Duke Energy nears operation of Edwardsport IGCC plant

Duke Energy Indiana has gone once more into the fire with the May 29 filing with the Indiana Utility Regulatory Commission (IURC) of its eleventh semi-annual IGCC Rider request related to the nearly-completed, perennially-controversial Edwardsport integrated gasification combined cycle project.

The 618-MW IGCC project, located at the site of an old coal plant, has been plagued by cost overruns and related recriminations by outside parties.

In the May 29 filing, this Duke Energy (NYSE: DUK) subsidiary also offered its latest progress report on the project. As of the end of March, the engineering, procurement, and construction work of the project is complete with the exception of the last punch list items. All of the 214 operating systems are under the care, custody, and control of the Duke Energy Indiana operations group.

During the six-month period of October 2012 through March 2013, the primary progress on the project was the initial operation of the plant and significant portions of General Electric’s New Product Information (NPI) testing program. During this period, both gasifiers were operated extensively, the initial radiant syngas cooler (RSC) conditioning was performed, and the combustion turbine rotor design was validated.

As of the filing date of the May 29 petition, the remaining activities at the site are almost exclusively Phases 5 (Process Island) through 8 of GE’s NPI testing program, including the plant performance testing. Duke Energy Indiana continues to provide independent observer Black & Veatch access to project information on an ongoing basis. Black & Veatch personnel regularly participate in project status meetings. Members of the commission staff also regularly participate in the same status meetings. It has been, and continues to be, Duke Energy Indiana’s practice to cooperate openly with Black & Veatch and commission staff about the Edwardsport IGCC, the company added.

In the May 29 filing, the company is asking for:

  • approval of the company’s updated ongoing progress report for IGCC project; and
  • commission authorization to reflect the additional actual expenditures through March 31, 2013, for the IGCC project under construction in its retail electric rates, and to recover certain other project-related costs and credits, including applicable reconciliation amounts and including recovery of forecasted depreciation and incremental operating and maintenance costs, property insurance and property taxes related to the IGCC project via the IGCC Rider consistent with the commission’s prior decisions in the certificate of public convenience and necessity order and subsequent update cases.

Duke Energy said in its May 9 Form 10-Q report that over the course of construction, Duke Energy Indiana recorded pre-tax charges of about $897m related to the Edwardsport project including a settlement agreement. For the first quarter of 2012, Duke Energy Indiana recorded pre-tax charges of $420m related to Edwardsport. These charges were recorded in Operating revenues, Impairment charges and Operations, maintenance and other on Duke Energy’s Condensed Consolidated Statements of Operations and Duke Energy Indiana’s Condensed Consolidated Statements of Operations and Comprehensive Income.

Certain intervenors have appealed the IURC order approving the April 2012 settlement agreement and other related regulatory orders to the Indiana Court of Appeals. No briefing schedule has been set, Duke noted in the Form 10-Q.

“The costs for the Edwardsport IGCC plant are recovered from retail electric customers via a tracking mechanism, the IGCC Rider,” the Form 10-Q explained. “Duke Energy Indiana files information related to the IGCC Rider every six months. In the currently pending tenth semi-annual IGCC rider proceeding, Duke Energy Indiana is requesting recovery associated with the capped construction costs of the project and forecasted operating expenses for the period the plant is expected to be in-service. On April 11, 2013, the [state Office of Utility Consumer Counselor] and the Joint Intervenors filed testimony. The OUCC requested additional information concerning the operating expenses, but otherwise did not dispute Duke Energy Indiana’s calculated rider amounts. The Joint Intervenors recommended rate disallowances of financing charges due to the extension of the in-service date calculated at approximately $77 million, which they deemed to be imprudent. Additionally, the Joint Intervenors requested various ratemaking changes, including interest to be paid on the credit to be provided to customers pursuant to the IURC order on the April 2012 Settlement Agreement. Finally, the Joint Intervenors have requested the IURC to open a docket related to the future reliability of the plant. Duke Energy Indiana will respond in rebuttal testimony in May and an evidentiary hearing is scheduled for June 2013.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.