Duke Cost Increase


Duke Energy's proposed coal-fired power plant is becoming, as expected, as huge boondoggle.

As predicted by CAC, Duke Energy has filed with the Indiana Utility Regulatory Commission to announce that the construction costs of its proposed, new coal-fired power plant will not be $1.9 billion but $2.35 billion, an 18% increase in cost. Among other things, Duke Energy requests that the Commission to approve the new cost estimate for constructing the plant. The catch for ratepayers is that this will not be the last request.

Consider this:

  • All over the country, coal plants are being cancelled due to excessively high costs. Similarly, you may recall that Vectren, who had once partnered with Duke on the current power plant proposal, backed out, citing cost and the fact that Vectren (Southern Indiana Gas and Electric in this case) could meet demand with energy efficiency programs, renewable energy and has, for the time being, dropped its proposed 100 megawatt natural gas-fired peaker in favor of buying power from existing power plants at much lower cost.

  • Construction costs continue to skyrocket as a result of steel and other construction material demands in China and Indiana . Steady and significant construction cost increases for coal-fired power plants have been sustained over the last few years, and we can only expect more.

  • The cost of coal is also rising. For instance, according to the Energy Information Administration (part of the U.S. Department of Energy) the cost Illinois Basin coal (available in Indiana ) nearly doubled in one year, from $30 to nearly $60 per ton. Coal Indiana imports from Appalachia is now $90 per ton.

  • Moreover, this new cost increase does not take into account the capturing of and shooting carbon dioxide into the ground (known as carbon capture and sequestration) which, by Duke's own estimates, would increase the cost of the plant by 67% and will not be available for at least 20 years. Carbon capture and sequestration (CCS) technology is a requirement for coal if it is to survive as an electric generating resource. However, CCS is pure theory at the scale required and the costs would be astronomical.

The bottom line is that the era of “cheap” coal is over. New coal-fired power plants are no longer a viable option financially. The only whimper of hope they have is in the political arena where Duke Energy has been very busy. The argument is that since we rely heavily on coal now, we must into the distant future as well. This is not true. Available energy efficient technology (for instance, using lighting and appliances that use less energy to operate) can now meet 50% of our electric demand. By 2020, renewable resources could easily meet 20% of our electric demand cost-effectively. New advances in solar technology are expected to drive down the cost to below Duke's proposed plant within 4 to 5 years.

In other words, we do not need a 50 year investment to tie up billions of dollars of ratepayer resources when the investment is already obsolete financially and, within a few years, technologically. Those dollars should be used to directly benefit ratepayers and the economy as a whole through energy efficiency and renewable energy programs, not Duke Energy's bottom line.

The good news for ratepayers is that Duke's current filing to gain IURC approval for the 18% increase in the estimated cost of the new plant can be challenged. CAC is now mustering the resources to intervene in this proceeding.

Please e-mail, write or call:

  • Governor Mitch Daniels: Inform him that his continued support for Duke's new coal plant is detrimental to your household finances and to the economy. Ask him why he cares so much about property taxes but looks the other way when it comes to utility bills.

  • The Office of Utility Consumer Counselor: Tell them to oppose the increase and power plant altogether because it is not needed, as we have cheaper options, particularly energy efficiency programs, that can meet our electric energy needs.

  • The Indiana Regulatory Commission: Tell them to force Duke Energy to implement a sound energy efficiency program before we even think of a costly, new coal-fired power plant.