Duke Energy Indiana, which has run into problems at the Indiana Utility Regulatory Commission with cost overruns at the Edwardsport coal gasification plant, has some revised cost numbers, said parent Duke Energy (NYSE: DUK) in an Oct. 31 SEC filing.
“Lower than projected revenues from test output and delays due to more extensive testing conditions have added approximately $174 million to the previously-announced $2.98 billion estimate, excluding [allowance for funds used during construction],” said the filing. “The new estimate is $3.154 billion, excluding AFUDC. Current projected AFUDC on total estimated project costs is approximately $400 million.”
As a result of the increase in the cost estimate, parent Duke Energy and Duke Energy Indiana expect to record a pre-tax charge to earnings of about $180m in the third quarter of 2012 which will be treated as a special item and excluded from Duke Energy’s adjusted diluted earnings per share.
In April, the company entered into a settlement agreement with the Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group and Nucor Steel-Indiana to cap costs to be reflected in customer rates at $2.595bn, including AFUDC through June 30. Under the settlement agreement, the company is allowed to recover additional AFUDC after June 30 until customer rates are revised, with such recovery decreasing to 85% on AFUDC accrued after Nov. 30, 2012. The agreement is subject to approval by the Indiana commission.
The Edwardsport project’s estimated commercial operation date has moved from early 2013 to mid-2013, the filing added.
In November 2007, Duke Energy received approval from the Indiana commission to build this integrated gasification combined cycle (IGCC) unit at the former 160-MW Edwardsport plant in Knox County. This 618-MW IGCC will be one of the cleanest and most efficient coal-fired power plants in the world. The old coal capacity at the plant has been retired.