In February 2018, Vectren announced its long-term electric generation transition plan as part of its Smart Energy Future strategy. Vectren’s strategy was designed to ensure a reliable, reasonably priced and well-balanced energy mix for its 145,000 electric customers in southwestern Indiana.
In filings with the Indiana Utility Regulatory Commission (IURC), Vectren proposed to install an additional 50 megawatts (MW) of universal solar, build a 700- to 850-MW natural gas-fired generation facility, and make environmental investments at its Culley Unit 3 to cost-effectively serve the electric needs of its customers.
In March 2019, the IURC approved the construction of the 50 MW universal solar array. In April 2019, the IURC approved the plan to retrofit Vectren’s largest, most-efficient coal-fired generation unit, Culley Unit 3 (270 MW), to ensure it remains in compliance with EPA rules related to coal ash and waste water handling. Also related to Culley Unit 3, the IURC ruled that certain costs associated with ash pond closure are recoverable through a new annual rate adjustment mechanism – the environmental cost adjustment. The IURC also approved recovery of certain past pollution control investments at Vectren’s power plants through the new environmental cost adjustment. Vectren’s request to construct a 700- to 850-MW combined-cycle natural gas plant was denied.
What happens now that an element of Vectren’s generation transition plan was not approved?
We have initiated our 2019 Integrated Resource Plan (IRP) to evaluate and identify a mix of resources to meet our customers’ demands for cleaner, reasonably priced energy to the region, while maintaining the reliability customers deserve and have come to expect. Our IRP will consider the IURC’s analysis.
What reasoning was given by the IURC for denial of the gas plant?
Our generation transition plan was filed at a time of significant change in generation technology and cost. While a large generation resource offered significant economic efficiencies, the IURC has directed us to increase our focus on the benefits of a more diverse resource mix. We look forward to continuing to explore investment alternatives to provide our customers affordable, reliable and well-balanced energy through the IRP process.
When will the 2019 IRP begin?
The 2019 IRP process has begun. Full details of the 2019 IRP schedule, including stakeholder engagement opportunities, has been released. Direction and feedback from the IURC’s order will be included in the process.
Vectren hosts public stakeholder meetings to facilitate stakeholder participation. Vectren will file an IRP on May 1, 2020 and will host four public advisory meetings beginning August 2019.
Why can’t Vectren continue to operate with its existing coal facilities without additional capital investment?
We cannot continue operating our existing coal-fired generation without making capital investments in those facilities. For example, we will need to construct new landfills and replace the equipment that scrubs emissions to remove pollutants at A.B. Brown if we are to continue operating the plant beyond 2024 on coal. The cost of these investments in our existing generation facilities must be compared against the cost of new, more efficient generation alternatives. The IRP will evaluate the cost and risk of constructing new generation, such as natural gas or renewables.
Why doesn’t Vectren install all or more renewable energy?
The 2019 IRP will answer the question about what the most cost-effective manner is to serve customers in the future. When evaluating the cost of renewable energy resources, the IRP will need to consider the cost of pairing the renewables with an energy source that can be dispatched when renewables are not available. Renewables are not available 24/7 and, as such, they can’t be relied upon to run around-the-clock due to sun and wind being intermittent forms of fuel. Therefore, from a market planning and reliability perspective, as well as a requirement of the grid operator Midcontinent Independent System Operator (MISO), of which we are a member of, we must back up intermittent resources with some form of dispatchable generation that is available 24/7
Will Vectren keep burning coal?
We will continue to burn the same amount of Indiana coal while we conduct the 2019 IRP. The IRP is designed to help us identify the best resources to meet future needs.
Will Vectren issue an RFP (Request for Proposals) for generation resources in advance of 2019 IRP outcome?
We have issued an all-source RFP targeting 10 to 700 megawatts (MW) of capacity and unit-contingent energy as part of our IRP process. We are doing so to study market data as inputs into the IRP models as we consider all options, as well as evaluate potential projects.
When will the 2019 IRP be submitted?
Adhering to the spirit of the IURC requirements for our IRP will require at least 12 months. Because the IURC’s decision has had a significant impact on our approach to the IRP, we have requested and received approval for a 6-month extension with plans to submit it by May 1, 2020.
Will Vectren move forward with those parts of the plan that were approved?
Yes, we will move forward with plans to retrofit Culley Unit 3 to ensure it remains in compliance with EPA rules related to coal ash and waste water handling.