The future of coal-powered utility plants is getting lots of political attention. (Getty Images)
A settlement with Indiana coal producers, announced Tuesday, could lead to third-party operation of coal units at Duke Energy Indiana’s Cayuga Generating Station.
In a news release, President Stan Pinegar said the agreement with trade association Reliable Energy “is aligned with” coal-focused executive action from Gov. Mike Braun.
The utility’s request to spend an estimated $3.3 billion — or $5.3 billion with financing costs — on new gas units at Cayuga is still pending before the Indiana Utility Regulatory Commission.
Stan Pinegar (Courtesy Duke Energy Indiana)
The project would add more than 470 megawatts to the aging facility’s 1005-megawatt capacity. After more than 55 years in operation, Cayuga is the oldest coal-fired facility left in Duke’s Hoosier portfolio.
The utility previously planned to replace and retire the existing coal units.
But now — if regulators approve the plan — Duke has agreed to perform an engineering study to evaluate the technical feasibility of continued operation of the coal units by third parties that may be interested in purchasing them.
Duke would issue a request for proposal to solicit interest in the coal units, which could be available for sale after the two proposed gas units are operational in 2029 and 2030, according to the news release.
“The settlement is aligned with (Braun’s) recent executive orders aimed at making sure there’s a careful evaluation before retiring coal units and encouraging additions to the state’s power supplies,” Pinegar said. “The new natural gas units we’ve proposed add additional, highly efficient power capacity to Indiana’s electric grid.”
Reliable Energy President Savannah Kerstiens said the agreement is a “meaningful step toward preserving reliable, in-state power generation for Hoosiers.”
She praised Braun and Indiana Secretary of Energy and Natural Resources Suzanne Jaworowski for their leadership, remarking that their “continued commitment to Indiana’s energy resilience made this outcome achievable.”
“As the state works to attract new investment and grow the economy, ensuring affordable electricity for working families means keeping every option on the table to maintain generation capacity,” Kerstiens added.
Age: not just a number
Cayuga’s coal units were built with estimated 30-year lifespans and have already operated for almost twice as long as expected, according to rebuttal testimony Pinegar filed late last month.
They “have reached the end of their useful lives from the Company’s perspective,” he wrote.
Performing the upgrades needed to further extend those lifespans “overlooks the additional maintenance required and increased reliability issues experienced by aging generating units,” Pinegar continued.
He added that Cayuga’s coal units have been and remain at risk of being derated due to operational constraints like river water temperature.
“We believe retirement of the units is in the best interest of our customers. That Duke Energy Indiana plans to permanently cease generating electricity from the Cayuga coal units, however, does not necessarily mean these units must cease operations altogether,” Pinegar wrote.
Duke plans to repurpose many of the coal-related assets to “reduce costs for customers.”
But if a third party does want to take over the coal units, it would be responsible for procuring the interconnection, air permit, and other assets required to continue or restart operations.
Such activities “can and should be done without impacting affordability for our existing retail customers,” per Pinegar’s rebuttal testimony.
If the natural gas project is approved, Duke estimates that the first tracker filed would add $1.87 to the typical residential customer’s monthly bill.
But that amount would rise as construction continues; the state agency tasked with protecting utility consumers estimated a total impact of $19.37 monthly. The Office of Utility Consumer Counselor in May asked regulators to reject the plan, which it described as “ill-advised.”
Duke contends the pay-as-you-go approach will “smooth out” the impact to customers and save them an estimated $812 million over the life of the revamped facility.
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