Regulation and Duke Energy and Electric and Energy & Environment and Utilities

Groups seek investigation into plant's power woes

March 7, 2014

Environmental and citizens' groups are asking Indiana regulators to launch a formal investigation into problems and delays that have sharply limited the power output of Duke Energy's $3.5 billion coal-gasification plant.

The groups said in a motion filed Thursday with the Indiana Utility Regulatory Commission that the southwestern Indiana plant has been plagued by failures and outages that have deeply reduced its power production. IBJ reported on the plant's slowing output Wednesday.

The plant generated only 4 percent of its maximum capacity in January and an average of 37 percent of maximum capacity from June to December.

Duke Energy customers continue paying for the plant's construction and repairs on their monthly electric bills. A typical household using about 1,000 kilowatt hours a month is now being charged $12.67 a month for costs related to the plant.

According to The Indianapolis Star, the groups seeking the investigation are the Citizens Action Coalition of Indiana, Save the Valley, Sierra Club and Valley Watch. All are longtime critics of the $3.5 billion plant, which is one of the largest, most expensive and most disputed construction projects in Indiana history.

The 618-megawatt plant that went online last year near the southwestern Indiana town of Edwardsport had an original 2007 cost estimate of $1.9 billion, but that eventually ballooned to about $3.5 billion.

In their 24-page motion, the groups argue that Duke Energy prematurely declared Edwardsport to be in commercial operation last summer before it was "actually used and useful for the convenience of the public."

The plant about 60 miles north of Evansville broke down six days after the opening and remained offline for nearly a month. Since then, it has suffered numerous problems, including leaking valves, cracked pipes and frozen machinery.

The environmental groups say that by opening the plant before it was ready, Duke Energy could try to recover repair costs from electricity customers, despite a settlement the company reached in 2012 that set a cap of $2.595 billion, plus millions in financing costs.

Duke Energy said Thursday that an investigation is unnecessary because it regularly provides updates on plant operations to the IURC.

"A forum already exists to discuss plant operations," company spokeswoman Angeline Protegere wrote in an email.

She added that the plant is complex and will require time to work out operational issues.

The settlement involving the plant followed years of legal fighting over the project, which became involved in an ethics flap involving the regulatory commission's staff and the utility's executives.

The plant converts coal to synthetic natural gas and uses it to generate electricity. It's the largest plant of its kind in the world.

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