Duke Edwardsport Testimony Comparisons

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The following are snippets of the testimony that has been filed before the Indiana Utility Regulatory Commission (IURC) by the parties involved in the case to determine whether or not Duke should be permitted to build a new coal gasification (IGCC) power plant in Southern Indiana (Cause #43114). They are calling it "clean coal" technology, which is a contradiction in terms. There is no such thing as "clean coal."

Several documents have been entered into testimony before the Indiana Utility Regulatory Commission. The quotes below were taken from a variety of those documents. You can access these documents by going to the IURC website. Just enter the cause number in the first search box and then click "Search" at the bottom of the page.

 

Least-Cost Option

Duke Assertions Duke Contradictions CAC Response Industrial Groups Response

“According to the analysis of the most recent IRP, the installation of an IGCC plant appears to be an economical addition to the Duke Energy Indiana system at this time.

With federal, state and local incentives, this is the least-cost option under base case assumptions and demonstrates robustness over many scenarios and sensitivities.”

   --Jim Rogers (Duke CEO) testimony, page 5 lines 14-19

“Although the IW modeling (computer modeling) focused most intently on the first decade for effective planning purposes, the IGCC option is especially attractive because it has so much potential for both near- and long-term cost effectiveness while being an environmentally responsible choice.”

   --Jim Rogers (Duke CEO) testimony, page 6 lines 11-14

“In addition, in response to a data request from the Indiana Industrial Group (IIG 2.3) asking at what capacity factor the IGCC must run to be the least cost option, Duke Energy Indiana explicitly stated that Duke Energy Indiana did not perform any STRATEGIST model (computer modeling) runs to determine the capacity factor at which the IGCC must run to be the least cost option.”

   --Diane Jenner (Duke Director of Integrated Resource Planning) rebuttal, page 14 lines 16-20

“The Reference Case analysis assumes that no incentives are available for IGCC on the Federal, State, or local level for any plant including the proposed Edwardsport IGCC.”

   --Judah Rose (Duke expert witness) testimony, page 27 lines 1-3

“There is no doubt that the Edwardsport IGCC Project represents a significant capital investment, and will ultimately result in an overall increase in Duke Energy Indiana 's rates.”

   --Kay Pashos (Duke VP of Regulatory Strategy) rebuttal, page 4 lines 14-17

“The Company's own analysis shows that Edwardsport is an uneconomic resource choice for its system under a range of gas and CO2 price assumptions.”

   --Bruce Biewald (CAC expert witness) testimony, page 10 lines 8-10

“The IGCC plant, with the federal subsidies of more than $100 million from DOE accounted for, has an expected cost of $57.01/MWh, edging out the other fossil technologies. In addition, the wind resource option, at a levelized cost just under $50/MWh is preferable to all of the fossil fuel options, even without a carbon price. Similarly, demand-side management would come in at $40/MWh and below, making that the most cost effective of the available resources, even in the absence of carbon regulations.”

   --Bruce Biewald (CAC expert witness) testimony, page 40 lines 10-12 & page 41 lines 4-8

“The Joint Petitioners and other parties need to demonstrate that this plant is the least cost option.”

   --Nicholas Phillips (consultant for the Industrial Groups) rebuttal, page 11 lines 4-5

“Indiana ratepayers require protection with respect to the overall cost of the project and the reliability of the operation of the plant. To the extent Joint Petitioners are unwilling to accept these ratepayer protections, the Commission should not pass these risks to ratepayers.”

   --Nicholas Phillips (consultant for the Industrial Groups) rebuttal, page 11 lines 9-13

“Because of the uncertain impact on the economics of the proposed plant, I am concerned that it is impossible for the Commission to determine whether the Joint Petitioners' proposed IGCC plant is in fact the least cost means of meeting the electric service needs of Joint Petitioners' ratepayers.”

   --Nicholas Phillips (consultant for the Industrial Groups) rebuttal, page 5 lines 5-9

 

Energy Efficiency

Duke Assertions

Duke Contradictions

CAC Response

Comments

“However, even under the most optimistic realistic scenarios, energy efficiency alone will not meet our growing capacity and energy needs .”

   --Kay Pashos (Duke VP Regulatory Strategy) rebuttal, page 6 lines 4-6

“It should also be noted that the Company did have, at one time, a much larger set of programs that were offered to customers. However, due to a number of circumstances, … the level of spending was reduced and the programs were scaled back.

