Duke Energy (NYSE: DUK) has failed to keep its promises to the State of Indiana that the Edwardsport coal gasification power plant would reduce greenhouse gas emissions and protect ratepayers from future carbon regulations, the Sierra Club said on Dec. 17.
In testimony filed Dec. 15 with the Indiana Utility Regulatory Commission, Beyond Coal Central Region Deputy Director Nachy Kanfer recommended that the commission require Duke Energy — and not Duke ratepayers — to bear the future costs of CO2 compliance.
“[T]he Commission should put Duke on notice that it will bear responsibility for those costs, not Duke’s captive ratepayers, as the regulation of carbon is here and Duke should be required to address its failed carbon mitigation promises made at the time Duke initially received approval for Edwardsport. Duke’s ratepayers were promised a facility that would reduce, not heighten, their exposure to carbon regulation risk,” Kanfer said.
Kanfer’s testimony was filed in a case involving the operating costs and performance of the Edwardsport IGCC. It was filed on behalf of the Citizens Action Coalition of Indiana, Save the Valley, Sierra Club, and Valley Watch.
The Edwardsport project was promoted as a way to “modernize” Duke’s fleet with “advanced clean-coal generation.” The plant was built, however, without any technology to capture carbon, the club said. Nevertheless, Duke executives promised that the plant would reduce carbon emissions even without carbon capture because it would be more efficient than a traditional coal-fired power plant.
Actual operation of the plant since it was declared “in service” by Duke in June 2013 has proven otherwise, the club added. According to testimony filed for citizen groups by technical expert David Schlissel of Schlissel Technical Consulting, Edwardsport’s CO2 emission rate in 2013 and in the first nine months of 2014 was higher than Duke’s four other Indiana coal plants. The figure also compares Duke power plant emissions in 2014 with the proposed federal goal for existing power plant emissions: 1,556 pounds of CO2 per kilowatt hour.
The U.S. Environmental Protection Agency has proposed new Clean Power Plan regulations for existing coal-fired power plants under Section 111(d) of the Clean Air Act. Although the regulations have not been finalized, Kanfer testified that it would be imprudent for the company to ignore the fact that utilities must plan for a future in which carbon emissions will be costly.
Much of the Dec. 15 testimony from the environmental groups, plus the state Office of the Utility Consumer Counselor, was about project costs and when the IGCC actually was in service, which has an impact on cost accounting for the project.
For example, said Duke Industrial Group witness Michael Gorman: “Duke’s testimony to the Indiana Utility Regulatory Commission (‘IURC’) outlines the importance of the testing and startup procedures to ensure Edwardsport operates consistent with its intended use and in a reliable manner. Duke’s progress reports show that Duke anticipated that Edwardsport would be declared in-service reasonably close to when it meets its substantial completion date, and completes the General Electric performance testing. Edwardsport did not meet these milestones by or near March 31, 2014.”
Gorman later added: “Through approximately September 2014, Edwardsport had only been dispatched by MISO on an economic basis once on May 28, 2014, which is outside the relevant period. During this period Edwardsport was committed to MISO based on a minimum loading capability approximately equal to its expected output. These restrictions limited Duke’s ability to operate Edwardsport as an economic base load generating resource during this time period.”