Indianapolis Power defends gas-heavy slate of new projects

Despite criticisms from other parties, the Indianapolis Power & Light plan to shut older, smaller coal units and replace them with new gas-fired capacity is the best alternative for ratepayers, said utility officials.

Several IPL officials provided Oct. 3 rebuttal testimony to the Indiana Utility Regulatory Commission (IURC) in a certificate of need case started in April of this year. Among them was Herman Schkabla, IPL’s Director of Resource Planning.

IPL wants to build a new gas-fired combined cycle gas turbine (CCGT) facility at its Eagle Valley power plant. In its April 29 application, the utility said this new CCGT capacity, with a range of 550 MW to 725 MW in size, would help it meet a forecasted need for additional generating capacity of approximately 744 MW by 2016 growing to 797 MW by 2020.

In the April 29 application, IPL requested that the commission approve various things, including:

  • grant to IPL approval to construct a 550-725 MW CCGT at IPL’s Eagle Valley Generating Station located in Morgan County Ind.;

  • grant to IPL a CPCN to convert the coal-fired Units 5 and 6 at the Harding Street Generation Station located in Marion County, Ind., to natural gas;

  • approve the construction of transmission, pipeline and other facilities associated with the Eagle Valley CCGT and Harding Street 5 and 6 refueling; and

  • grant to IPL a necessity certificate to engage in the transportation of gas within Indiana for use by IPL in the operation of the CCGT.

Given the extreme uncertainty regarding the regional capacity situation in the 2017-2020 time frame, delaying the CCGT addition to 2020 and relying on third party capacity, as suggested in this case by the Citizens Action Coalition (CAC), is not in the best interests of IPL’s customers, Schkabla wrote in his Oct. 3 rembuttal.

The company has evaluated the replacement generation projects against other reasonable generation alternatives, including sensitivities, and also included demand side management (DSM) levels that are consistent with IURC energy efficiency targets. The analysis concludes that the projects are the least cost reliable resource alternatives to meet our customers’ future resource needs.

In summary, wrote Schkabla:

  • The resource planning and selection process used by IPL adequately and reasonably considered and weighed alternatives to the proposed replacement projects. The CAC’s conclusion that the company’s analysis in this proceeding does not reflect reasonable planning practices is unfounded.

  • The company has clearly established the need for the replacement capacity projects, with a projected capacity deficit of 759 MW in 2017 without the projects. CAC’s estimation of less than 300 MW of need is based on flawed analysis using inconsistent load and resource data.

  • Differences in data assumptions for different phases of analyses presented in thisproceeding by IPL are not “inconsistencies,” but simply reflect the ongoing nature of the resource planning process and the company updating its analysis as it moved forward to determine the reasonable least cost option for customers.

Utility nears final air approvals for Harding Street and Eagle Valley projects

Angelique Oliger, a Senior Environmental Coordinator at IPL, said in Oct. 3 testimony that an air permit for construction and operation of Harding Street Units 5 and 6 on natural gas was issued by the Indiana Department of Environmental Management on Sept. 20. This operating permit will undergo an additional 15-day review period with the U.S. Environmental Protection Agency, which will end on Oct. 8. The air permits for construction and operation of the Eagle Valley CCGT were published for public comment on Sept. 3, with the comment period to end of Oct. 3.

Under the draft air permit, the Eagle Valley CCGT would include two nominal 192.5 MW combustion turbines with steam waste heat recovery to drive a nominal 271 MW steam turbine generator. The new facility would have a total nominal capacity of 656 MW (net). The exclusive fuel for the new combustion turbines will be natural gas.

Kevin Crawford, employed by IPL as Senior Vice President, Power Supply, said in supporting testimony for the April 29 application that the new CCGT will help compensate for the shutdown or refueling of up to six older coal units and five associated oil/diesel-fired units. In addition to new air emissions rules, unit obsolescence and falling natural gas and market prices have contributed to the decision to retire these units. In total, these 11 units comprise 607 MW of capacity (Midwest ISO installed capability rating). The five associated units are oil-fired boilers and one small diesel generator.

Each of these six targeted coal-fired units is covered by an extension under the Mercury and Air Toxics Standards (MATS) granted by the Indiana Department of Environmental Management which allows them to operate until April 2016 at which point they must be shut down or retrofitted to burn another fuel. IPL determined that it was not economical to retrofit these smaller units.

The 200 MW represented by the Harding Street 5 and 6 refueling project in 2016 and the 683 MW represented by the Eagle Valley CCGT in 2017 are needed to meet the future needs of IPL’s retail customers. The six targeted coal-fired units (Eagle Valley Units 3-6 and Harding Street Units 5-6, called the “Small Six”) are smaller than the to-survive Big Five coal units and are not equipped with flue gas desulfurization or selective catalytic reduction.

IPL is a unit of AES Corp. (NYSE: AES).

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.