Duke Energy reaches settlement with key consumer groups on Edwardsport operating costs

PLAINFIELD, Ind., Sept. 18, 2015 /PRNewswire/ -- Duke Energy Indiana and some of the state's key consumer groups have reached a settlement agreement related to operating costs at Duke Energy's Edwardsport coal gasification power plant.

The proposal, which was filed with state regulators today, is subject to Indiana Utility Regulatory Commission approval. If approved, the settlement would resolve all Edwardsport-related proceedings pending at the commission.

Participants in the settlement are the Indiana Office of Utility Consumer Counselor, the Duke Energy Indiana Industrial Group and Nucor Steel-Indiana.

"If approved, this agreement limits what customers will pay for plant operations since Edwardsport was declared commercial," said Duke Energy Indiana President Melody Birmingham-Byrd. "With this settlement, we're on track toward putting some outstanding regulatory issues behind us. Importantly, Edwardsport's performance has continued to improve, and the plant performed well this summer when power was needed most."

Edwardsport's gasification availability factor averaged 72 percent for July and August, and July's power generation was the largest since operations began.

Key provisions of the proposed settlement include:

• The company has agreed not to bill customers $85 million of operating costs deferred since the plant's in-service date. If approved by state regulators, the remaining operating costs charged to customers will result in an approximately 2 percent customer bill increase. There will be regulatory hearings on the settlement, and a commission decision is possible in the first half of 2016.
• The settling parties agree that the plant's commercial operation in-service date will remain June 7, 2013, for accounting and ratemaking purposes.
• During 2016 and 2017, the company will cap annual plant operating, maintenance and capital costs billed to customers. Future regulatory filings to update plant operating costs and customer rates will be made annually rather than twice a year.
• The agreement also designates $5 million, out of shareholder funds, for attorney fees, litigation expenses, and funding commitments, including a customer bill credit and additional resources for battery storage research, low-income energy assistance and the Indiana Utility Ratepayer Trust.

As a result of the settlement provisions, Duke Energy expects to take a pretax charge of approximately $90 million in the third quarter of 2015. This charge will be reflected as a "special item" and, therefore, excluded from the company's adjusted diluted earnings per share.

Background on the Edwardsport Project
The 618-megawatt Edwardsport plant uses state-of-the-art technology to gasify coal, strip out pollutants, and then burn that cleaner gas to produce electricity.

This advanced, integrated gasification combined cycle technology significantly improves plant efficiency. The plant began commercial operation in June 2013.

Edwardsport is a critical part of Duke Energy Indiana's efforts to modernize its generation fleet and an initial step toward replacing older, coal-fired generation expected to be retired due to pending EPA regulations. The Edwardsport plant is the first major new coal-fired power plant built in Indiana in more than two decades.

Duke Energy Indiana's operations provide about 7,500 megawatts of owned electric capacity to approximately 810,000 customers in a 23,000-square-mile service area, making it the state's largest electric supplier.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at duke-energy.com. 

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SOURCE Duke Energy

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