Daily Clarion staff report

news@pdclarion.com

PLAINFIELD-Design changes and growth in the scope of Duke Energy's Edwardsport coal gasification plant will add about $150 million to the $2.35 billion cost, the company reported Tuesday.

Duke Energy Indiana filed the information about the 6 percent cost increase with the Indiana Utility Regulatory Commission Tuesday as part of its semi-annual update.

The company earlier estimated the project could bring an average 18 percent customer rate increase between 2009-13. By March, the revised rate impact estimates will be provided, the utility reported.

Duke spokesman Angeline Protogere said the company has not yet determined how much more than the $150 million will be needed as contingency funds to complete the project.

The utility is asking the IURC to schedule a proceeding in March 2010, when most of the project engineering will be complete, so the company can file a more detailed cost estimate.

She said Duke will use the next few months to look at future costs projections for labor, engineering, procurement and plant start-up.

After next spring, labor costs will be a key part of the final project cost. "We worked with General Electric, Bechtel and other design firms to perform an engineering study early on; however, as engineering progressed, the scope of the project has increased, said Duke Energy Indiana President Jim Stanley.

Stanley said the engineering has required more steel, piping, electric cable and other materials than originally expected. "Because this is the first time this technology has been used on this scale, there was not nearly as much guidance on size and quantity as there would be for a typical project design that had been constructed many times," he said.

The IURC granted the utility permission in 2007 to build the clean coal power plant in Edwardsport, but will need to approve any cost increase for the plant.

It is scheduled to be completed in 2012.

The 630-megawatt plant will use integrated gasification combined cycle (IGCC) technology to produce 10 times more power than the existing Edwardsport plant, but emit less sulfur dioxide, nitrogen oxide and mercury than the plant it replaces.

It will also emit 45 percent less carbon dioxide per megawatt-hour than the existing facility, according to Stanley.

"The Edwardsport project is the first major new coal-fired power plant to be constructed in Indiana in more than 20 years," he said. "It is key to modernizing our Indiana generating fleet."

Stanley said coal fuels most of the electricity produced in Indiana, and half of the power produced in the nation. "Coal gasification is a way to use an abundant local resource and burn it cleanly with high efficiency."

The plant will get more than $460 million in local, state and federal tax incentives to reduce the consumer cost impact. The company will retire the existing plant, with coal and oil units built between 1944-54, when the new project is completed.

IGCC technology uses a coal gasification system to convert coal into a synthesis gas, which is then 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.

The technology can also, with some modifications, remove carbon dioxide from coal during the conversion process, allowing it to be stored underground.

Duke has asked state utility regulators to study permanent underground carbon storage of a portion of the plant's carbon dioxide emissions, said Protogere.

The company also has filed a plan with state regulators to increase customer energy efficiency program savings 10-fold through green energy sources, she said. Duke has a 20-year contract with the Benton County wind farm.