FEBRUARY 2009

Indiana utility regulators approve updated costs for gasification plant

The Indiana Utility Regulatory Commission has approved Duke Energy’s revised cost estimate of $2.35 billion for its clean coal gasification power plant under construction in southwest Indiana.

The commission also approved the company’s $17 million request to study capturing a portion of the plant’s carbon dioxide emissions. Duke Energy would like to explore capturing and storing carbon dioxide permanently in underground geologic formations. Carbon dioxide is a greenhouse gas associated with global warming.

Duke Energy filed its $365 million cost increase request with state regulators in May. International demand for materials and rising labor costs were the main drivers for the cost increase. The company has now negotiated contracts with major suppliers and can better forecast project costs.

The plant is expected to have a total estimated average customer rate impact of about 18 percent. The rate impact will be phased in between now and 2013.

The Edwardsport project is the first major new coal-fired power plant to be constructed in Indiana in more than 20 years. The Indiana State Utility Forecasting Group predicts that Indiana will need new power generation equal to five projects the size of this plant by 2012.

The approximately 630-megawatt 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 plant it replaces. Due to the plant’s superior efficiency, it also will emit 45 percent less carbon dioxide per megawatt-hour than the existing facility.

Duke Energy selected an existing power plant site in Edwardsport, Indiana for the project. The company will retire the existing plant – with coal and oil units built between 1944 and 1951 – prior to startup of the new facility. Construction began early last year and is scheduled to be completed in 2012.

“When it’s completed, this will be one of the cleanest, most efficient coal-fired plants in the world,” said Duke Energy Indiana president Jim Stanley. “In the Midwest, coal is plentiful and relatively low-cost, and finding ways to burn it cleanly is fundamental to meeting our customers’ demand for power. If greenhouse gases are going to be regulated, and we believe they will be, then coal gasification plants with carbon capture and sequestration technologies hold tremendous promise to reduce carbon dioxide emissions and help address global climate change.”

Integrated gasification combined cycle 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.