Indiana Michigan Power (I&M) on Aug. 12 filed a proposed order with the Indiana Utility Regulatory Commission that covers a settlement it worked out with the Indiana Office of Utility Consumer Counselor (OUCC) and the I&M Industrial Group for new air emissions control projects.
On April 11, this American Electric Power (NYSE: AEP) subsidiary filed its verified petition with the commission initiating this cause. The application, which resulted from a revised air Consent Decree with the U.S. Environmental Protection Agency, in part calls for new air controls on the 2,600-MW Rockport coal plant to meet commitments in the decree and also needs under the newer Mercury and Air Toxics Standards (MATS).
The parties filed a proposed settlement with the commission in July, with that settlement getting an Aug. 7 hearing, and now a proposed order has been filed with the commission that it may sign as it exists. The settlement is mostly about ratemaking treatment and doesn’t fundamentally change the overall plan.
I&M proposes to install and use dry-sorbent injection technology (DSI) and related facilities and equipment improvements on Rockport Units 1 and 2. The Rockport project consists of advanced technologies designed to reduce acid gases such as hydrochloric acid (HCl) and SO2 emissions associated with the combustion of coal at Rockport.
I&M President and Chief Operating Officer Paul Chodak III explained that the Rockport plant, which consists of two nominally-rated 1,300-MW coal-fired units, is a cornerstone of I&M’s generation fleet that provides low cost generation to I&M’s customers. Unit 1 was placed in service in 1984 and Unit 2 in 1989, which is relatively young for coal-fired generation.
Chodak stated in testimony that the Rockport project will allow the plant to comply with the MATS rule by April 16, 2015. Chodak testified that the Rockport project will not include a change in the fuel source used at the Rockport plant because the required emission reductions can only be obtained through the continued use of Powder River Basin (PRB) coal from Wyoming. He stated that I&M will therefore continue to transport coal from the PRB to the Cook Coal terminal in Metropolis, Ill., for loading onto barges and delivery via the Ohio River to the Rockport plant.
This deal replaced old plan for FGD at Rockport
Chodak discussed the Consent Decree which AEP entered into to resolve allegations against AEP and its affiliates (including I&M) related to the New Source Review (NSR) provisions of the Clean Air Act (CAA). The decree took effect in December 2007 and in pertinent part included an agreement to retrofit Selective Catalytic Reduction (SCR) and Flue Gas Desulfurization (FGD) on Rockport Unit 1 by no later than Dec. 31, 2017, and retrofit SCR and FGD on Rockport Unit 2 by no later than Dec. 31, 2019.
Chodak explained that since entering into the Consent Decree, I&M has continued to evaluate the most cost-effective means to achieve compliance with the decree and other pending and anticipated regulations. He noted that the estimated cost of the original compliance plan was approximately $1.4bn.
Chodak testified that I&M’s investigation included the testing of DSI technology at one of the Rockport units to determine if it would allow I&M to meet existing environmental obligations in a more cost-effective manner. He said I&M determined that reasonable emission reductions were technologically feasible with DSI and legally permissible under the applicable environmental regulations, including the Consent Decree. Consequently, AEP and I&M approached the parties to the Consent Decree to confidentially discuss this compliance alternative. The parties engaged in negotiations, and ultimately agreed on modifications to the Consent Decree that resolved any question about the legal ability to use DSI as an environmental compliance measure.
Chodak added that I&M will secure an additional 200 MW of wind energy, provide additional mitigation funding to the states, and create a fund to support other energy efficiency and small scale renewable projects. He stated I&M will also refuel or retire the coal-fired Tanners Creek Unit 4 by June 1, 2015. Chodak also explained that AEP has accepted more restrictive system-wide emission caps on the AEP units subject to the Consent Decree. He testified that further emission reductions will be required at Rockport with the installation of SCR control equipment by the end of 2017 on one unit and by the end of 2019 on the other.
Chodak testified that the company’s efforts will allow I&M to lower the cost of complying with environmental regulations, noting the significant difference to I&M’s customers between I&M investing $1.4bn in the original Rockport project and investing $240m in the current version of the Rockport project.
Robert Walton, American Electric Power Service Corp. (AEPSC) Managing Director Projects, described in detail the DSI technology and AEP’s experience with DSI technology, provided an overview of the equipment that will be installed on each unit as part of the DSI system, and discussed the additional equipment that will be installed on the units, including improvements to the existing Activated Carbon Injection (ACI) system, electrostatic precipitators (ESPs) and ash handing systems, and expansion of the Ovation distributed controls system (DCS) network and of the existing Type II landfill.