Legacy Progress Director's Production of Documents (Part 3 ... - NCUC

Duke's Coal Gasification Plant Slanimed for High Costs'EnergyBiz, 7-4-12Barry GassellConsumer and environmental groups recently filed testimony at the Indiana Utility RegulatoryCommission (IURC) opposing the proposed'settlement between Duke Energy (NYSE: DUK), the:Indiana Office of Utility Consumer.Counselor, Nucor Steel and the Duke.Energy Indiana IndustrialGroup regarding the Edwardsport' integrated gasification combiried-cycle. (IGGC) power plant.The proposed settlement claims to pfotecf the captive ratepayers of Duke by placing a $2.595bn"hard cap" on the construction costs that could be passed onto ratepayers, said the groups in a July 2public statement. However/the expert testimony of both David Schlissel, President of SchlisselTechnicalConsulting, and Ralph Smith, Senior Regulatory Cprisu Ita nt at Larkin & Associates PLLC,provides evidence thatthe $2.595bn:"cap: , -is nothing more ; than:;a 'firm flooP' that offers consumers 1iittle protection, they added 1 .Also, the proposed settlement ensures that captive ratepayers will in fact pay a minimum total of$3.25bn for the coal-fueled, in : cphsfructioh.|GCG project whethef or not if in fact ever comes online."The settlement also rewards Duke Energy for its gross mismanagement and ordinary •mismanagement of the project.by giving the Company significantly more than the original $1.985:billion estimate," the groups said."The proposed Settiement Agreement offers no protection for ratepayers" against the likelihood thatthe Edwardsport project will not operate; at or near the annual 84% avaiiability, and approximateannual 82-83% capacity, factors, which; Duke has claimed since 2007 that if would achieve; Schlisselstated in prerfiled testimony.^Smith's testimohy discusses the t fact that the $2:595bn is not aH that customers will pay to completethe construction ofthe project.shouid.the^terms/initheproposed' settlement be accepted by the IURC',given that Construction Work in Progress (CWIP) finance related.costs that Duke already collectedfrom ratepayers is not inciuded inithe settiement.inor are.'future&WiP finance related charges.Additional testimony was also filed at the : IURC by Nachy Kahfer, Deputy Director for the CentralRegion of the Sierra Club: Beyond Coal to Clean Energy Campaign. Kanfer points out the claimedfailure of Duke Energy to propose any plan to mitigate carbbh emissions.Hearings on the proposed settlement are scheduled to. begin on July 16.In a May SO filing at the: commission, Duke sakithat within a subdocket; the settling parties are askingthe.commission to:;- approve a new cost estimate for the IGCC project, .equivalent to the hard cost cap of $2.595bn (plusadditional allowance for funds used during construction);- find that there'has been no imprudence and/or fraud, concealment or gross mismahagement whichexceeds the value.of the.impairment:buke:Energy lndiana,has^^agreed to in-the settlement-(almost$700-million) (plus the "value of. other settlement provisions); and- appfoye'otherprovisiofis of the settlemeht agreement, like.the agreed-upon proposed changes indepreciation rates and a partially corresponding change rn'retail e jectric rates,. a nd the agreedruponproposed change in calculation of CWIP return based on;the treatment of deferred taxes."16LEGPGNDIR001156