Indiana regulators approved a settlement agreement that allows Northern Indiana Public Service Co. to spend nearly $200 million on environmental projects at three coal plants in order to comply with the federal coal combustion residuals rule.
The Indiana Utility Regulatory Commission in a Dec. 13 order approved the stipulation that allows the NiSource Inc. subsidiary to spend about $188.5 million for groundwater monitoring and ash landfill projects at its Bailly, Michigan City and R.M. Schahfer coal plants, as well as ash handling and new coal combustion residuals containment projects at R.M. Schahfer and Michigan City, and a new process water pond at R.M. Schahfer. NIPSCO is also authorized to recover all reasonable and prudently incurred O&M costs related to the environmental compliance projects at nearly $7 million per year.
NIPSCO submitted an application in November 2016 to the IURC for a certificate of public convenience and necessity for a "federally mandated compliance project" at each of the coal plants. NIPSCO said that capital projects at these facilities, estimated at about $400 million, are necessary to comply with the U.S. Environmental Protection Agency's final coal ash rule, which became effective in October 2015, and Effluent Limitation Guidelines rule.
The proposed costs broke down to $228.5 million for coal combustion residuals projects and $170.4 million for Effluent Limitation Guidelines projects, including allowance for funds used during construction. The EPA, however, in September proposed to postpone certain deadlines associated with the Effluent Limitation Guidelines for steam electric power plants as part of the Trump administration's stay of the rule.
The pollutant discharge limitations were set to phase in by Nov. 1, 2018, with all guidelines in effect by Dec. 31, 2023.
The parties to the settlement agreement agreed to address costs to comply with the Effluent Limitation Guidelines rule in a later proceeding. R.M. Schahfer is believed to be the only plant that would need upgrades to comply with the rule. The settling parties agreed to provide NIPSCO with $3.3 million for ongoing compliance work related to the rule. The commission approved these costs, as well as $353,580 incurred between Nov. 1, 2016, and March 31, 2017, for deferral.
NIPSCO was granted recovery of 80% of the approved federally mandated costs through a rate rider and the authority to defer 20% of these costs for recovery in its next general rate case.
The utility plans to retire its 480-MW Bailly coal plant as early as mid-2018, as well as two units at its 1,625-MW R.M. Schahfer plant by 2023.
Still, the Sierra Club called the IURC decision a "bailout" for the coal plants and argues that NIPSCO's own data shows retiring all four units at the Schahfer plant would "save its customers between $178 million and $420 million."
"NIPSCO customers are over-burdened with dirty air and high utility bills, due to the utility company's poor decision to continue burning coal for power," Wendy Bredhold, senior representative for the Sierra Club's Beyond Coal campaign in Indiana, said in a written statement. "NIPSCO needs to begin to evaluate lower-cost options for customers' energy needs, and start building toward a sustainable long-term, low-cost, cleaner future. Sierra Club is reviewing the Commission's disappointing decision and is considering an appeal to the Indiana Court of Appeals." (IURC docket 44872)
