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Vectren formally lays out plans to retire 715 MW of capacity by 2025

Vectren Corp.'s electric utility will replace 715 MW of existing coal and gas capacity with solar generation and an 889-MW combined-cycle plant under an integrated resource plan expected to exceed carbon-reduction targets in the U.S. EPA's Clean Power Plan.

Southern Indiana Gas and Electric Co. Inc., which does business as Vectren Energy Delivery of Indiana Inc., formally unveiled plans to retire the capacity in its 2016 integrated resource plan, or IRP, which is filed with the Indiana Utility Regulatory Commission. Vectren, at a stakeholder meeting in late November, had already revealed its plans to retire both units at its 115-MW Broadway Avenue Generating Station in 2018 and 2025, respectively, the 20-MW Northeast (IN) peaking plant in 2019 and 580 MW consisting of its A.B. Brown steam units and F.B. Culley unit 2 by 2024. In addition, Vectren plans to exit a joint operating agreement with an Alcoa Corp. subsidiary at unit 4 of the Warrick coal and gas plant. Vectren owns 150 MW of the 300-MW coal unit, according to its IRP.

Vectren's preferred portfolio includes the addition of 54 MW of solar capacity by 2019 and an 889-MW combined-cycle natural gas plant by 2024. Upgrades are also planned at its F.B. Culley unit 3 by 2023 to comply with the EPA's Effluent Limitation Guidelines, or ELG rule. Vectren said it will also continue its energy efficiency programs.

Vectren said it will build the combined-cycle plant in lieu of continued investments in the Brown units, F.B. Culley Unit 2 and Warrick Unit 4 to ensure compliance with federal environmental regulations. The plants have been at the center of a debate with Indiana environmental and consumer advocates concerned about the costs and need for coal plant upgrades. The utility, however, will move forward with upgrades for F.B. Culley 3 that includes dry-bottom ash conversion and flue-gas desulfurization technology needed to comply with the ELG rule.

Vectren noted that its preferred portfolio reduces carbon-dioxide output from its power plants by approximately 46% by 2024 from 2012 levels, which exceeds the 32% reduction by 2030 under the Clean Power Plan. The utility, however, also pointed out that some of its portfolio decisions may change based on the uncertainty of regulations, such as the Clean Power Plan. The U.S. Supreme Court stayed the rule in February until all legal challenges are resolved, and it is not expected to survive President-elect Donald Trump's administration.

Still, Vectren said other regulations such as the ELG rule and the final coal ash rule "are the main drivers of closing Vectren coal plants [and] will be much more difficult to change."

"Vectren is confident in the need for new gas generation in 2024," the utility wrote in its IRP. "Under all scenario modeling, a natural gas-fired plant was selected, including the low regulatory scenario. While future carbon regulations are less certain than prior to the election, it is likely that new administrations will continue to pursue a long term lower carbon future. Vectren's preferred portfolio positions the company to meet that expectation."

Vectren's preferred portfolio in its 20-year resource plan indicates that by 2036, baseload natural gas capacity and peaking natural gas capacity together will form 63% of its energy portfolio, with coal accounting for 16%. In 2015, baseload coal provided 68% of the company's generating capacity and gas peakers another 17%. Energy efficiency, demand response and renewables together will form about 19% of its capacity in 2036, compared to 14% of its 2015 portfolio.