building infrastructure to accommodate new electricity demand and strengthening the infrastructure communities rely on every day. The generation and transmission capacity required to serve large data center loads is not necessarily the same infrastructure that determines how well a neighborhood withstands and recovers from severe weather.

While billions are being invested to serve those new loads, are we investing enough in the last-mile poles, substations, distribution lines, and vegetation management that neighborhoods depend on?

Infrastructure failure has a household balance sheet

We tend to talk about grid resilience in the language of engineering: megawatts, transmission, substations, hardening, redundancy.

But infrastructure failure has a household balance sheet too.

It is $200 or $300 worth of groceries thrown into a trash bag. It is missing a work shift because you cannot get there. It is driving farther to find a gas station with working pumps while fuel is already expensive. It is a family with little financial cushion absorbing another unexpected expense.

Those costs are not distributed equally. The same outage can be an inconvenience for one household and a severe financial setback for another. That is also infrastructure equity. Not only where infrastructure is built, but who benefits from it, who can afford it and who absorbs the cost when it fails.

Asking a different question

Northwest Indiana was hit by an extraordinary storm. Hundreds of thousands lost power. That does not make questions about equity less important. It changes the question.

The issue is not only who was restored first or which communities remained without power the longest. It is whether the infrastructure serving Northwest Indiana is strong, resilient, and affordable enough for the people and businesses already here.

That question becomes urgent as Indiana makes a decades-long bet on data centers and artificial intelligence. If Indiana is willing to make a public commitment to power the next economy, the infrastructure bargain should be clear: the communities already here must be stronger, more resilient, and better served because of it.