Vectren wins approval for coal plant emissions upgrades

The Vectren Energy Delivery of Indiana unit of Vectren Corp. (NYSE: VVC) was approved Jan. 28 by the Indiana Utility Regulatory Commission (IURC) to upgrade existing emissions control equipment on its coal-fired generation units in southwestern Indiana.

These enhancements are being made in order to comply with more recent U.S. Environmental Protection Agency (EPA) mandates, including the Mercury and Air Toxics Standards (MATS). In response to these federal mandates, Vectren plans to spend $70m to $90m hrough 2016. The IURC also granted Vectren’s request to defer recovery of these federally mandated costs, which will likely be until 2020.

“While existing Indiana legislation provides for immediate cost recovery of federally mandated projects, we are pleased that our request to defer cost recovery was granted, which will ensure these investments result in no near-term customer bill impacts,” said Carl Chapman, Vectren’s chairman, president and CEO, in a Jan. 28 statement. “With today’s ruling, we can avoid an immediate impact to our customers’ electric bills yet still fulfill our obligation to comply with these additional, federally imposed environmental requirements.”

As a result of these investments, Vectren will enhance the emissions removal capabilities of its pollution control equipment. The two primary pollutants addressed will be mercury and sulfur trioxide (SO3). Approximately half of the planned investments are going toward mercury-related compliance: Vectren will upgrade its equipment, primarily its scrubbers, to ensure more mercury is captured in air emissions. Mercury capture in plant wastewater discharge areas has also been enhanced. The remaining investments will address EPA’s concerns with SO3 emissions through an SO3 mitigation system.

“Other utilities are spending hundreds of millions of dollars; shutting down aging, uncontrolled plants; or building new plants to ensure they can comply with these additional federal mandates by 2016,” added Chapman. “The new environmental investments we are making to comply with these additional EPA mandates are proportionately less than many other projects announced by neighboring utilities due to the fact, over the last decade, we have already installed the majority of the required emissions control equipment.”

Vectren has nearly 1,300 MW of generating capacity, of which 1,000 MW is coal-fired. Vectren has two coal-fired power plants: F.B. Culley in Warrick County and A.B. Brown in Posey County. The utility shares ownership of Warrick Unit 4, a 300-MW coal unit, with Alcoa, which operates the rest of the warrick power plant for its on-site aluminum operations.

Noted the commission in its Jan. 28 order: “Vectren submitted evidence showing that failure to comply with the federally mandated requirements would require Vectren to retire Brown, Culley, and Warrick, which make up approximately 85% of its baseload generation, in 2015. The Mandated Projects will enable the continued operation of the facilities for at least the next ten years and continued service to Vectren’s customers.

“The evidence presented by Vectren shows that failure to complete the Mandated Projects could require the premature retirement of the related generation facilities, which would result in significant reliability, market, and regulatory risk. MISO is projecting capacity shortfalls as early as 2016 and constructing a new gas generation facility would take at least four years. Without the ability to obtain voltage support from distant generators to serve its territory, Vectren would be forced to purchase capacity in an already constrained market. All of these factors point to concerns that retirement of Brown and Culley would expose Vectren’s customers to significant reliability risks. Based on the evidence presented, we find that the Mandated Projects are reasonable and necessary.” 

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.