Group: Indiana Should Reject Vectren Plan for New Gas-Fired Plant

An Indiana consumer protection agency has told state regulators they should reject Vectren Corp.’s plan to build a new natural gas-fired power plant in the state. Vectren wants the plant to replace four of the utility’s retiring coal-fired units.

Indiana’s Office of Utility Consumer Counselor (OUCC) on August 13 said it completed a five-month legal and technical review of Vectren’s request. In a news release, the OUCC’s Bill Fine said, “Any electric utility that seeks to overhaul its generation fleet today must evaluate all possible options. It must also carefully examine the ways the options would impact its customers in terms of both money and electric reliability. In this case, Vectren has not evaluated all options or shown that it is proceeding in the most prudent manner.”

Evansville-based Vectren in a statement in response said it feels confident “that our generation plan is the best option for our electric customers in southwestern Indiana. The new natural gas plant will provide reliable, cleaner energy in addition to local jobs in Posey County.”

Vectren in February of this year announced plans for a new $900 million gas-fired plant in Posey County in the state’s southwestern corner. The new plant would be built at the site of the existing A.B. Brown Generating Station, a plant with two 265-MW coal-fired units, and two 88-MW gas-fired units. Vectren said those four units would be retired in 2023.

Vectren’s plan—what the utility calls its Smart Energy Future—filed with the Indiana Utility Regulatory Commission (IURC) proposed an additional 50 MW of solar power capacity, along with the new gas-fired plant. The utility also would close the 90-MW coal-fired Unit 2 (built in 1966) at its F.B. Culley Generating Station in Warrick County, and end its co-ownership of 150 MW of Unit 4 at the Warrick Generating Station, located downstream of Culley on the Ohio River near Newburgh, Indiana.

The changes would leave Vectren with just one operating coal-fired unit, the 270-MW Unit 3 at the Culley plant, which began operating in 1973. Vectren said it would spend $95 million to install emissions control technology on that unit.

The moves are aimed at slashing Vectren’s carbon dioxide emissions by 60% by 2024.

At the time of February’s application, Carl Chapman, the chairman, president, and CEO of Vectren, in a statement said, “The unfolding of Vectren’s Smart Energy Future plan illustrates how our company is transforming the way it produces and delivers power to become a next generation energy company. This decade-long generation portfolio transition will meet growing demand to provide cleaner energy for our region while maintaining the reliability our customers deserve and have come to expect.”

The OUCC in its statement Monday said Vectren did not fully evaluate options for extending operation of its coal units beyond 2023. It said the utility should look at switching the coal-fired units at A.B. Brown to natural gas, which it said would cost “far less” than construction of a new natural gas-fired plant.

The consumer agency also said its review of Vectren’s request showed the utility should explore “Refueling one A.B. Brown unit [with natural gas] and building a smaller natural gas plant” at the site, what it called “an alternative worth exploring.” The OUCC also said “Vectren’s customer demand for electricity over the last five years has gotten smaller, not larger. In addition, Vectren currently has a surplus of produced electricity even after serving its peak load.”

Vectren serves about 145,000 customers in southwestern Indiana.

The consumer protection group said the utility’s proposal “would not diversify Vectren’s generation fuel mix. By closing four coal-fired units at three different locations, and consolidating their power production at a single facility, the utility would be subjecting its customers to additional risks, such as potential future increases in natural gas prices.”

The OUCC said it had filed written comments from more than 600 consumers regarding Vectren’s request, and said “the vast majority of consumer comments oppose the utility’s proposal for various reasons, including the utility’s current rates, environmental concerns, and potential economic harm to the state’s coal industry.”

Coal is an important part of the economy of the region. The Indiana Department of Natural Resources says the state produces on average 32 million to 35 million tons of coal each year, ranking eighth among states in terms of annual production, according to the U.S. Energy Information Administration (EIA). The Indiana Coal Council says most of that coal comes from 24 coal-mining operations in 10 southwestern Indiana counties.

Indiana receives about 70% of its electricity from coal-fired generation, according to the EIA, although that level has dropped from as high as 98% in 1998. Coal supporters in the state, including Alliance Resource Partners, Sunrise Coal, the Indiana Coal Council, and the Evansville-Western Railway, have asked the IURC to reject Vectren’s plan for the new gas plant.

Vectren has until September 10 to file rebuttal testimony to the IURC, which is expected to issue an order on the case next year.

Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).