Indianapolis - A state panel on Wednesday approved Duke Energy's request to pass along to its Indiana customers the higher cost of a coal-gasification power plant that's under construction in southwestern Indiana.
In May, Duke Energy asked the Indiana Utility Regulatory Commission to approve the Edwardsport plant's higher cost, saying the project's estimated cost had risen $365 million to $2.35 billion, largely due to the rising costs of materials and labor.
The commission, which had previously taken testimony from Duke Energy and the project's opponents, approved the revised cost estimate Wednesday.
Charlotte, N.C.-based Duke Energy expects the cost of building the 630-megawatt plant to result in an 18 percent rate increase for its customers phased in over the next five years.
The 630-megawatt plant being built along the White River will convert coal into a synthetic gas that's processed to remove pollutants such as mercury and sulfur dioxide.
That gas will then be burned in turbines to produce electricity, while heat from that process is tapped to create steam that generates power in separate steam turbines.
"When it's completed, this will be one of the cleanest, most efficient coal-fired plants in the world," Duke Energy Indiana President Jim Stanley said in a statement.
Environmental and government watchdog groups oppose the plant and have sued to try to halt it, calling the project a huge waste of money that would be better spent on renewable energy such as wind farms. They also warn that its price tag could go even higher if Congress acts to impose caps on carbon dioxide emissions linked to global warming.
The plant, which is expected to go online in 2012, will release an estimated 4 million tons of carbon dioxide annually.
On Wednesday, the commission also approved Duke Energy's $17 million plan to study the plant's potential to capture a portion of its carbon dioxide emissions as part of the company's proposal to possibly store the gas permanently deep underground.
Kerwin Olson, the program director for the Citizens Action Coalition of Indiana, said he had expected the Indiana Utility Regulatory Commission to approve the plant's cost increase. But he said the watchdog group wants Duke Energy's case reopened and re-examined.
"We'd like them to look at whether or not there's even a need for this plant. Its cost is escalating at the same time that energy demand in Duke's Midwestern portfolio is going down," Olson said.
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