Indianapolis Power argues for approval of Harding Street 7 coal-to-gas conversion

Indianapolis Power & Light in May 29 testimony defended its plan for a coal-to-gas conversion of Unit 7 at the Harding Street power plant, which will be a companion to coal-to-gas conversions at Units 5 and 6 that have already been approved by the Indiana Utility Regulatory Commission.

In October 2014, Indianapolis Power & Light (IPL) applied with the commission for approval of the Unit 7 conversion to gas, needed mostly for NPDES water permit compliance. Various parties, including the IPL Industrial Group (IG) and the Indiana Office of Utility Consumer Counselor (OUCC), have filed to intervene in the case.

IPL is requesting that the commission issue certificates of public convenience and necessity (CPCN) and approve a project to comply with federally-mandated requirements, including the National Pollutant Discharge Elimination System (NPDES) and the Mercury and Air Toxics Standards (MATS). IPL’s compliance plan includes the construction of wastewater treatment technologies, operational changes and use of modified stormwater management practices at IPL’s Petersburg and Harding Street stations and the refueling of Harding Street Unit 7 (HS-7).

IPL recently filed a proposed order for the commission in this case, which has taken flak from two parties. Said the utility in its May 29 response: “IPL’s Proposed Order reconciles the contested issues with the record evidence, sound regulatory policy and the governing statute. The Industrial Group and OUCC (‘IG/OUCC’) filing provides little, if any, direct response to IPL’s filing or record evidence. The crux of the IG/OUCC filing is the $4.743 million which IPL prudently incurred to preserve the ongoing operation of HS-7 for the benefit of its customers. The prudence of these costs is not challenged and IPL has previously explained in its Proposed Order why these prudently incurred costs are appropriately recognized for ratemaking purposes. This explanation is supported by substantial record evidence, the governing statutes, and sound regulatory policy. The IG/OUCC ignore this and ask the Commission to penalize IPL by disallowing these prudently incurred costs.

“The punitive tone of the IG/OUCC filing is surprising given the extensive benefit that IPL’s actions are providing to its customers. That aside, the various arguments offered by IG/OUCC are red herrings, misstate or confuse the record evidence, or misapply the governing regulatory framework. Sound regulatory policy dictates that the Commission should encourage utilities to prudently review their compliance options based on new evidence, not be penalized for doing so. IPL respectfully requests the Commission reject the arguments of the Industrial Group and OUCC. IPL asks the Commission to approve the relief sought by IPL, including recovery through the ratemaking process of the costs prudently incurred to preserve the ongoing operation of HS-7.”

Along with its May 29 arguments, the utility filed a revised version of its proposed order for the commission to consider.

Unit 7 conversion needed mainly due to clean-water needs

In August 2012, the Indiana Department of Environmental Management (IDEM) issued NPDES water permit renewals to IPL’s Petersburg and Harding Street stations. These permits contain new Water Quality Based Effluent Limits (WQBELs) and Technology-Based Effluent Limits (TBELs), with a compliance date of Oct. 1, 2015, for the new WQBELs. This compliance date was extended to Sept. 29, 2017, through agreed orders issued by IDEM.

Pollutants and other parameters limited by the NPDES permits include Boron, Cadmium, Chromium, Copper, Iron, Lead, Mercury, Nickel, oil and grease, pH, Selenium, Sulfate, total residual Chlorine, total residual oxidants, total suspended solids, and Zinc.

IPL said it cannot continue to operate the Petersburg and Harding Street stations through the end of their useful lives without investing in compliance projects to reduce effluents and emissions to a level that complies with federal environmental regulation, including the NPDES permit limits in terms of water quality and MATS for air emissions. The compliance projects for which the utility is seeking approval include: the refueling of Harding Street Station Unit 7 from coal to natural gas; the installation of new water treatment technology and operational changes at Harding Street and Petersburg; and modified stormwater management practices at these two stations.

IPL asked the commission for an approval by July 31, 2015,  so that the Harding Street Unit 7 refueling may be completed in time for the summer of 2016 peak demand season.

In May 2014, IPL was approved by the commission to convert Harding Street Units 5 and 6 from coal to natural gas. IPL plans to stop burning coal completely at the Harding Street plant in 2016, if plans to convert Unit 7 are approved. The three coal units at Harding Street total 645 MW of capacity. Harding Street 5 and 6 were among the units targeted to stop using coal because it is not cost effective to add emission controls to these small coal-fired units (106 MW each when coal-fired). The GenerationHub database shows Harding Street Unit 7 at 471 MW (nameplate) and 435 MW (net summer) of capacity.

IPL’s mainstay coal generator will, after these conversions, be the four-unit Petersburg plant.

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.