Clean Coal Indiana Project Selected For $133 Million In Federal Tax Incentives - Duke Energy

News Release
Nov. 30, 2006

Clean Coal Indiana Project Selected For $133 Million In Federal Tax Incentives

PLAINFIELD, Ind.— Duke Energy’s future clean coal power plant in Edwardsport will be eligible for $133.5 million in tax credits if it is built.

The U.S. Treasury Department and the Internal Revenue Service working in partnership with the U.S. Department of Energy announced today that the Indiana project is one of two bituminous coal gasification projects selected nationwide for the tax credits.

Duke Energy Indiana, along with Vectren Energy Delivery of Indiana, is studying building an approximately 630-megawatt power plant that will use advanced integrated gasification combined cycle technology. The technology offers a way to burn coal with less environmental impact than traditional coal-fired electric plants.

“This plant could be a way to use coal—a resource that’s plentiful in our state—to meet our growing energy needs, “ said Duke Energy Indiana President Jim Stanley. “We’re very appreciative of the extraordinary level of state, local and now federal support this project has received. Governor Daniels, the Indiana legislature and Knox County officials have worked hard and creatively to secure financial support for this important technology.”

Duke Energy Indiana has selected its existing power plant site in Edwardsport, Ind., as the site for the new coal gasification plant. Upon completion of the IGCC project, the existing plant -- with coal and oil units built between 1944 and 1951 – will be retired.

Based on industry data, a 630-megawatt IGCC plant could cost approximately $1.6 to $2.1 billion. The project would use an average of 800 to 900 construction workers over a three-year period, with a peak work force of 2,000. Ongoing plant operations would employ approximately 100 people.

The IGCC project is located in Knox County and has received support from local and area residents. The Knox County Commission unanimously approved tax incentives for the project. Indiana state legislation to encourage clean coal technology also has made tax incentives available to the project.

Duke Energy Indiana and Vectren Energy Delivery of Indiana are working with GE Energy and Bechtel Corporation on an engineering and design study for the plant, which is expected to be completed by early to mid-2007.

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.

IGCC technology could also remove the carbon dioxide from coal during the syngas conversion process to enable it to be stored or sequestered in underground geologic formations. This is not in the current scope of the IGCC plant project, but it could be added as carbon dioxide capture and sequestration technology advances and if it is determined that the Edwardsport site has the appropriate geology to sequester carbon dioxide underground.

Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in the Americas, including 28,000 megawatts of regulated generating capacity in the United States. Duke Energy’s Indiana operations provide 7,200 megawatts of safe, reliable and competitively priced electricity to more than 750,000 electric customers, making it the state’s largest electric supplier. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

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