The Indiana Michigan Power unit of American Electric Power (NYSE: AEP) won a May 13 approval from the Indiana Utility Regulatory Commission for a selective catalytic reduction (SCR) installation for NOx control on Unit 1 of the coal-fired Rockport power plant.
For various reasons, including a clean-air consent decree with the federal government, the utility needs to clean up air emissions, including through an impending retirement of its coal-fired Tanners Creek power plant. That will leave it with increased reliance on the two-unit, 2,600-MW Rockport plant.
Indiana Michigan Power (I&M) must retrofit Unit 1 at Rockport with SCR technology by Dec. 31, 2017, in order to be able to continue operation of this unit. Rockport Unit 1 was placed in service in 1984.
I&M jointly owns the two units at the plant with AEP Generating Co. (AEG), which is another subsidiary of AEP. I&M owns 50% of Rockport Unit 1. AEG sells 70% of its 50% share to I&M under a unit power agreement (UPA) and the remaining 30% is sold to Kentucky Power, another AEP subsidiary. I&M ultimately owns or purchases 85% of the capacity and energy of the Rockport plant, which amounts to 2,210 MW of the 2,600 MW. For 2014, that 2,210 MW represents approximately 41% of I&M’s total generating capacity.
- Paul Chodak III, I&M President and COO, provided during this case an overview of I&M’s request, described the reasons why installing a SCR on Rockport Unit 1 makes sense for I&M and its customers and explained how the installation fits within a long-term strategy to comply with federally mandated requirements and environmental regulations. Chodak testified that the SCR is a cost-effective means of maintaining the availability of relatively low cost, coal-fired generation that complies with environmental regulations, allows the plant to continue to serve customer needs, provide jobs and taxes to the community and does so in a manner that mitigates the rate impact on customers.
- John C. Hendricks, Director Air Quality Services within the Environmental Services Division of American Electric Power Service Corp. (AEPSC) discussed the regulation of NOx emissions, the consent decree, future environmental regulations including those that could further necessitate the need for SCR technology on Rockport Unit 1, and the permits necessary to support the proposed retrofit.
- Scott C. Weaver, AEPSC Managing Director-Resource Planning and Operational Analysis, described his evaluation of the cost and feasibility of an option to retire and replace Rockport Unit 1. He also described the modeling process undertaken to evaluate the relative economics of the alternative Rockport Unit 1 disposition options, including a discussion around the major input parameters and key drivers. Chief among them the anticipated long-term price of natural gas and energy as well as CO2 that could impact the Rockport Unit 1 dispatch priority. He discussed the results of these economic modeling analyses and the determination that a decision in the near-term to retrofit Rockport Unit 1 by Dec. 31, 2017, with SCR technology and associated equipment for the reduction of NOx would further a long-term course of action around this unit that could ultimately save I&M and its customers more than $800 million versus retirement/replacement alternatives.
The proposed SCR project solution effectively preserves an option for I&M and its customers to consider, in the future, additional possible retrofitting of Rockport Unit 1 with dry flue gas desulfurization (FGD) technology, as set forth under the modified consent decree.
The cost of the SCR project in total is estimated to be $234 million, excluding allowance for funds used during construction (AFUDC). This cost estimate includes the installation of the SCR and other associated upgrades to existing plant equipment as well as the AEP allocation cost for support of the SCR project.
The existing activated carbon injection system and the Dry Sorbent Injection (DSI) system currently being constructed will be used with the SCR.
The commission noted how its approval decision is not based on this power plant using Indiana coal (it actually uses Powder River Basin coal from Wyoming). “Rockport Unit 1 does not bum Indiana coal and the evidence shows the SCR Project is economically justified. The provisions of the state environmental statutes providing favorable regulatory treatment to projects using Indiana or Illinois Basin coal have been held to be an unconstitutional interference with interstate commerce, but severable from the rest of the statutes which remain valid.”