   --Richard Stevie (Duke Director of the Customer Market Analytics) rebuttal, page 7 lines 6-11

“However, the Commission should not side-step the good work that is being done in the collaborative by requiring a certain level of energy efficiency requirements in this proceeding.”

   --Richard Stevie (Duke Director of the Customer Market Analytics) rebuttal, page 10 lines 19-22

“Through our programs and involvement, Duke Energy Indiana seeks to bring energy efficiency to new levels.”

   --Jim Rogers (Duke CEO) testimony, page 26 lines 10-11

“This dedication to energy efficiency and demand-side management practices is an ongoing commitment that Duke Energy Indiana takes very seriously.”

   --Jim Rogers (Duke CEO) testimony, page 26 lines 16-17

"The most environmentally benign power plant you ever build is the one you don't build. Through energy efficiency, if we can reduce the growth in demand then we won't have to build power plants ."

   --Jim Rogers (Duke CEO), The Louisville Courier-Journal, May 1, 2007

“We've got to change the ethic of people in terms of environmental footprints. We got to change their belief about energy efficiency.”

   --Jim Rogers (Duke CEO) testimony, page 207 lines 22-24 (before the North Carolina Utilities Commission)

The cost-effective achievable electric efficiency potential in Duke Energy and Vectren's territories are large and sufficient to meet all electric load growth at least thru 2020. Pursuit of this efficiency resource would result in dramatically lower energy costs for ratepayers and avoid the need to build a new IGCC plant in the near future.”

   --Phillip Mosenthal (CAC expert witness) testimony, page 4 lines 9-13

“As shown in Exhibit PHM-2, virtually all electric load growth by 2020 can be met with efficiency. For Duke, loads would actually decrease, with a resultant average annual load growth from 2007-2020 of -0.03%.”

   --Phillip Mosenthal (CAC expert witness) testimony, page 14 lines 5-7

“CAC Witness Biewald testimony addresses costs for supply-side options. He estimates a cost for the IGCC plant proposed by Duke Energy and Vectren of at least 7 cents/kWh, or roughly 2 to 3 times the cost of efficiency resources. As a point of reference, in 1995 Vectren captured significantly larger savings than its current plans, at a cost of approximately 2.3 cents/kWh.”

   --Phillip Mosenthal (CAC expert witness) testimony, page 9 lines 12-16

Duke Energy Indiana claims an ongoing commitment to energy efficiency, yet in the mid 90's they were spending $43 million a year towards efficiency; today, that investment stands at around $5 million annually. They are saying their customers energy demands are increasing by 0.4% a year. Other states have proven demand can be reduced at least 1% a year with aggressive efficiency measures, which would meet or exceed Duke's expected need. Energy efficiency should be considered the first fuel, not the “fifth” fuel as Jim Rogers has previously stated. Former Florida Governor Jeb Bush once said “The cheapest, easiest, and fastest kilowatt we can generate is the one we save through efficiencies.” Jim Rogers also stated it takes 3, 4, or 5 years before energy efficiency “really gets rolling”. It takes that long, if not longer to build a new fossil fuel plant, which in the end will cost ratepayers billions, further harm the environment, and continue to adversely affect the health of Hoosiers. Energy Efficiency is the least-cost and the cleanest option to address the energy needs in Indiana now and in the future.

 

Renewables

Duke Assertions

Duke Contradictions

CAC Response

Comments

“The very same sign posts that we see as signaling a move to clean coal technology demand that we investigate the potential of renewable energy, although renewable energy sources cannot yet make a big enough impact on our capacity to supply our growing baseload need .”

   --Jim Rogers (Duke CEO) testimony, page 27 lines 6-9

“Energy from coal is cheaper than energy from oil and natural gas, while being more cost effective for increasing baseload capacity, than available renewable energy options.”

   --Jim Rogers (Duke CEO) testimony, page 4 lines 11-13

“But, given the magnitude of our capacity needs, renewables alone are not able to cost-effectively meet our customers' incremental energy demands.”

   --Kay Pashos (Duke VP Regulatory Strategy) rebuttal, page 5 lines 30-32

“Renewable energy options, in combination with our demand-side management programs, offer the potential for cost-effective resource options combined with efficient clean energy.”

   --Jim Rogers (Duke CEO) testimony, page 26 lines 21-23

Duke Energy includes Gov. Mitch Daniels Homegrown Energy plan in their rebuttal testimony, which states the following:

“Utility-scale wind farms can provide rural areas with significant investment and provide farmers with new sources of revenue by opening their land to new energy development, while at the same time allowing present farming activities to continue virtually unchanged… Indiana possesses viable wind resources in limited pockets scattered across the northern half of the state. Wind power could provide the electricity capacity of a new baseload power plant within the next ten years.

