The Indiana Utility Regulatory Commission on June 22 reaffirmed its January 2015 approval of air emissions control projects at the coal-fired Culley and Brown plants of Southern Indiana Gas and Electric Co. d/b/a Vectren Energy Delivery of Indiana.
In January 2015, the commission issued a final order, which was appealed to the Indiana Court of Appeals by the Citizens Action Coalition, the Sierra Club and Valley Watch. In October 2015, the Indiana Court of Appeals issued an opinion remanding this case to the commission to enter findings required under state code and to grant or deny a certificate of public convenience and necessity (CPCN) to Vectren for its proposed soda ash (Brown Units 1 and 2) and hydrated lime injection systems (Culley Unit 3) installation projects.
On Feb. 12, 2016, the appealing parties asked the commission to reopen the case, based on the court ruling. They asked to submit new evidence. The commission noted in its June 22 decision: “In this case, we find that there is sufficient evidence in the evidentiary record to make the required findings under [state code]. The Appealing Parties, in asserting that new evidence might change the original analysis, amounts to a request that the Commission engage in hindsight review, which we decline to do.”
Vectren estimated the costs for all projects approved last year to be in the range of $75 million-$95 million. Vectren testified that Black & Veatch considered several alternative technologies, including fuel switching, coal washing, boiler flue gas temperature control, furnace sorbent injection, and others. The Brown and Culley projects were selected because the preliminary screening showed them to be the most cost effective.
Vectren testified that the Brown and Culley units have not reached the end of their useful lives. The Brown and Culley projects are necessary to resolve a Notice of Violation (NOV) issued by the U.S. Environmental Protection Agency and to allow the continued operation of the Brown and Culley units. These projects would extend the useful lives of these units for another ten years, allowing Vectren to fully depreciate its prior capital investment in emission controls and to avoid stranded costs.
Under the NOV, Vectren has agreed to install sodium-based sulfur trioxide (SO3) mitigation systems on both Brown units. The systems will reduce sulfuric acid (H2S04) emissions to 0.008 lb/mmbtu (pounds per million British thermal units) on Brown Unit 1 and 0.010 lb/mmbtu on Brown Unit 2. Vectren has also agreed to install a SO3 mitigation system on Culley Unit 3, which will reduce H2S04 emissions to 0.009 lb/mmbtu.
A Vectren official testified that the company hired Burns & McDonnell and Black & Veatch to analyze alternative generation options to retrofitting Brown Units 1 and 2 and Culley Unit 3. The analysis included both the variable operating costs of the proposed alternatives and the annual fixed charge required to recover capital costs and fixed operating costs under various capacity scenarios. In addition, the analysis considered that the Brown and Culley units are base load units; so any replacement technology must be able to supply the necessary capacity to meet the Midcontinent ISO-required Planning Reserve Margin.
The analysis considered 20 commercial generating technologies, including seven natural gas options, battery storage, compressed air, wind, solar, hydro, nuclear, wood, landfill gas, and coal. Of those options, Black & Veatch identified two – a 200-MW, Class F natural gas-fired generation facility and a 300-MW natural gas fired combined cycle facility – as the most practical options. The other options were determined to be infeasible due to cost, size, or environmental reasons.
Black & Veatch compared the two replacement options to the retrofitting option on the basis of total customer cost and relative risk. The analysis was run under three separate market scenarios and adjusted those scenarios for variables including natural gas costs and carbon costs. The analysis compared 21 different replacement scenarios to the retrofitting option, and in every scenario except one, the analysis demonstrated that retrofitting was the lowest cost alternative. The only scenario that favored replacement, was a low natural gas and high carbon cost scenario that showed a 2.2% benefit by replacing Brown Units 1 and 2 with a combined-cycle natural gas facility.
Said the commission in its June 22 order: “In our January 28, 2015 Order in this Cause, we approved the estimated costs, and found that Brown Units 1 and 2 and Culley Unit 3 will continue to utilize Indiana coal as their primary fuel, specifically coal from sourced from the Illinois Basin. Therefore, we issue a CPCN to Vectren for the Brown and Culley Projects.”