Dive Brief:
- Duke Energy Indiana has reached a settlement with some of the state’s key consumer groups addressing operating costs at the company's Edwardsport coal gasification power plant.
- If approved by regulators, Duke will take a pretax charge of approximately $90 million in the third quarter of 2015.
- Though the Edwardsport facility had issues last year, Duke said the facility's gasification availability factor averaged 72% for July and August, and July’s power generation was the largest since operations began.
Dive Insight:
Duke has reached a settlement with key groups that would limit the amount customers are required to pay for the plan's operations since it was declared commercial. The proposal, filed last week, will require approval by the Indiana Utility Regulatory Commission approval and would resolve all Edwardsport-related proceedings.
The settlement includes the Indiana Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group and Nucor Steel-Indiana.
“If approved, this agreement limits what customers will pay for plant operations since Edwardsport was declared commercial,” Duke Energy Indiana President Melody Birmingham-Byrd said in a statement. “With this settlement, we’re on track toward putting some outstanding regulatory issues behind us. Importantly, Edwardsport’s performance has continued to improve, and the plant performed well this summer when power was needed most.”
The facility faced outages and maintenance issues last year, which dropped its capacity factor significantly. After output fell to less than 1% of capacity, repairs were performed and output increased, but only once got to above 50% of capacity. September 2014 capacity was 15%, in October it was 27%, in November it was 71%, but it fell to 20% in December.
But now, Duke appears to have the plant back on track, and officials say Edwardsport’s gasification availability factor averaged 72% for July and August, and July’s power generation was the largest since operations began.
The 618-MW facility is located in Knox County, and was declared commercial in 2013.
Under the proposed settlement, Duke agreed not to bill customers $85 million of operating costs deferred since the plant’s in-service date. The remaining operating costs charged to customers would result in an approximately 2% customer bill increase.
Duke said a decision on that could come in the first half of next year.
The parties also agreed that the plant’s commercial operation in-service date would remain June 7, 2013, for accounting and ratemaking purposes. During 2016 and 2017, Duke said it would cap annual plant operating, maintenance and capital costs billed to customers. The agreement also designates $5 million, out of shareholder funds, for attorney fees, litigation expenses, and funding commitments, including a customer bill credit and additional resources for battery storage research, low-income energy assistance and the Indiana Utility Ratepayer Trust.
As a result of the settlement, Duke said it anticipates a $90 million pretax charge in the third quarter. Charlotte Business Journal points out that brings the company's total charges related to the plant to $956 million.
