Indianapolis Power and Light Co. received the state’s go-ahead Wednesday for two major power projects at a cost of more than $600 million.
The larger piece will be a new plant near Martinsville that will convert natural gas to electricity. IPL has estimated the plant will cost about $631 million.
The Indiana Utility Regulatory Commission also signed off on IPL's plan to spend $36 million on converting two generators at its Harding Street plant in Indianapolis from coal-burning to natural gas-powered.
“We are pleased that the IURC approved IPL’s plans as the most cost-effective and reliable solution to replace generation that will retire as a result of increasing environmental regulations,” IPL President and CEO Kelly Huntington said in a prepared statement.
In Martinsville, IPL will retire six coal-fired units at its Eagle Valley Generating Station and replace them with a 650-megawatt combined-cycle gas turbine in effort to reduce emissions and meet federal environmental mandates.
IPL promotes the plant as a more efficient and environmentally friendly way to generate electricity for its 470,000 retail customers in the Indianapolis area. The project is supposed to create 660 construction jobs and 25 permanent ones. The plan is expected to produce $1.6 million per year in tax revenue for Morgan County.
Critics have challenged the merits of natural gas as a fuel source.
Kerwin Olson, executive director of the Citizens Action Coalition, contended in IURC filings that gas, despite some advantages over coal or nuclear power, carries concerns due to the environmental effects of hydraulic fracturing.
He also pushed for moving customers away from “declining block rates,” which decrease costs for customers as their consumption increases. Reversing the system to inclining rates would reduce electricity consumption overall, he argued.
The group urged IPL to consider more wind energy, but the utility retorted that the energy source could not produce enough electricity to meet demand.
Attempts to reach Olson for comment Wednesday afternoon were unsuccessful.
A representative for the Sierra Club's Indiana Beyond Coal Campaign on Wednesday also called for more renewable energy sources.
“Our city and our state possess enormous potential for clean, renewable energy that will power our homes, create jobs, and attract investments that will benefit our communities," said representative Jodi Perras. "Instead of jumping from one expensive and unsustainable fuel to another, IPL should be investing in more wind, solar, and energy efficiency solutions that will put our city on a cleaner and stronger path."
The IURC will rule on any changes to IPL customers’ rates as a result of the projects, a spokeswoman for the state agency said. Wednesday’s ruling did not contain any specific rate projections.
The state approval follows up on a separate approval last August on $511 million in IPL upgrades to an existing plant in Petersburg, as well as another unit at Harding Street.