The Indiana Utility Regulatory Commission has denied a petition by Southern Indiana Gas & Electric Company (Vectren South) for authority to build an 850 MW combined cycle gas turbine (CCGT). It found that the proposed large-scale single resource investment: (1) would not result in an outcome that reasonably minimizes the potential risk that customers could sometime in the future be saddled with an uneconomic investment; and (2) fails to foster utility and customer flexibility in an environment of rapid technological innovation.
The commission emphasized that the requested pre-approval would obligate regulated customers for a 30-year period in a time of rapid change. It said that Vectren South should use its scheduled 2019 integrated resource planning process to address problems in its modeling and incorporate more options for partnering with other entities and competitive inquiries into smaller-scale options that can be acted upon swiftly to meet the end-of-2023 date upon which additional capacity may be needed.
The commission also found that Vectren South did not fully consider options to extend the life of, or refurbish, existing units. It said that viewed in the context of
minimizing risk and providing future flexibility, the refurbishment option would seem to provide a potential bridge to the future, providing system capacity value that was not sufficiently evaluated.
According to the utility, the main drivers behind its proposal are the age and operating characteristics of its existing baseload capacity and the upcoming deadlines for significant capital investments to address environmental regulations. Vectren South’s fleet consists of five coal-fired busload units totaling 1,000 MW growth of renewable energy sources, and low natural gas prices have negatively affected MISO’s dispatch of Vectren South’s coal-fired units. Instead of running continuously, Vectren South’s units are currently cycled up and own throughout the day or are shut down altogether, decreasing unit efficiency and increasing wear and tear on the units, and because the units were not designed to cycle in this manner, the units cannot effectively compete with gas units in particular, the estimated cost of the CCGT is $781 million. Re Southern Indiana Gas & Electric Co. d/b/a Vectren Energy Delivery of Indiana, Inc., Cause No. 45052, Apr. 24, 2019 (Ind.U.R.C.).