UPDATE: Watchdog cheers Vectren decision

August 2, 2007

Saying its need for electricity can be filled in other ways, Evansville-based Vectren Corp. announced yesterday that it will not go forward with a southwestern Indiana coal gasification project it planned with Duke Energy Corp.

Vectren instead will turn to buying power and will rely more on natural gas-fired peaking plants, renewable resources and persuading customers to conserve.

The $2 billion, 630-megawatt plant, which is to be built near Edwardsport, was expected to cost Vectren $400 million.

Vectren would have had an option to own 20 percent of the project, which would replace a Duke plant at the site

"It was not right for our customers right now," said Vectren spokeswoman Chase Kelley. "It's not about cost. It's about the scope and the scale of the project. Do we really need that much power?"

Jerry Polk, an attorney for Citizens Action Coalition, an Indiana group opposing the plant, said, "It just didn't make sense for them at all. It doesn't make sense for Duke, either."

Natural gas peaking units, energy-efficiency measures and renewable generation such as wind power are more appropriate alternatives, Polk said.

"What makes the plant look so good to [Duke] is the extra capacity and off-system sales [potential]," he added.

Citizens Action Coalition also has argued that costs for the developing technology could soar, noting that when the plan was first proposed, the price was estimated at $1.3 billion.

The handling of carbon produced by the process-injecting it underground-also has raised concerns.

John Blair, director of the Evansville-based environmental group Valley Watch, said previously that proposing such a plant without knowing carbon-sequestration costs is like writing Duke a blank check: "We do not even know, at this time, whether permanent sequestration is even possible, let alone the likely enormous cost involved."

Vectren continues to partner with other utilities, including Indianapolis-based Citizens Gas, on another coal gasification plant proposed for southern Indiana. But that venture, known as Indiana Gasification, would produce fuel-grade gas and not be used by Vectren to generate electricity.

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