Indiana Regulator Denies Vectren’s 850-Megawatt Gas-Fired Plant, Citing Financial Risks to Customers

The Indiana Utility Regulatory Commission on April 24 turned down Southern Indiana Gas & Electric Company’s proposal to construct an 850-megawatt natural gas-fired power plant to replace its retiring coal power units. The agency said that the investment in the project, which is estimated to cost about $780 million, could become uneconomic over the long-term at a time of “quickening technological change.”

The commission expressed concerns about potential financial risks to customers, who could be burdened with paying for the project over a period of 30 years, particularly in the rapidly changing energy landscape. The company proposed the project last February, citing the age and operating characteristics of its existing baseload capacity and the upcoming deadlines for capital investments to comply with the Environmental Protection Agency’s regulations for coal plants. Absent substantial investment, the coal plants must cease operations by December 31, 2023, the company said.

In denying the proposal, the agency noted that the company’s issuance of a request for proposals based on its 2016 resource plan was “unduly restrictive,” with regard to the swift changes in technology and costs, especially renewable energy. The narrow solicitation limited the options to baseload resources larger than 600 megawatts, ruling out combinations of smaller resources that could have provided better resource diversity, flexibility, and cost-efficiencies than depending on a single large gas-powered plant, the agency said.

As the company is scheduled to develop a new integrated resource plan in 2019, the agency noted that the process should consider a more thorough analysis to fully examine possible options to provide reliable, efficient, and economical service. The order instructed that the next IRP process should incorporate more alternatives to partner with other entities and inquire into smaller-scale options that can be implemented quickly to meet the additional capacity required by 2023-year end.

Southern Indiana Gas & Electric is a subsidiary of Vectren Energy Delivery of Indiana Inc.