Duke Energy says Indiana coal-gasification power plant’s cost rises to nearly $2.9 billion

Duke: New Ind. coal plant’s cost up to $2.9B

INDIANAPOLIS — Duke Energy said Friday that the cost of a coal-gasification power plant it is building in southwestern Indiana has risen to nearly $2.9 billion, or about twice the original estimate.

The details are part of Duke’s filing asking the Indiana Utility Regulatory Commission to allow it to pass on the plant’s additional costs to its customers.

If regulators agree, it will boost the project’s overall rate impact on Duke’s average Indiana customer 3 percent to 19 percent. The increase would be fully phased in by 2013.

The plant’s estimated cost has grown steadily since it was announced in 2007, when Duke said the project likely would cost between $1.3 billion and $1.6 billion.

Environmental and government watchdog groups have sued to try to halt the plant, calling the project a huge waste of money that would be better spent on renewable energy such as wind farms and promoting energy efficiency.

Charlotte, N.C.-based Duke said the estimated cost of the roughly 620-megawatt plant — the first of its kind at such a scale — had risen $530 million, or 23 percent, since November largely because its design has grown more complex as construction has proceeded, requiring more materials.

“Unfortunately, this evolution in scope and complexity makes an increase in the cost estimate impossible to avoid,” said James Turner, president and chief operating officer of Duke Energy’s Franchised Electric & Gas businesses.

Duke spokeswoman Angeline Protogere said while there’s no guarantee the cost won’t go higher, the company is “confident” it can be completed for about the revised estimate.

Unlike traditional coal-fired power plants that burn coal to produce electricity, the new plant will convert coal into a synthetic gas processed to remove some pollutants such as mercury and sulfur. The gas is then burned in a traditional turbine power plant to produce electricity.

Construction of the plant is about 35 percent completed at the site along the White River near Edwardsport, about 15 miles northeast of Vincennes. It will replace a 160-megawatt coal-fired plant Duke operates there.

When it goes online as projected in 2012 it will release an estimated 4 million tons of carbon dioxide annually.

Kerwin Olson, the program director for the Citizens Action Coalition of Indiana, said he expects the project’s final cost to top $3 billion. But he said the price tag could grow even more if Congress acts to impose caps on carbon dioxide emissions linked to global warming.

If that happens and Duke decides to adapt the plant to capture some of its carbon dioxide, he said the project’s price would spiral higher.

“Despite Duke’s public greenwashing in saying that this will be the country’s cleanest coal plant it’s not going to capture a single ounce of carbon dioxide — nor have they committed to doing that,” Olson said.

The IURC already has given Duke approval to charge ratepayers $17 million to study the feasibility of capturing the plant’s carbon dioxide. The company had asked to pass onto its customers another $121 million for a geological study for underground carbon storage.

But Protogere said Duke scaled back that request to $42 million after failing to obtain Department of Energy funds for study. The request is pending before the IURC.