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Opponents of Duke Energy’s Edwardsport Plant Lose Battle As Duke Increases Monthly Charges

Opponents of Duke Energy’s Edwardsport coal gasification plant have lost another battle in the fight to keep Duke from passing on plant development costs to consumers.

Last week, the Indiana Court of Appeal unanimously upheld an Indiana Utility Regulatory Commission ruling in 2012 to allow Duke to increase by 16  percent its monthly charges to its 790,000 Indiana customers to cover increases in costs of its Edwardsport plant.

The appeal to the courts to overturn the IURC deal with Duke was launched by several environmental and consumer groups.

The 618-megawatt plant near Edwardsport had an original 2007 cost estimate of $1.9 billion, but that eventually ballooned to about $3.5 billion. In a 2012 settlement between Duke and the IURC, the commission limited Duke to passing on $2.6 billion of construction costs to its customers. This settlement included the 16 percent rate increase that was the subject of the court appeal.

Duke had been applying this increase to it customers bills since then and, with the court ruling, will continue to do so.

Kerwin Olson of the Citizens Action Coalition say they appealed and are waiting on the ruling.

“We have every intention of taking this as far as we can,” Olson says.

Olson estimates that Duke’s Indiana customers are paying about 15 dollars monthly for the plant which went online last summer.

Since then, it has operated between 10 and 60 percent of capacity.

Four environmental groups call for an investigation into Edwardsport coal-gasification plant

Duke Energy’s controversial coal-gasification plant in Edwardsport, Indiana is again being challenged before state regulators.

Four environmental groups, the Citizens Action Coalition of Indiana, Save the Valley, the Sierra Club and Valley Watch, have filed a motion before the Indiana Utility Regulatory Commission calling for an investigation into the plant’s operating problems, schedule delays and cost overruns.

Kerwin Olson is the executive director of the Citizens Action Coalition.

“Our complaints relate back to 2007,” Olson says, “Our complaints were that this is a first-of-a-kind technology. This is a science project. We predicted that there would be significant cost escalations, construction delays, and problems during testing and startup, and all of these have happened. So much so that it’s only running at 4 percent of its rated capacity.”

In 2007, when it approved the plant, the Regulatory Commission put a $1.985 billion cap on building costs that Duke could be pass on to its customers. the Commission subsequently raised that cap to $2.6 billion. Today, the cost of the still-not-quite-operational plant is around $3.5 billion and rising.

Duke is now seeking Commission approval to add another $180 million to the expense line for a plant that is years behind its projected completion date.

“This plant was supposed to be purring like a kitten at 85 percent capacity on day one, according to Duke Energy,” Olson says, “In the six month period for the petition we filed it averaged 37 percent capacity, and the latest information we have from January was at 4 percent. We believe that this is a power plant that first of all never should have been approved in the first place and secondly, we have ratepayers paying a tremendous amount of money that is not useful and not serving the public interest.”

Since the time of its initial conception, various opponents have filed 12 motions to the Commission on the proposal. Seven of these are still before the courts.

In the past, the Commission has been reprimanded by the courts for have a too cozy relationship with the interests it is charged with regulating.

Yet the commission continues to add Duke’s costs to ratepayers bills, including the most recent request by Duke to recover repair and maintenance costs for a plant that is not producing much gas.

The Commission has not yet responded to the complainants petition, nor it is required to actually hold a hearing on it. The complainants are preparing for the eventuality of appealing the Commission’s response to Duke’s most recent cost recovery request.

Senate Bill 340 passes, changing Indiana’s energy saving program

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The Indiana State Senate voted 37 to 1 to pass Senate Bill 340 earlier this month, a bill that would ultimately change Indiana’s statewide energy saving program. Jodi Perras, Indiana Representative for the Sierra Club’s Beyond Coal Campaign, further explains what effect the bill will have.

“As it’s written now, big business can withdraw from the energy efficiency programs,” Perras says, “That means the rest of us will pay for the programs and the large facilities opting out is like us taking our two best players off the basketball floor.”

These utility programs seek to create less demand for energy, and Perras says they ultimately save everyone money. She says that passing Senate Bill 340 would benefit big industries, but hurt citizens along the way.

