Duke Energy Corp. has reached a tentative settlement with a consumer advocacy agency and a group of industrial customers that will mitigate rate increases that have resulted from construction of a power plant in Edwardsport.
The agreement—which needs approval from the Indiana Utility Regulatory Commission—is expected to save ratepayers $85 million over what they might have paid.
If approved, the plan will still result in a 2-percent increase in customer bills, Duke said.
At issue is the date that the 618-megawatt plant—which uses new technology to gasify coal—actually went into service. That matters because a previous agreement had called for Duke shareholders to bear the plant’s startup and testing costs. Duke had hoped to set the “in-service” date at June 7, 2013. But industrial customers and the Indiana Office of Utility Consumer Counselor—which represents ratepayers in utility cases—had argued the plant was still in startup and testing phases then.
Originally, the OUCC had sought nearly $115 million in savings for customers. Under the new agreement, the startup date for the purposes of ratemaking will be set up at June 7, 2013. In exchange, however, Duke agreed that shareholders will fully cover an additional $85 million in operating costs.
“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 written statement.
“With this settlement, we’re on track toward putting some outstanding regulatory issues behind us,” she said. “Importantly, Edwardsport’s performance has continued to improve, and the plant performed well this summer when power was needed most.”
But Indiana Utility Consumer Counselor David Stippler had a different take, saying in a statement that “the Edwardsport plant has not met its performance expectations during the last two years while operating costs have risen.”
“This agreement ensures that a significant portion of those rising costs will not be borne by Duke Energy’s Indiana customers, while providing the utility with the chance to continue to address the plant’s level of operations,” he said. “It also does not waive our rights to object to future costs if the plant fails to perform at an acceptable level.”
In addition to the $85 million in savings, OUCC officials say the agreement calls for Duke to provide:
— $250,000 to the OUCC to fund expert witnesses and related expenses.
— A $500,000 contribution from Duke Energy shareholders to the Battery Innovation Center in southern Indiana to advance research of renewable energy storage systems. This funding is in addition to a $1 million contribution to the center included in the 2012 agreement.
— A $500,000 shareholder contribution to the Indiana Utility Ratepayer Trust (in addition to a $2 million contribution in the 2012 settlement).
— A $100,000 shareholder contribution to the Indiana Low Income Home Energy Assistance Program to benefit Duke Energy customers (in addition to $3.5 million contributed under the 2012 agreement).
— An eight-year rate amortization of the IGCC plant’s costs (compared to the currently authorized three-year amortization), reducing the rate impact.
— Caps on rate recovery of future costs for the plant’s daily operations and for capital costs through 2017.