MISO to terminate interconnect for Duke’s Wabash River Units 2-5

The Midcontinent Independent System Operator on Feb. 4 filed with the Federal Energy Regulatory Commission a notice of termination of a Generator Interconnection Agreement with Duke Energy Indiana related to the upcoming April 16 retirement of the coal-fired Wabash River Units 2-5.

“Pursuant to Article 2.3.1 of the GIA, the Parties mutually agree to terminate the GIA, effective April 16, 2016,” said the notice. “Terminating this GIA is appropriate, as the Interconnection Customer is retiring this Project.”

The word “Project” is something of a misnomer, since these units are decades old. MISO had filed this GIA with the commission in December 2014, and the GIA showed that these units were initially to be retired on April 16, 2015, with the GIA allowing for a one-year extension to April 16 of this year.

Notably, April 16, 2015, was the initial compliance deadline under the U.S. Environmental Protection Agency’s Mercury and Air Toxics Standards, while April 16 of this year is the MATS deadline under a one-year compliance extension.

These four units totaling approximately 350 MW, with Units 2-4 at 85 MW each, and Unit 5 at 95 MW.

Duke Energy Indiana, a subsidiary of Duke Energy (NYSE: DUK), on Jan. 28 filed with the Indiana Utility Regulatory Commission the opening testimony in its latest fuel cost adjustment case. In that testimony, John D. Swez, employed by Duke Energy Carolinas as Director, Generation Dispatch and Operations, mentioned the April retirements of Wabash River Units 2-5.

Also, the Wabash Valley Power Association on Jan. 21 petitioned the Indiana commission for a Certificate of Public Convenience and Necessity to purchase Lively Grove Energy Partners LLC and its only asset, a 5.06% undivided interest in the Prairie State Energy Campus (PSEC) located in Illinois from Peabody Electricity LLC. Coal producer Peabody Energy (NYSE: BTU), which originally developed the Prairie State project as a minemouth power generator, had announced this prospective sale on Jan. 21.

Lee R. Wilmes, employed by Wabash Valley Power Association as its Vice President of Power Supply, testified that this buy is in part needed due to the impending partial retirement of Wabash Valley Unit 1. “For a purchase price less than the cost to build a new peaking plant, Wabash Valley is purchasing a very economical base load generating plant with a fixed fuel supply with no transportation cost or risk,” he wrote. “In addition, the [integrated resource plan] included generation from the existing Wabash Valley-owned Wabash River Unit 1. Due to the capital costs required to replace the common facilities shared with the soon-to-be-retired Duke Energy Indiana, Inc.-owned Wabash River Units 2-5 and potentially Unit 6, Wabash Valley announced the retirement of its Wabash River Unit 1 targeted for spring of 2016. This will result in a loss of approximately 81 MW of base generation. The 83 MW resulting from Wabash Valley’s purchase of the interest in PSEC will replace the retired Wabash River Unit 1 base generation included in the IRP.”

Wabash River is a coal-fired plant mostly owned by Duke Energy Indiana. Unit 1 was repowered in the 1990s as an integrated gasification combined cycle unit with U.S. Department of Energy funding help. The unit initially used coal as a feedstock, then switched to cheaper petroleum coke.

Noted Wilmes about Wabash River #8: “This facility is an approximately 168 MW peaking plant located in Vigo County, Indiana. It is the remaining generation after the retirement of sgSolutions‘ gasification facility and the Wabash River Unit #1 steam turbine. After the retirements, expected in the spring of 2016, the gas turbine Unit #8 will be fueled by natural gas.”

The other coal unit at Wabash River, the 318-MW Unit 6, has been targeted by Duke for either retirement or a conversion to natural gas. This means that Wabash River’s days are numbered as a coal- and petcoke-fired facility.

Says the Duke website about the plant: “Wabash River is a six-unit station that was completed between 1953 and 1968. It is also the site of the 260-megawatt Wabash River Coal Gasification Repowering Project, owned by Wabash Valley Power Association and operated by Duke Energy. The project was one of the first demonstrations of coal gasification to produce electricity. The U.S. Department of Energy contributed $219 million to the project to help develop the coal gasification technology, an environmentally beneficial way to burn coal to generate power.”

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.