   --Indiana's Strategic Energy Plan, page 5

“One current study conducted in the MISO region indicates that up to 25% of system energy needs – which translates to a higher percentage by installed capacity - might be met by wind without jeopardizing system reliability and without incurring significant integration costs.”

   --Robert M Fagan (CAC expert witness) testimony, page 20 lines 5-8

“Assessment of wind energy potential in the state of Indiana by the US Department of Energy indicates a technical potential of up to 198,000 MW of installed capacity at NREL (National Renewable Energy Lab, part of the US Department of Energy) class 4 and class 5 wind sites at 100-meter turbine hub heights. This potential is estimated at 42,000 MW at class 4 sites at lower hub heights of 70 meters. The existing generation interconnection queue of the Midwest Independent System Operator (MISO) indicates a current commercial potential for wind power of over 3,000 MW in Indiana .”

   --Robert M Fagan (CAC expert witness) testimony, page 2 lines 15-22

It's clear that since Coal plants cost more than wind, and the more money Duke spends the higher their profits are, they choose coal. Duke Energy values providing their investors with high earnings over their greater societal obligations of providing least-cost service to ratepayers and providing that service with minimal environmental impact. CAC expert witness Bruce Biewald testified that wind power comes in at a levelized cost of just under $50/MWh while the IGCC has an expected cost of $57.01/MWh. Robert Fagan also testified that “Duke Energy Indiana does not appear to recognize the vast potential and the relatively attractive economics of wind generation resources”. Based on numbers provided by the NREL, we have the potential here in Indiana to produce at least twice as much electricity utilizing wind power as we do by burning coal.

 

CO2 Planning

Duke Assertions

Duke Contradictions

CAC Response

Comments

“Further, Duke assumed, in its modeling, that carbon constraints will occur during the 30-year useful life of the proposed plant.”

   --Joan Soller (Director of the Electric Division of the Office of Utility Consumer Counselor) testimony, page 9 line 22-23

“As discussed by Mr. Rogers, Duke Energy believes that carbon regulation is probable.”

   --John L. Stowell (Duke VP of Environmental, Health & Safety Policy) testimony, page 9 line 13

“Even more stringent SO2, NOx and mercury requirements may be enacted in the future, and as I discuss later in my testimony, I believe C02 regulation is highly likely as well.”

   --Jim Rogers (Duke CEO) testimony, page 8 line 22 & page 9 lines 1-2

“New CO2 regulations could significantly increase our cost of generating electricity over time and ultimately result in higher prices for our customers.”

   --Jim Rogers (Duke CEO) testimony, page 18 lines 20-21

“Duke Energy Indiana essentially assumed the status quo of environmental regulations for modeling purposes in our base case scenario planning”

   --John L. Stowell (Duke VP of Environmental, Health & Safety Policy) testimony, page 8 lines 10-11

“The base case assumes that all current environmental requirements are met, that the recent Clean Air Interstate Rule (CAIR) and Clean Air Mercury Rule (CAMP) requirements will be met, and that no climate change initiatives or hazardous air pollutant controls would be implemented during the relevant time period.”

   --Jim Rogers (Duke CEO) testimony, page 5 lines 17-21

“No Global Climate Change (i.e., CO2) legislation or regulation mandates will be implemented during the planning period; No hazardous air pollutant controls other than mercury (Hg) will be mandated or implemented during the planning period; and no renewable portfolio standard will be mandated or implemented during the planning period.”

   --John L. Stowell (Duke VP of Environmental, Health & Safety Policy) testimony, page 4 lines 2-7

“Coal-fired generation is subject to now, and will be subject in the future, to significant regulations governing air emissions. For example, it is simply a matter of time before carbon dioxide emissions are regulated at the federal level. The Companies must engage in environmental compliance planning that is forward-looking and recognizes likely future costs.”

   --Bruce Biewald (CAC expert witness) testimony, page 8 lines 18-2

“For example, experts at an industry conference right after the elections expressed the opinion that now that Democrats have won control of Congress, electric utilities should expect a strong legislative push for mandatory caps on carbon dioxide emissions. Senator McCain also has indicated that he believed that the chances of Congress approving meaningful global warming legislation before 2008 were 'pretty good' and that he believed that 'we've reached a tipping point in this debate, and its long overdue.' At the same time, Senators Bingaman, Boxer and Lieberman sent a letter to President Bush on November 14, 2006, seeking the President's commitment to work with the new Congress to pass meaningful climate change legislation in 2007.”

