Dive Brief:
- Duke Energy Indiana last month reached a settlement related to operating costs at its Edwardsport combined cycle coal gasification facility, but more controversy is possible as the plant gets up and running, Midwest Energy News reports.
- The Citizens Action Coalition of Indiana, Sierra Club, Save the Valley and Valley Watch all signed on to a settlement originally put forth in September, agreeing to not oppose Duke's plans for recovering costs until 2017 in exchange for a $87.8 million refund to customers over extranenous billing.
- But the settlement didn't smooth over future concerns about the coal facility. Anthony Swinger, spokesperson for the Office of the Utility Consumer Counsel, told Midwest Energy News that the deal "does not preclude us from raising more concerns down the road if need be."
Dive Insight:
Duke's expanded settlement covering costs at Williamsport could quell debate in the near-term, but observers say they will continue to keep a close eye on the coal gasification plant that has been plagued by cost overruns.
“What this basically does is give Duke Energy a couple years to get the plant where it needs to be. But by no means are we precluded from further actions," OUCC's Swinger told Midwest Energy News. "And we’ll continue to watch the costs of the plant and continue to keep an eye on this.”
The intervenors had argued that Duke Energy began billing its customers for the plant's operating and maintence costs at a time the plant was still in startup and testing mode in 2013, which ratepayers are not required to cover, Midwest Energy News reports. The 618-MW facility is located in Knox County, Indiana, and was declared commercial in 2013. In additional to capacity factor issues in 2014, the cost of the plant has risen from $1.9 billion to $3.5 billion.
The Edwardsport plant attracted controversy when the state launched an ethics probe into some regulators' relationships with Duke officials.
The
original settlement, announced last year, included the Indiana Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group and Nucor Steel-Indiana. The environmental groups were brought on board by including additional savings for customers, low-income energy assistance, and solar grants for communities.
"One of the key parts of the new agreement is help for our customers most in need," Duke Energy Indiana President Melody Birmingham-Byrd said in a statement. "In addition to limiting what all customers will pay for plant operations, the revised settlement dedicates funds to help low-income customers with their energy bills. It also commits grant funds for community organizations and low-income customers interested in solar power."
“These are important safeguards for ratepayers we felt would be good to put into place,” Steve Francis, chair of Sierra Club Indiana, told Midwest Energy News. “We recognize that at some point you can get items through settlement that we wouldn’t have gotten ordinarily through litigation. So we signed on to it, and will continue to be aggressive in monitoring of the plant and intervening if it becomes necessary in the future.”
The Edwardsport facility is one of two major coal gasification plants in the United States, along with Southern Co.'s Kemper facility in Mississippi. The facilities convert coal into a cleaner-burning synthetic gas, remove the impurities such as sulfur and mercury, and then burn it in combined cycle plant like natural gas.
While air pollution regulations imposed by the Obama administration make it nearly impossible to build a traditional coal facility today, gasification technologies seek to lower the carbon intensity of coal generation to comply with air quality rules. Gasification technologies, much like carbon capture and storage, have attracted media attention and government funding, but low prices for natural gas and renewable generation have pushed most utilities to opt for those resources rather than the expensive pollution controls for coal plants.