“We see big utilities that don’t like energy efficiency, and they have a lot of voice in the statehouse,” Perras says, “We need voters across the state to voice their opinion.”

According to Perras, utilities were forced to participate in these programs beginning in 2009, leading to energy efficiency. She says that efficiency is now under attack at the statehouse.

“People need to wake up and know that big utilities are trying to fight energy efficiency,” Perras says, “These are programs that keep our electricity rates down for schools, universities and we need to make sure these programs keep going.”

Perras says The Sierra Club stresses the importance of the public’s voice in dealing with Indiana’s environmental issues.

Duke Agrees To Close Old Terre Haute Coal Power Plants

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A private coalition of environmental groups has forced Duke Energy Indiana to agree to close its old coal-fired power plants in Terre Haute.

The settlement between Duke and the coalition, composed of the Sierra Club, Citizens Action Coalition, Valley Watch, and Save the Valley, was reached before an Indiana Department of Environment administrative law judge. The settlement requires Duke to cease burning coal at most of its Wabash River coal-fired power plant in Vigo County and to invest in new renewable energy projects.

In return, the environmental coalition will drop its appeal of the air pollution permit issued by IDEM to Duke for its Edwardsport coal-gasification and combined-cycle power plant to the south.

We spoke to Jodi Perras, of the Indiana branch of the Sierra Club, about this settlement, as well as another parallel suit concerning Duke.

She said that Duke agreed to retire their coal-fired units and that there was a commitment from Duke to invest in some clean-energy projects.

The result is that a total of 668 megawatts of coal-fired power will come offline.

Currently, Indiana gets more than 90 percent of its electricity from burning coal.

Besides emitting more green-house gases than other fossil fuels, coal-fired power plants are also the country’s biggest source of mercury, sulfur dioxide pollution, carbon pollution, and many other pollutants that can trigger heart attacks and contribute to respiratory problems.

Duke also agreed to pursue either a new feed-in tariff program to purchase at least 30 megawatts of solar power from its Hoosier customers or to purchase or install at least 15 megawatts of wind or solar generating capacity from new facilities built in Indiana.

A feed-in tariff enables customers to earn money from their own solar panels by selling excess power back to electric utilities.

“Duke said previously that they thought they would retire the units at Wabash river because of the mercury and the toxin rule that’s supposed to go into effect in 2015. Those are old plans from the 50’s or 60’s but the mercury rule is being challenged in federal court. If we were to lose that case, Duke still has to retire those units by 2018,” says Perras.

Four coal burning units are required to close by 2015 and the sixth by 2018. While they have settled this suit, the coalition is still continuing with its parallel suit against Duke before the Indiana Court of Appeals to overturn Indiana Utility Regulatory Commission decisions regarding the Edwardsport plant.

In December of 2012, the IURC approved additional rate increases tied to the Edwardsport coal gasification plant which would allow Duke to pass on rising construction costs to power consumers.

The plant is currently $1.6 billion over budget and still not operating at full capacity after eight years of design, construction, and testing.

“We have briefs that are due on Monday so we have been working on that and there’s an opportunity for the folks involved to do a reply brief. The court of appeals will probably schedule those and it’ll take several months before the court issues a decision,” Perras says.

There are several issue in question in this suit: whether the IURC violated the law by failing to consider the long-term costs to Duke Energy ratepayers of controlling the plant’s carbon pollution.

This issue was raised in testimony by citizens groups and ignored in the IURC’s decision, in violation of Indiana law; whether the IURC should have appointed a Special Administrative Law Judge to conduct a formal investigation into reports of behind-closed-doors communications, undue influence, conflicts of interest, and other misconduct involving high-level officials of Duke Energy and the IURC and whether the IURC failed to act as an impartial judge by directing Duke Energy to hire an outside consultant to monitor problems at Edwardsport and report to the IURC on its progress, and then refusing to place the reports into the public record.

This scandal involving conflict of interest between state regulators and Duke has resulted in several firings and transfers but no reversal of the resulting tainted regulatory rulings.

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