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Coal, greens team up to fight Hoosier gas plant

Environmental groups seeking to block Vectren Corp. from building a new $900 million natural-gas-fired power plant in Indiana and a related pipeline are flanked by an unlikely ally in the fight: the Hoosier State's powerful coal industry.

The Indiana Coal Council and two mining companies — Sunrise Coal LLC and Alliance Resource Partners LP — have separately intervened at the Indiana Utility Regulatory Commission, hired expert witnesses and made filings arguing that Vectren should be denied a certificate to build the plant.

The opposition includes testimony from Charles McConnell, former assistant secretary for fossil energy at the Department of Energy, who said Vectren's proposal doesn't address concerns about grid "resilience."

There's little mystery to why the coal industry is pushing back. The 850-megawatt combined-cycle gas plant would displace an almost equivalent amount of coal-fired generating capacity. In a plan filed with state regulators, Vectren is proposing to shut down three coal units and exit a partnership with Alcoa Corp. that operates a fourth unit.

The request for a certificate to move forward with the project is emblematic of the energy transition going on across the U.S., where aging coal plants are being squeezed by a new breed of efficient gas plants, wind and solar, and eroding demand for electricity.

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Just a few months ago, DTE Energy Co. in Michigan won regulatory approval for a $1 billion combined-cycle natural gas plant outside Detroit to be built on the site of a coal plant to be retired (Energywire, April 30).

But Vectren's plan would be a direct hit on Indiana's coal industry, which has kept output of just over 30 million tons a year relatively steady in recent years in large part because most of the electricity generated in the state still comes from coal.

The gas plant would mean the loss of more than 1 million tons of coal a year for supplier Sunrise Coal's mining complex in nearby Knox County as well as 200 well-paying jobs that would be difficult to make up elsewhere. It would mean the loss of jobs at the A.B. Brown and F.B. Culley coal plants along the Ohio River and hundreds of millions of dollars in related economic losses.

"Those are $90,000-a-year jobs," Indiana Coal Council President Bruce Stevens said. "Mining pays the highest wages in Knox County as well as some of the surrounding counties."

What's more, the gas plant is proposed to be built on the site of Vectren's newest coal plant, the 450-megawatt Brown plant just outside Evansville, in the heart of Indiana coal country.

Vectren isn't the only Indiana utility seeking to replace older coal-fired generating units with natural gas. Indianapolis Power & Light Co. (IPL) shut down six units of the Eagle Valley coal plant in 2016 and built a gas plant at the site. The utility, a unit of AES Corp., also repowered its Harding Street coal plant in Indianapolis with gas.

The Indiana Coal Council didn't intervene in the IPL case at the Indiana Utility Regulatory Commission.

But the group decided it must be involved in the utility planning process moving forward out of concern that other companies would likewise seek to swap Indiana coal for natural gas. And if Vectren is successful, the case could encourage other utilities to propose similar plans.

"We have concerns it would set the stage for others to follow suit," Stevens said.

Northern Indiana Public Service Co., for instance, just closed its 50-year-old Bailly coal-fired power plant at the end of May and plans to shut down two units at the Schahfer coal plant in 2023. A natural gas plant is among the options being weighed by the utility, which will submit a long-range plan to state regulators later this year.

'Banging the same old drum'

The gas plant proposal filed with regulators on Feb. 20 by Evansville-based Vectren likewise grew out of the utility's 20-year integrated resource plan filed in 2016, part of an "electric generation transition" plan that also includes 50 MW of solar and making needed investments to continue operating a 270-MW unit at the Culley plant.

Vectren, Indiana's smallest investor-owned electric utility with 145,000 customers in the state's southern tip, said the coal units to be retired require hundreds of millions of dollars in investment for environmental compliance, including new "scrubbers" at the Brown plant. Replacing the four coal units with a new gas plant is a more prudent investment both for ratepayers and the environment, Vectren said.

The plan is being challenged not only by the coal industry, but also the state Office of Utility Consumer Counselor and environmental groups such as the Citizens Action Coalition, Hoosier Environmental Council and Sierra Club.

In testimony filed with regulators last week, parties challenging Vectren's proposal took aim at every aspect of it. Some argued Vectren didn't fully evaluate all options for extending the coal units' lives beyond 2023, and they questioned the utility's proposal to add 850 MW when it already has a surplus of capacity and demand has been declining for the past five years.

Environmental groups also criticized Vectren's modeling, the basis for its gas plant proposal, which they said was biased against cleaner energy resources such as renewable energy, demand response and efficiency.

What's more, parties challenging Vectren argue that the gas plant does nothing to diversify the utility's fuel mix; rather, it shifts reliance from one fossil fuel to another.

As it has elsewhere, the coal industry is asking state regulators to examine what an increased reliance on natural gas and pipelines could mean for the bulk power grid.

"We're concerned that we're going to get way too heavy on natural gas here in Indiana," Stevens said.

Vectren officials weren't available to discuss the proposal. But utility spokeswoman Natalie Hedde said in an emailed statement that the company will respond to the filings per the Sept. 10 deadline set by the state Utility Regulatory Commission.

Meanwhile, the coal industry and environmental groups are content to work side by side, if not together, to pursue a shared goal.

Kerwin Olson, executive director of the Citizens Action Coalition, said the advocacy group has a different vision for the state's energy future than the Indiana Coal Council. He'd rather see the coal plants shut down and replaced with a portfolio of renewable energy, efficiency and demand response.

For now, Olson welcomes the additional scrutiny of Vectren's proposal, and vice versa. Both sides are willing to butt heads later over the future of coal in Indiana's power sector.

"The engagement of the coal industry has provided value to the process," Olson said. "It's definitely raised awareness on the part of many that it's not just the environmental and consumer interests banging the same old drum."

Twitter: @jefftomich Email: jtomich@eenews.net

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