Duke Energy Indiana files cost update for coal gasification plant

Plainfield, Ind., November 25, 2009 — Duke Energy Indiana said design modifications and growth in the scope of its Edwardsport coal gasification plant under construction in southwest Indiana are projected to add about $150 million, or 6 percent, to the project’s $2.35 billion cost.

The company filed the information with the Indiana Utility Regulatory Commission as part of its semi-annual update.

Still to be determined is how much will need to be added over and above the $150 million as contingency funds necessary to complete a project of this size and type.

Duke Energy Indiana is asking the commission to schedule a separate proceeding by next March, when most of the project’s engineering will be complete, so that the company can provide a more detailed, revised cost estimate.

The company will use the next few months to examine future cost projections associated with labor, engineering, procurement and plant start-up. After next spring, labor costs will be a key variable driving the final project cost.

Previously, Duke Energy Indiana estimated the project would result in an average 18 percent customer rate increase between 2009 and 2013. By March, the company will file revised rate impact estimates.

The IURC granted the company permission in 2007 to construct the technologically advanced clean coal power plant in Edwardsport, Ind. The commission will need to approve any cost increase for the plant. The project is slated for completion in 2012.

The 630-MW plant will use advanced integrated gasification combined cycle technology. The new plant will produce 10 times as much power as the existing plant at Edwardsport, yet it will emit less sulfur dioxide, nitrogen oxide and mercury than the much smaller plant it replaces. The plant will also emit 45 percent less carbon dioxide per MWh than the existing facility.

The plant is slated to receive more than $460 million in local, state and federal tax incentives, which will help reduce the customer cost impact. The company will retire the existing plant — with coal and oil units built between 1944 and 1951 — upon completion of the new facility.

IGCC technology uses a coal gasification system to convert coal into a synthesis gas (syngas). The syngas is processed to remove sulfur, mercury and ash before being sent to a traditional combined cycle power plant, using two combustion turbines and a steam turbine to efficiently produce electricity.

The technology is also capable, based on certain modifications, of removing the carbon dioxide from coal during the syngas conversion process to enable it to be stored or sequestered in underground geologic formations.

The company has a request pending before state utility regulators to study permanent underground carbon storage of a portion of the plant’s carbon dioxide emissions.

Duke Energy also is meeting increased Indiana power demands through green power sources such as wind energy. Duke Energy Indiana has a 20-year contract with the Benton County wind farm. The company also has filed a plan with state utility regulators to increase tenfold its customer energy efficiency program savings.

Duke Energy Indiana’s operations provide about 6,800 MW of electricity capacity to about 780,000 customers, making it the state’s largest electric supplier.

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