New coal plants cost up to $2.9 billion

INDIANA - Duke Energy said that the cost of a coalgasification 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 Dukes filing asking the Indiana Utility Regulatory Commission to allow it to pass on the plants additional costs to its customers.

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

The plants 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, North Carolinabased Duke said the estimated cost of the roughly 620megawatt 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 Energys Franchised Electric & Gas businesses.

Duke spokeswoman Angeline Protogere said while theres no guarantee the cost wont go higher, the company is confident it can be completed for about the revised estimate.

Unlike traditional coalfired 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 160megawatt coalfired 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 projects 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 projects price would spiral higher.

Despite Dukes public greenwashing in saying that this will be the countrys cleanest coal plant its 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 plants 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.