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Vectren to replace coal generation with up to 950 MW of gas, solar plants

Vectren Energy Delivery of Indiana-South filed a long-term electric generation transition plan that calls for building an up to 900-MW gas-fired power plant and a 50-MW solar facility to replace coal-fired generation it intends to retire.

The plan, filed with the Indiana Utility Regulatory Commission on Feb. 20, would see the Vectren Corp. electric utility retire two 245-MW units at the A.B. Brown in Posey County, Ind., and a 90-MW unit at the F.B. Culley plant in Warrick County, Ind. The utility also proposed to relinquish its ownership stake in 150-MW Warrick unit 4 and retrofit the 270-MW coal-fired Culley unit 3.

The generation transition plan comes on the heels of a recent media report that Vectren launched a sale process following months of reported takeover interest. The utility serves roughly 900,000 natural gas customers in central and southern Indiana and a neighboring portion of central-western Ohio and 111,000 electricity customers in southwestern Indiana. It is among several midsize utilities that have previously been mentioned as a likely acquisition target.

If approved, the plan will help the company reduce carbon emissions by 60% over 2005 levels and comply the U.S. Environmental Protection Agency's rules related to coal ash and waste water handling.

Vectren Energy Delivery of Indiana-South, known legally known as Southern Indiana Gas and Electric Co. Inc., seeks the IURC approval to build the 800-MW to 900-MW combined-cycle facility at the site of its A.B. Brown plant. The $900 million project is slated for completion in 2023.

The utility proposed to build the solar farm on nearly 300 acres in its electric service area in southwestern Indiana to further diversify its energy mix. The farm will consist of 150,000 solar panels and is expected to go online by 2020. The project is estimated to cost between $70 million and $75 million.

Vectren Energy originally laid out its plans to replace 715 MW of existing coal and gas capacity with solar generation and an 889-MW combined-cycle plant under an integrated resource plan the company filed with the Indiana regulators in December 2016.

The transition plan, according to Vectren, is a key element of its "smart energy future" strategy to ensure a reliable, reasonably priced and well-balanced energy mix for its 145,000 customers in southwestern Indiana. "This decade-long generation portfolio transition will meet growing demand to provide cleaner energy for our region while maintaining the reliability our customers deserve and have come to expect," said Carl Chapman, chairman, president and CEO of Vectren.

The company said the plan will have no impacts on residential electric bills this year. It plans to seek cost recovery for some of the initiatives, including the 50-MW solar farm, Culley unit 3 projects, beginning in 2019. Vectren does not expect to request cost recovery for the gas-fired project until 2024.

Vectren also is exploring options tied to the closure of its ash ponds, noting it is in talks with a potential partner to determine if ash within its ponds can be excavated and recycled over several years for beneficial re-use of the material rather than retiring the ponds in place.