AES Indiana Proposing Coal to Gas Conversion at Petersburg
AES Indiana has announced plans to transition Petersburg Units 3 & 4 from coal to natural gas. If approved by the Indiana Utility Regulatory Commission (IURC), AES Indiana would be on a path to be the first investor-owned electric utility to stop burning coal. The conversion is projected be complete in 2026 and the utility estimates it will save customers around $280 million over 20 years and reduce CO2 emissions by 43%. AES Indiana President Brandi Davis-Handy, said in a statement announcing the plan, "Repowering our Petersburg Generating Station aligns with our state’s all-of-the-above energy policy while allowing us to continue our 50+ year commitment to Pike County."
The utility’s most recent integrated resource plan (IRP), submitted to the IURC on December 1, 2022, included the conversion of Petersburg Units 3 and 4 from coal to natural gas in its preferred portfolio and short-term action plan. According to testimony filed by the company, it currently generates 31% of its energy from coal and 51% from natural gas. In its short-term action plan, the company projects that natural gas will account for approximately 70% of its resource mix once the Petersburg conversion is complete.
AES Indiana intends to stagger the unit outages to continue serving customers during conversion. Petersburg Unit 3 will be converted first with the outage beginning in February 2026 and commercial operation commencing in June 2026. Once Unit 3 has reach operation Unit 4 will begin conversion with a commercial operation date of December 2026.
The project was competitively bid and AES Indiana received three proposals in response to an RFP that was issued in March of 2023. The Babcock & Wilcox Company was selected to complete the conversion project. Additionally, Midwestern Gas Transmission Company will construct a one-mile natural gas transmission lateral to provide service to the converted units.
AES Indiana is likely the first utility to seek approval of a coal-to-natural gas conversion under the amended clean energy project statute (Ind. Code § 8-1-8.5-5). The legislature revised the statute to include these types of projects and also established a 240-day timeframe for a Commission decision on a petition for a certificate for public convenience and necessity (CPCN). The company has proposed a procedural schedule which anticipates a late-July evidentiary hearing and requests an order from the Commission by October 30, 2024.