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Consultant urges Ind. regulators to 'modify or revoke' Edwardsport certificate

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Consultant urges Ind. regulators to 'modify or revoke' Edwardsport certificate

An energy consultant retained by a group that opposes Duke Energy Indiana LLC's 618-MW Edwardsport integrated gasification combined-cycle, or IGCC, plant argues the facility "has been and continues to be an economic catastrophe" for the utility's customers, and state regulators should "modify or revoke" the certificate that authorized its construction.

"By any reasonable measure such as heat rate, capacity factor, equivalent forced outage rate and availability on syngas, Edwardsport's operating performance to date has been significantly worse than the company repeatedly told the [Indiana Utility Regulatory Commission, or IURC] it would be," consultant David Schlissel said in testimony recently submitted to the commission on behalf of Citizens Action Coalition of Indiana Inc., or CAC, as part of annual cost recovery proceedings for the plant.

CAC is challenging cost recovery for the plant, which uses technology to strip pollutants and gasify coal before burning it to create electricity with the resulting synthesis gas.

The consultant noted that during the current review period of Jan. 1, 2017, through Dec. 31, 2017, the 60% capacity factor the Edwardsport plant achieved on syngas and the 73% capacity factor the facility achieved on all fuels "remained significantly below the 82[%] average capacity factor projected by Duke."

"Consequently, although there was some improvement in Edwardsport's operations in 2017 compared to earlier years, it is not possible to characterize its performance as 'strong' in any way or close to what was projected by Duke and approved by the commission in the plant's [certificate of public convenience and necessity]," wrote Schlissel, who also serves as the director of resource planning for the Institute of Energy Economics and Financial Analysis.

Absent a change or revocation of the plant's certificate, the consultant recommended the IURC limit the recovery of nonfuel operation and maintenance expenses until it conducts a rate case review to determine how much of the Edwardsport investment is "used and useful" or initiates a special proceeding into the fully embedded cost of the electricity.

"The Citizens Action Coalition is focusing on the past and not current data that shows that Edwardsport is performing well," Duke Energy Indiana spokeswoman Angeline Protogere said in an email. "The plant had strong operations throughout 2017: 78[%] gasifier availability level; 99[%] availability when you factor in both coal and gas; and a net capacity factor — run time on both coal and natural gas — of 73[%]."

The spokeswoman added that the plant had 464 days of continuous generation from January 2017 through mid-April 2018, that was stopped for planned maintenance and required relay testing.

"It has taken time and work to get to this point, but today the plant is serving Indiana customers using advanced technology to produce cleaner power from Indiana coal," Protogere said, adding Edwardsport's operating expenses decreased in 2017 from 2016 and the company is forecasting a decrease in 2018 and 2019.

Edwardsport came online in June 2013 but was plagued with operation problems and higher fuel costs, along with lower than expected efficiency and fuel conversion.

Indiana regulators approved a settlement in August 2016 between Duke Energy Indiana, or DEI, and several state consumer and environmental advocates over how much ratepayers should be charged for the $3.5 billion project, given delays and technical difficulties during its startup. Under the agreement, Duke Energy Corp. shareholders, not ratepayers, will fund $87.5 million in previously incurred and recoverable operation and maintenance expenses at the plant.

In addition, the amount of the $3.5 billion price tag that must be covered by ratepayers is capped at about $2.6 billion. DEI files annual petitions to recover these costs through its rates and a rider.

Schlissel argues that the cost to operate the Edwardsport facility is significantly more than the cost of generating power at DEI's Gibson and Cayuga coal plants, buying power in the wholesale Midcontinent ISO markets or the cost of producing electricity at any of Duke Energy's gas-fired combined cycle plants brought online between 2009 and 2013.

"During just the 55 months between June 2013 and December 2017, DEI's ratepayers paid $1.4 billion more for power from Edwardsport than they would have paid for the same amounts of energy and capacity from the MISO markets," the consultant testified.

"The CAC testimony assumes that the amount of power the plant produces would always be available on the market at a certain price. That's unrealistic," Protogere said. (IURC docket No. 43114 IGCC-17)