AEP alters Rockport plan, will shut coal at all of Tanners Creek

Indiana Michigan Power (I&M) has revamped its air control plans and now intends to install cheaper dry sorbent injection (DSI) systems to control SO2 on both coal units at its Rockport power plant, instead of much more expensive flue gas desulfurization on just one of those units.

I&M, a subsidiary of American Electric Power (NYSE: AEP), said Feb. 25 that has reached an agreement that will allow to utilize a different compliance strategy at Rockport, located in Spencer County, Ind. This compliance strategy will substantially reduce the cost for I&M to comply with U.S. Environmental Protection Agency requirements, resulting in significant savings to I&M’s customers.

Prior to this agreement, I&M had filed with the Indiana Utility Regulatory Commission requesting approval for a dry scrubber on one of the two 1,300-MW Rockport units in order to satisfy EPA requirements. Estimates for the single dry scrubber project were $1.4bn. Given this high cost, I&M continued to investigate alternatives and ultimately identified DSI as a lower-cost option.

I&M entered into negotiations with the U.S. EPA, several northeastern states, and various environmental groups to clarify the type of environmental controls required at Rockport. Under the agreement reached, I&M will install DSI on both 1,300-MW Rockport units. The cost of installing DSI is less than one-fifth of the cost of the dry scrubber project on a single unit and will meet all environmental regulations.

In at least one respect, this deal may be bad news for the coal industry. I&M didn’t say this, but DSI is generally viewed as a short-term fix that is relatively inexpensive to install, but also fairly expensive to operate due to sorbent costs as compared to FGD. So DSI is viewed as something that is installed on a unit with a relatively short expected lifespan, while the more expensive FGD gets installed on units that a power generator thinks will last for many years to come. Also, the relatively new 1,300-MW units at Rockport and several other AEP plants in the East are considered the pride of AEP’s coal fleet, so any lack of confidence in the future of the Rockport units is of particular concern to the coal industry.

“This is a great day for I&M, our customers, and the environment, as we will achieve cleaner air at a lower overall cost,” said Paul Chodak, I&M’s president. “Investments driven by changes in the utility industry will require increases in our rates, but our strategy is to increase rates as little as possible in order to maintain our lower rates and the competitive advantage that our customers enjoy today.”

Also as part of the agreement, I&M will install an additional 200 MW of wind energy, provide additional mitigation funding to the states, and create a fund to support other small scale renewable projects. I&M will also refuel or retire the coal-fired Tanners Creek Unit 4 and accept more restrictive system-wide emission caps on the AEP units subject to the consent decree. Further emission reductions will be required at Rockport in the next decade.

The revised Tanners Creek Unit 4 plan is also bad news for the coal industry, since this 500-MW unit had previously been slotted for DSI and activated carbon injection air control installations. The coal-fired Tanners Creek Units 1-3, with 495 MW in total, are already due to be shut in 2015.

The new agreement is subject to review and approval by a federal court, which is expected to occur within the next few months. The existing filing with Indiana state regulators requesting approval for installation of a dry scrubber on one unit is being withdrawn and will eventually be replaced with filings requesting approval for DSI on both units.

Details of these coal plants are:

  • At Rockport, SO2 emissions are currently limited by the New Source Performance Standard to 1.2 lbs of SO2/MMBtu. Compliance with the emission limit is achieved by using a blend consisting primarily of low-sulfur sub-bituminous coal. The coal supply for Rockport currently uses a blend of Powder River Basin (PRB) coal from Wyoming and low-sulfur bituminous coal from Colorado and eastern U.S. sources.
  • Tanners Creek, which has three units (Units 1-3) targeted for 2015 shutdown, is located in Dearborn County, Ind., and consists of four coal units with a total nominal capacity of 995 MW. As a result of the different air emissions standards, as well as differences in the boiler designs, the coal supplies for Tanners Creek 1-3 (TC 1-3) and Tanners Creek 4 (TC 4) vary. Units 1-3 are limited to emissions of 1.2 lbs SO2/MMBtu while Unit 4 is held to a 1.2% sulfur standard on an annual basis. The fuel needs of TC 1-3 are being met by bituminous coals from Colorado and eastern sources. TC 4, similar to Rockport, uses a blend of PRB coal from Wyoming and high-sulfur bituminous coal from eastern sources.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.