{"id":4534,"date":"2018-08-01T17:01:29","date_gmt":"2018-08-01T23:01:29","guid":{"rendered":"http:\/\/valleywatch.net\/?p=4534"},"modified":"2018-08-01T17:01:29","modified_gmt":"2018-08-01T23:01:29","slug":"ieefa-update-duke-energys-costly-edwardsport-coal-gasification-project-continues-to-underperform","status":"publish","type":"post","link":"http:\/\/valleywatch.net\/?p=4534","title":{"rendered":"IEEFA update: Duke Energy\u2019s costly Edwardsport coal-gasification project continues to underperform"},"content":{"rendered":"

August 1, 2018-by David Schlissel in IEEFA<\/a><\/strong> News<\/a>\u00a0Editor’s Note: Valley Watch has \u00a0steadfastly\u00a0<\/i>opposed<\/i><\/span><\/span>\u00a0this plant since it’s conception offering sage <\/i>testimony<\/a><\/i> at the original CPCN hearing in\u00a0<\/i><\/strong>Bloomington in 2007.<\/i><\/b><\/p>\n

Duke Energy\u2019s 5-year-old gasified coal power experiment in Edwardsport, Ind., has turned out to be a catastrophe for ratepayers.<\/span><\/p>\n

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Duke Energy’s Edwardsport plant has been a financial disaster for Hoosier ratepayers.<\/p><\/div>\n

That\u2019s the main conclusion of the testimony I submitted yesterday to the Indiana Utility Regulatory Commission<\/a> on the plant, which was sold at the outset as a cost-effective integrated gasification combined cycle (IGCC) project that burns gasified coal, or syngas.<\/span><\/p>\n

The all-in cost of power from the plant, including financing costs and profits for Duke, averaged $145 per megawatt-hour (MWh) over the 55 months from its opening in June 2013 through December 2017, according to the latest available data. And that doesn\u2019t include the $397 million Duke collected from Indiana ratepayers for the plant even before it went into service.\"\"<\/a><\/span><\/p>\n

Market prices, by comparison, averaged $32 per MWh over the same period.<\/span><\/p>\n

This means that Duke\u2019s ratepayers paid in excess of $1.4 billion more for power from Edwardsport than they would have spent to purchase the same energy and capacity from the competitive wholesale markets in the 15-state region encompassing the grid managed by Midcontinent Independent System Operator (MISO).<\/span><\/p>\n

Edwardsport will continue to burden ratepayers unless the commission takes some strong action.<\/span><\/p>\n

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A plant that by any empirical measure has fallen well short of expectations\u2014and will most likely continue to do so.<\/span><\/p><\/blockquote>\n<\/div>\n

My testimony<\/a> explains how it is unreasonable\u2014given Edwardsport\u2019s high O&M expenses\u2014to expect that the plant will produce a net economic benefit for ratepayers at any time in the foreseeable future. Indeed, Edwardsport is likely to become even more of an economic problem for Duke\u2019s Indiana ratepayers as now-entrenched market trends persist.<\/span><\/p>\n

Natural gas prices are expected to remain low, and design and technological improvements are driving down the costs of competing wind and solar resources. As more natural gas-fired generators and more wind and solar renewable resources are added to the MISO grid, Edwardsport will become even less economically viable. Two forces in particular are working against the plant: The fact that market prices can be expected to remain low, if not decline over time, and the likelihood that generation from Edwardsport will be displaced by lower-cost wind and solar energy.<\/span><\/p>\n

BY ANY EMPIRICAL MEASURE, EDWARDSPORT\u2019S OPERATING PERFORMANCE HAS FALLEN WELL SHORT <\/strong>of what Duke promised the Indiana commission it would be when the company sought permission to build it. \u00a0Those metrics include heat rate, capacity factor, equivalent forced outage rate and availability of syngas.<\/span><\/p>\n

And by any forward-looking empirical measure, the plant\u2019s performance, especially on syngas, should not be expected to improve significantly at any time in the foreseeable future.<\/span><\/p>\n

Edwardsport is faltering persistently on several fronts:<\/strong><\/span><\/p>\n