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Duke Energy Responds to Indiana Utility Regulatory Commission Order Oct. 14, 2010

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PLAINFIELD, IND. -

The Indiana Utility Regulatory Commission today announced it has initiated an internal investigation of Duke Energy’s cases over which commission attorney Scott Storms presided between Jan. 1, 2010, and Sept. 30, 2010. The action is in response to an Oct. 5 request by Indiana Governor Mitch Daniels.

In addition, the commission stated it would internally audit all Edwardsport coal gasification plant cases dating back to 2006. The commission requested Duke Energy Chairman, President and Chief Executive Officer James E. Rogers appear at a Nov. 3 technical conference to describe the continuing need for the company’s Edwardsport plant, which is under construction in southwest Indiana.

“We understand the state’s actions and recognize the need to ensure public trust,” Rogers said. “This has my full attention and I am prepared to appear before the commission on Nov. 3 to reaffirm the need for and benefits of the Edwardsport plant for our Indiana customers. Edwardsport is key to modernizing Indiana’s aging electric system, which has not added a major new power plant in more than two decades.”

Duke Energy recently hired Storms to fill an opening in the company’s legal department. On Oct. 5, Duke Energy placed Storms and Mike Reed, Duke Energy Indiana president, on administrative leave. The company has appointed Doug Esamann interim president of its Indiana service region.

Duke Energy reached a settlement with key consumer groups that capped the Edwardsport project’s costs at $2.975 billion. The company’s current cost estimate is $2.88 billion. The settlement lowers the customer rate impact from an overall average 19 percent to 16 percent by 2013. The average residential rate increase will be a total of 14 percent by 2013. The settlement case was filed with the commission on Sept. 17. That case is still pending and remains scheduled for hearing Nov. 29.

Plant costs began phasing into customer rates in January 2009 through semi-annual regulatory proceedings. This “pay as you go” approach lowers total project financing costs, easing the customer rate impacts by spreading them out over time.

Additional Information on Edwardsport
The Edwardsport project will be the largest in the world to use advanced technology to gasify coal, strip out many of the pollutants, and then burn that cleaner gas to produce power. Consequently, it will be one of the cleanest coal-fired plants in the world.

The plant can use local, Indiana coal with significantly less environmental impact. It will replace 60-plus-year-old power generating units with state-of-the-art efficiency. The project, factoring in aspects such as engineering, construction and procurement, is about 70 percent complete. Actual construction is about 50 percent done.

Location:  Edwardsport, Ind., about 20 miles northeast from Vincennes
Size:  618 megawatts -- enough energy to power more than 494,000 average-sized homes. It will be the world’s largest electric power plant to use advanced coal gasification technology.
Economic Impact: One of the largest construction projects in Indiana

  • Approximately 2,500 construction workers and other professionals are currently working on site; about 200 will be added this fall.
  • 110-120 permanent full-time jobs will be provided once the plant begins operations in 2012.
  • More than $700 million in contracts so far have been awarded to Indiana businesses as part of the work.
  • 1.7 to 1.9 million tons of coal will be used annually, supporting an estimated 170 mining jobs.
  • Annual property taxes are estimated at $37 million in years 1-10; and approximately $5 million after the first 10 years of operation.

Environmental Benefits:
Air -- Will produce 10 times as much power as the existing plant at Edwardsport, yet with significantly less environmental impact than the much smaller plant it replaces.

Water -- Will use dramatically less water. The IGCC plant will need less than one-tenth the amount of water per day compared to the current plant when it’s operating. It also will process its own industrial waste water and will be a zero-discharge facility.

Land -- Will generate marketable byproducts. The plant produces sulfur and slag for agricultural and construction materials.

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

Duke Energy is one of the largest electric power holding companies in the United States. Its regulated utility operations serve approximately 4 million customers located in five states in the Southeast and Midwest, representing a population of approximately 11 million people. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

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.  To learn more and contribute to the discussion about the energy issues of today and the possibilities of tomorrow see www.sheddingalight.org.


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