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AEP sets retirement date for massive Rockport coal unit in Indiana

A campaign to rid the U.S. of coal-fired power generation secured a closure date for a 1,300-MW coal unit in Indiana, the largest to announce retirement since the Sierra Club began its crusade to shut down existing plants in 2010.

American Electric Power Co. Inc. agreed to retire its Rockport Unit 1 by the end of 2028 as part of a U.S. District Court-approved modified consent decree concerning air pollution from multiple AEP plants in the Midwest.

The Rockport unit, operated by AEP subsidiary Indiana Michigan Power Co., is among the largest coal units in the nation. Before the Rockport announcement, the Sierra Club's Beyond Coal campaign counts the announced retirement of 791 retired coal units totaling 144,766 MW, since the campaign targeting existing power plants began.

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"We all came together with the common goal of asking I&M to stop burning coal, and start developing clean renewable energy," Kimberly Koczan, a board member of Hoosier Interfaith Power and Light and Sierra Club volunteer, said in a news release. "This signed agreement is a large step in the right direction and we will continue to push until that transition to clean, renewable energy is complete."

AEP, long a significant customer of thermal coal in the U.S., announced plans to retire several of its coal units in recent years and indicated it will address customer demand for cleaner energy and new generation technology.

Before the coal retirements, AEP touted the reduction of its coal-fueled generation capacity to 47% in 2017 from 70% in 2005. AEP Chairman, President and CEO Nicholas Akins told investors in October 2018 that the reduction in coal capacity is "going to go even further." The company noted in its July 18 news release that it retired more than 8,600 MW of coal-fueled generation since 2011 and will retire another 1,100 MW by the end of 2020.

Akins previously said AEP expects the share of coal-fired generation in its portfolio to drop about 36% by 2030, with solar, hydro and wind up 29%.

Rockport Unit 1 first came online in 1984 and Unit 2 came online in 1989. In 2018, Rockport was operated at about a 52.2% capacity factor, a measure of the company's net generation compared to its full operating capacity.

The two 1,300-MW supercritical coal units have primarily used sub-bituminous coals from the Powder River Basin since AEP representatives said they would switch to "almost exclusively" western coals to minimize costs. The Powder River Basin region has been struggling as a steady stream of coal-fired power retirements in the U.S. reduced its domestic customer base while export opportunities remain limited.

Peabody Energy Corp.'s North Antelope Rochelle mine, the largest coal mine in the U.S, has been the primary supplier of coal to Rockport, providing about 1.4 million tons of the 1.5 million tons of coal delivered to the plant through April 2019 according to federal data. Both North Antelope and Arch Coal Inc.'s Black Thunder mine in the Powder River Basin were major suppliers to the plant in 2018. Peabody and Arch recently announced a joint venture of mines in the region, in part as a response to waning demand due to increased competition from natural gas and renewable energy sources.

The consent decree also requires AEP to use technology that will reduce sulfur dioxide emissions at Rockport by at least 58%, according to the Sierra Club news release. Starting in 2021, the Rockport plant will have an annual 10,000-ton cap on sulfur dioxide emissions, eight years earlier than the previous agreement. The cap will be cut in half in 2029, after Rockport 1 retires.

AEP also will reduce the annual sulfur dioxide emissions across its Midwest coal-fired power plants to 89,000 tons per year by 2029, compared with the current cap of 113,000 tons per year.

The agreement also requires AEP to provide $3.5 million in funding to support projects that will promote energy efficiency, distributed generation and pollution reduction measures for nonprofits, governmental entities, low-income residents or other entities selected by public interest plaintiffs.

In a July 18 statement, Akins said the modified consent agreement benefits customers by eliminating the need to spend nearly $1 billion to install flue gas desulfurization, or scrubber, equipment at the Rockport plant while achieving emissions reductions at a lower cost than previously planned.

"We invested nearly $9 billion in capital since 2000 to drastically cut emissions from our coal-fueled power plants," Akins said. "Today, our investments are focused on renewable generation and advanced technologies that enhance service for our customers. This shift in focus achieves ongoing emission reductions and provides the resources and services that our customers have told us they expect from their energy company."

The consent decree was filed May 29 and modifies a requirement that Rockport Unit 2, owned by multiple out-of-state corporations, must be equipped with flue gas desulfurization technology. U.S. District Judge Edmund Sargus of the U.S. District Court for the Southern District of Ohio approved the fifth joint modification to the original consent decree, putting it into effect on July 17.

The company said the original agreement settled allegations AEP violated new source review provisions and made major modifications to its power plants without obtaining proper permits and installing best available technology to control emissions of sulfur dioxide and nitrogen oxides, which the company denied.

AEP built the Rockport facility, then sold it and leased in back more than 20 years ago. In 2017, AEP subsidiary AEP Generating Co. disputed a ruling that found it could not force the owners of the Rockport plant, Wilmington Trust Co., to pay for the installation of emissions controls at the facility.