Thursday January 8, 03:45 PM
Indiana OKs Duke Edwardsport coal plant cost hike
NEW YORK, Jan 8 (Reuters) - Indiana regulators on Wednesday approved of Duke Energy Corp (NYSE: DUK - news) 's $2.35 billion cost increase estimate for the 630-megawatt Edwardsport coal gasification power plant under construction in southwest Indiana.
Duke said in a release it filed the $365 million cost increase request with the Indiana Utility Regulatory Commission in May. The higher costs were primarily related to demand for materials and rising labor costs, the company said.
Duke said it has now negotiated contracts with major suppliers and can better forecast project costs.
The new plant will boost the average customer's costs by about 18 percent, which Duke will phase in between now and 2013.
In addition, state regulators also approved of Duke's $17 million request to study the capture and storage of a portion of the plant's carbon dioxide (CO2) emissions in underground geologic formations.
CO2 is a greenhouse gas associated with global warming.
The new Edwardsport plant would produce about 4 million tons of CO2 a year, which is more than the existing 160 MW coal/oil units at the site because the new plant will be much bigger.
But, the new plant would produce much less sulfur dioxide (linked to acid rain), nitrogen oxide (linked to smog) and mercury (a neurological toxin) than the existing units because the new plant uses the more advanced integrated gasification combined cycle (IGCC) technology.
Duke plans to retire the existing 160 MW coal/oil plant, which were built between 1944 and 1951, prior to start-up of the new facility.
IGCC technology uses a coal gasification system to convert coal into a synthesis gas (syngas) that is processed to remove sulfur, mercury and ash before being sent to a traditional combined cycle power plant, using two combustion turbines and a steam turbine to produce electricity.
Duke decided to use the IGCC technology in Indiana in part because the company expects the United States to regulate CO2 emissions in the future and it cost less to capture CO2 in an IGCC plant than a conventional pulverized coal plant because the CO2 can be captured before burning the syngas, a spokeswoman for the company noted.
Construction of the new unit, which would burn primarily Indiana coal and power about half a million homes, began early last year and is scheduled to be completed in 2012.
Duke, the biggest power supplier in Indiana, serves about 775,000 electric customers in the state.
Duke, of Charlotte, North Carolina, owns and operates about 39,000 MW of generating capacity in North America and Latin America, markets energy commodities, and transmits and distributes electricity to about 4 million U.S. customers in the Carolinas and the Midwest.
(Reporting by Scott DiSavino; Editing by Marguerita Choy)
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