The state's top environmental regulator has told NIPSCO it will be subject to the U.S. EPA's most stringent environmental standards if it wants to reopen the Dean H. Mitchell power plant in Gary.

The utility would have to obtain what is called a "new source" permit, according to a July 12 letter from IDEM Commissioner Thomas Easterly to NiSource Inc., NIPSCO's parent company. It has been estimated that could cost the utility up to $600 million.

The letter from the Indiana Department of Environmental Management makes it "abundantly clear" the agency considers the plant "closed for good," said NIPSCO spokeswoman Colleen Reilly. Despite that, the utility continues to examine all options for the plant, she said.

The fate of the mothballed plant has been the subject of regular meetings at NIPSCO headquarters in Merrillville, where those who want it reopened and those who want it permanently closed have weighed in.

"We have had a long-term position that reopening Mitchell makes good sense for Northwest Indiana because of the exceptionally big dollars this is costing all of us," said Jack Wickes, a lawyer representing Mittal Steel and Praxair.

Steelmakers and others contend keeping Mitchell closed costs northern Indiana ratepayers about $80 million per year, because the utility needs to buy higher-priced power to make up for it.

La Porte County will be asking IDEM to reconsider its conclusions, due to what it sees as "fundamental errors" in its July 12 letter, according to County Attorney Shaw Friedman.

A report prepared in a previous case showed that three of Mitchell's four generating units could be restarted without a new source permit, Friedman said.

The city of Gary wants the plant demolished to make way for lakefront development and expansion of the Gary/Chicago International Airport. In 2004, the city and NIPSCO struck a deal paving the way for taking the plant down, but that deal later was rejected by regulators.

The 485-megawatt power plant was mothballed in early 2002. The utility said declining electric demand and the high cost of maintaining the 52-year-old plant were behind the move.

U.S. Rep. Pete Visclosky, D-Ind., who has sent representatives to the meetings at NIPSCO, has told the state's top utility regulator that the plant should be demolished.

"The station's location ... represents a major hurdle to the necessary expansion of the airport," Visclosky wrote in a June 15 letter to Indiana Utility Regulatory Commission Chairman David Lott Hardy.

Environmental groups also oppose reopening the plant because it would add to pollution, particularly when it comes to mercury and other contaminants.

"They have to factor in the environmental and potential human health costs as part of the costs of reopening Mitchell," said Lee Botts, a Gary environmentalist and founder of the Great Lakes Alliance.