   --David A Schlissel (CAC expert witness) testimony, page 8 lines 7-8 & page 9 lines 1-10

Over 70% of the American public accepts climate change as reality and this strong public opinion has made its way to Washington . Climate change initiatives and carbon regulation have strong bi-partisan support and most political experts believe both will be enacted prior to President Bush leaving office. Duke classifies the “relevant” time period or planning period as being through the year 2028. With their expected online date for the plant of 2011, they are essentially assuming there will be no CO2 regulations or mandates implemented for the first 17 years of the plant's life. We believe these “assumptions” directly relate to Duke's desire to build new coal-fired power plants and have them grandfathered in to any future carbon regulation. Jim Rogers, CEO of Duke Energy publicly stated before the North Carolina Utilities Commission he believes IGCC will “get a pass” as will any new PC plant and be grandfathered into any future CO2 regulations or get allowances allocated to them. The OUCC “believes that legislation to address these issues by the time the proposed plant would be operational are very high”.

 

Carbon Capture and Sequestration

CATF/IWF/OUCC Positions

Duke Response

CAC Response

Industrial Groups Response

“CATF and IWF strongly support this project and ask that the IURC grant the requested CPCN, with the modification from the Petition that the work and equipment necessary to capture and dispose of approximately 15% - 20% of the carbon dioxide the plant will produce should be added to the project.”

   --John Thompson (Clean Air Task Force Director of Coal Transition Project) testimony, page 5 lines 4-7

“The OUCC agrees that the Joint Petitioners have a need for new capacity in the near future, recognizes the challenges presented by imminent carbon emission regulation, and supports this project with certain accounting adjustments as the best solution to those challenges; but only if the project includes some carbon capture and sequestration (CCS).”

   --Soller (Office of Utility Consumer Counselor Director of Electric Division) testimony, page 3 lines 1-4

We are simply not ready, in terms of engineering knowledge and feasibility, cost estimates, funding, liability issues, etc., to fully commit today to implement partial carbon capture and sequestration or enhanced oil recovery at Edwardsport.”

   --Kay Pashos (Duke VP Regulatory Strategy) rebuttal, page 9 lines 1-3

“The most important open issue is simply that the feasibility of 'permanent' geologic storage of large volumes of C02 is not proven and more research and testing are needed before sequestration of C02 from power plants is considered a definite commercial option.”

   --Darlene S Radcliffe (Duke Director of Environmental, Technology & Fuel Policy) rebuttal, page 9 lines 19-22

“We've got to figure out how to do carbon sequestration and that's 15 years off in terms of commercialization.

   --Jim Rogers (Duke CEO) testimony, page 203 lines 2-4 (N.C. testimony 2006)

“I propose that there be some investigation of the possibility to gain CCS knowledge by exploring the technological options for CCS at the existing IGCC plant in Indiana, Wabash River. This could allow the stated aim of the OUCC to be met - gain experience with CCS technology so it can be used in the future without incurring the unreasonable costs associated with building Edwardsport or the increase in CO2 emissions associated with operating Edwardsport IGCC.”

   --Biewald (CAC expert witness) rebuttal, page 13 lines 24-26 & page 14 lines 1-3

“The opportunity to capture and sequester at an existing facility should not be overlooked in favor of a more expensive alternative that only promises to increase carbon emissions and foreclose opportunities for higher-performing investments in DSM, wind and combined heat and power.”

   --Biewald (CAC expert witness) rebuttal, page 15 lines 13-16

“The Joint Petitioners should not be handed a blank check to recover unknown costs through a rider for Joint Petitioners to gain experience with IGCC and carbon capture technology at the expense of Indiana ratepayers.”

   --Nicholas Phillips (consultant for the Industrial Groups) rebuttal, page 11 lines 5-8

“Neither the CATF/IWF nor the OUCC has identified in their testimony who will manage the C02 captured at the proposed IGCC plant and for how long, nor have they identified who will be legally and financially responsible for any leakage of the C02 captured and stored for the proposed IGCC plant. These environmental issues will have costs that will likely be recovered from ratepayers.”

   --Nicholas Phillips (consultant for the Industrial Groups) rebuttal, page 11 lines 5-8