Indiana regulators have signed off on a settlement over Duke Energy’s controversial 618 MW Edwardsport coal gasification plant in Knox County.
Under the agreement, Duke Indiana rate payers will bear a 2% rate increase, instead of a proposed 3.6% increase.
The 2% rate increase will help pay for the $3.5 billion plant that has been plagued by cost overruns. The settlement calls for Duke to pay $87.5 million of operating costs.
Duke’s Edwardsport has generated at least as much controversy as electricity. The coal gasification project was originally slated to cost $1.9 billion, but cost have risen to $3.5 billion.
Under a settlement reached in January, Duke Indiana agreed to refund customers $87.8 million. Duke also agreed to provide $500,000 to fund solar installations for community organizations and/or low income customers and to donate $500,000 to a fund that benefits Duke’s low income customers. And the utility agreed to stop burning coal at its Gallagher plant in New Albany by 2020, and to pay $2.5 million in attorneys’ fees to an industrial group involved in fights over the project.
The Edwardsport plant went commercial in 2013 but had operating trouble in 2014, often operating at less than 50% of its capacity. Consumer groups also objected that Duke was charging customers while the plant was still in the testing phase.
The plant still uses coal—1.7 million to 1.9 million tons of Indiana and Midwestern coal a year—but converts it through a chemical process to a synthesis gas that is used to generate electricity. Burning gas produces far fewer pollutants than does burning coal. Gasification technology is not new, but very few integrated gasification-generation plants are in commercial operation.
Mississippi Power is building a 582-MW gasification plant in Kemper County, Mississippi, and it also has been plagued by cost overruns. In the second quarter, Southern Company, Mississippi Power’s parent company, added $9 million to the expected cost of the Kemper project, bringing the total to about $6.8 billion.