Regulation and Duke Energy and Electric and Gas and Energy & Environment and Utility rates and Utilities

Court gives Duke Energy go-ahead for rate increase

March 19, 2014

Duke Energy won approval from an Indiana court Wednesday to raise electricity rates to pay for its $3.5 billion Edwardsport coal-gasification power plant.

The Indiana Court of Appeals ruled unanimously against environmental and consumer groups that sought to overturn a 2012 settlement between Duke and state regulators that authorized a 16-percent increase in the monthly bills of 790,000 Indiana customers.

The Indiana Utility Regulatory Commission decision had capped at $2.6 billion the amount of construction costs Duke Energy could pass onto its customers, with the company absorbing nearly $900 million in cost overruns.

Angeline Protogere, a spokeswoman for Charlotte, N.C.-based Duke Energy Corp., said much of that rate increase was already reflected in customers' rates, and said in a prepared statement that the settlement "shares the cost of the project between our customers and shareholders."

The 618-megawatt plant that went online last summer 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.

The appeals court acknowledged the cost overruns, but it said that state regulators had taken that into account. It also said that Duke had made plans for possible future requirements that it control carbon emissions at the plant, another aspect of the project that the groups had challenged.

The activist groups, including the Sierra Club and the Citizens Action Coalition, had also raised questions about an ethics flap that arose after Duke officials and regulators were found to be discussing the project's rising costs before an initial 2010 agreement that was later withdrawn.

But the judges said that "despite substantiation of improprieties prior to submission of a first settlement," the second settlement was valid because the officials accused of misconduct were no longer involved.

Citizens Action Coalition Executive Director Kerwin Olson said the ruling confirmed the challengers' belief that Edwardsport was a collaboration between Duke and the state government.

"This ruling kind of confirms our opinion that the fix is in regarding Edwardsport," Olson told The Associated Press.

"We really feel like this is one of those cases for whatever reason the state of Indiana chooses to ignore the evidence and the facts to protect this power plant for some reason," he said.

Olson said his group will seek a rehearing or appeal to the Indiana Supreme Court.

"I can assure you we have every intention of taking this as far as we can," he said.

A spokeswoman for Gov. Mike Pence had no immediate comment.

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