American Electric Power Co. Inc. could shut down both units at its massive Rockport coal plant in Indiana before the end of 2028 after reaching a settlement agreement with numerous parties, including consumer and environmental advocates.
AEP utility Indiana Michigan Power Co. and wholesale subsidiary AEP Generating Co. agreed to retire the second unit at the 2,600-MW Rockport coal plant in Spencer County, Ind., "no later than December 31, 2028" as part of the agreement reached with the Indiana Office of Utility Consumer Counselor, the I&M Industrial Group, Citizens Action Coalition of Indiana Inc., the Sierra Club and municipalities.
The parties filed their settlement agreement Sept. 13 with the Indiana Utility Regulatory Commission (IURC cause 45546) and are seeking an order on or before Dec. 15.
In April, the AEP subsidiaries reached an agreement to acquire 100% of the interests in 1,300-MW unit 2 at the Rockport plant for $115.5 million from Wilmington Trust Co., according to a federal filing. The transaction is expected to close at the end of a lease agreement in December 2022.
The settlement calls for AEP to exclude costs related to the unit's acquisition from retail rates as well as exclude "any going-forward costs specifically associated with the continued ownership and operation of Rockport Unit 2 incurred after termination of the Rockport Unit 2 lease."
In addition, there is a transition plan that limits the amount of Rockport unit 2 capacity that can be bid into the PJM Interconnection capacity auction to meet Indiana Michigan Power's fixed resource requirement, beginning with the 2023-2024 delivery year. "Beginning with the 2024/2025 PJM Planning Year and through the remainder of its operating life, 100% of Rockport Unit 2 will be treated as a merchant generating unit and participate in the PJM markets as [a reliability pricing model]-only resource," the agreement states.
Under the settlement, Indiana Michigan Power also agreed to evaluate the earlier retirement of Rockport unit 1 in its integrated resource plans. Specifically, the utility must evaluate the unit's retirement in May 2024, May 2025 and May 2026.
In July 2019, AEP agreed to retire its 1,300-MW Rockport unit 1 by the end of 2028 as part of a U.S. District Court-approved modified consent decree concerning air pollution from multiple AEP plants in the Midwest.