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A History of Duke Energy’s Edwardsport IGCC

 

A Boondoggle Shrouded in Controversy

 

2002: Duke Energy convinced the Indiana General Assembly and the Governor to enact legislation that ended up heavily subsidizing the construction and operations of this science experiment with money taken out of the wallets of Duke Customers and Indiana Taxpayers.

 

2006: Duke Energy filed for Indiana Utility Regulatory Commission (IURC) approval of their Edwardsport Integrated Gasification Combined Cycle coal-fired power plant (Edwardsport IGCC) with a price tag of $1.985 BILLION. This would be first-of-a-kind technology; a science experiment never done on this scale before.

 

Citizens Action Coalition (CAC) aggressively contested the initial approval of the plant. We argued at the Commission and the General Assembly that Duke didn’t need the power.  We further argued that even if power was needed, Duke should start with increasing investments in energy efficiency, and fill in the gaps with low-cost Indiana wind.  Those empowered to make these decisions ignored the evidence and approved Edwardsport IGCC anyway.

 

Before construction even began, costs were skyrocketing.

 

Late 2000’s: When the costs of the plant began escalating, CAC again recommended at the Commission and the General Assembly that Duke should change course and cancel the expensive and experimental coal gasification components and immediately convert the plant to a natural-gas plant. Again, evidence was ignored and Duke was permitted to continue sinking money into the money pit that the Edwardsport IGCC plant became.

 

2010: A widely publicized ethics scandal between Duke and the IURC led to the termination of the President of Duke’s Indiana operations (Michael W. Reed), the resignation of a top Duke executive (James L. Turner), and the termination of the Chairman of the IURC (David L. Hardy). 

The scandal also led to the former IURC General Counsel (Scott R. Storms) being found guilty of ethics violations and the indictment of the former Chairman (David L. Hardy) on multiple felony counts of official misconduct. Most of the felony counts had a connection to the regulatory approval of the Edwardsport IGCC.

 

The ethics scandal should have spelled certain doom for the IGCC plant.

 

December 2012: The IURC approved a Settlement agreement that swept the ethics scandal under the rug. The Settlement capped the total amount of costs incurred before June 2013 that Duke could recover from ratepayers at $2.6 BILLION. CAC voiced loud opposition to that Settlement.  We took our objections as far as we could in the courts. Our case centered around the fact that Duke customers would be MANDATED to pay $2.6 billion in construction costs for a plant which was riddled in corruption and malfeasance.

 

June 2013: Duke declared Edwardsport IGCC to be “in-service.” This meant the end of the “cost cap” and that Duke could now add “post” in-service costs (operations and maintenance costs) to the bills of their customers.

CAC and our partners filed testimony asking the IURC to disallow Duke from collecting a substantial amount of the costs related to the “in-service” declaration.  We further recommended that the IURC protect customers from a continuation of the poor performance and unreasonably high costs by establishing cost caps related to the future operations of the plant.

 

2016: CAC joined a Settlement that called a temporary cease-fire to the Edwardsport IGCC drama. After nearly ten years of litigation, the IURC approved the Settlement, which included:

  • Cost caps on how much Duke would be allowed to collect from customers for capital costs (through the end of 2018) and operational costs (through the end of 2017) for the Edwardsport IGCC.  These caps allowed Duke customers to avoid having to pay $40 MILLION on their electric bills.
  • Duke Energy agreed to make their shareholders eat $87.5 MILLION for the Edwardsport IGCC instead of forcing customers to foot that bill.
  • Taken together, customers of Duke Energy saved $127.5 MILLION because of the settlement.

 

Additional items secured in the Settlement included:

  • Duke agreed to retire or cease burning coal by the end of 2022 at Units 2 and 4 of the Gallagher Generation Station in Floyd County, IN.
  • $500,000 in funding for small-scale community solar installations in Duke’s service territory.
  • $500,000 for the Helping Hand Fund, to help our most vulnerable citizens struggling to pay their monthly bills.

 

CAC retained its right to challenge the costs and performance of the plant after December 2017. We continue to maintain our belief that Edwardsport IGCC will never run as promised and operating and maintenance costs will continue to skyrocket. Therefore, CAC continues to track the costs of the plant and its actual performance – neither of which has been anywhere close to what was promised to legislators, regulators, and the public.

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