Duke, Environmental Groups Reach Agreement

Posted: Updated:

Duke Energy Corp. (NYSE: DUK) has come to an agreement with a group of environmental organizations concerning air quality permits at its Edwardsport plant. Terms of the settlement outline when the utility must retire several coal burning units to comply with federal standards. August 30, 2013

News Release

PLAINFIELD, IND. - Duke Energy has reached a settlement with the Sierra Club, Citizens Action Coalition, Save the Valley and Valley Watch over outstanding issues with the Edwardsport power plant air permits.

The Indiana Department of Environmental Management issued the new plant's air permits in 2008 and, importantly, under the settlement they remain approved with no changes. The dispute centered on technical issues surrounding the permits that enabled the company to build and operate the plant.

The settlement also addresses deadlines for retiring units at Duke Energy's Wabash River Station in West Terre Haute. Prior to the settlement, the company had announced it planned to retire four, 1950s-vintage units totaling 350 megawatts at the station by the 2015 federal mercury rule deadline.

In the agreement, the company agrees to complete the retirements by the compliance deadline or, if the mercury rule is vacated or delayed, by June 1, 2018, whichever occurs first.

Duke Energy also had been exploring converting another unit at Wabash River Station to natural gas, and, under the settlement, the company agrees to cease burning coal at that 318-megawatt unit by June 1, 2018.

The deadline will not prevent Duke Energy from converting the unit to natural gas earlier.

"We’re glad to resolve these issues. Our new, cleaner Edwardsport plant modernizes our fleet and enables us to retire older, coal-fired generation," said Duke Energy Indiana President Doug Esamann. "The new plant replaces the old Edwardsport units, which date back to the 1940s and 1950s and were retired in 2011. In addition, we retired two older units at our southern Indiana Gallagher plant in 2012."

The settlement also includes a commitment to pursue additional green energy sources. The company has the option to either implement a 30-megawatt "feed-in tariff" for solar photovoltaic energy or construct/contract for 15 megawatts of wind and/or solar generation.

A feed-in tariff offers a set, long-term price for green energy based on such factors as type and size. It generally is used with smaller power generators.

If the company pursues the second green energy option, Duke Energy also would retire two 40- to 45-year-old oil-fired peaking stations -- the Miami Wabash and Connersville units -- totaling about 166 megawatts by June 1, 2018. These smaller units are used occasionally during times of high power demand.

If this option is pursued, Wabash River Units 2 through 5 must be retired by the mercury rule compliance deadline or by June 1, 2017, whichever occurs first.

Located in Knox County, Ind., near Vincennes, the advanced technology Edwardsport plant is one of the world's cleanest coal-fired power generating facilities.

The facility uses advanced technology to gasify coal, strip out pollutants, and then burn that cleaner gas to produce electricity. The technology substantially reduces the environmental impact of burning coal to produce electric power.

Duke Energy Indiana's operations provide approximately 7,500 megawatts of owned electric capacity to approximately 790,000 customers, making it the state's largest electric supplier.

Duke Energy is the largest electric power holding company in the United States with more than $110 billion in total assets. Its regulated utility operations serve approximately 7.2 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

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: www.duke-energy.com.

Source: Duke Energy Corp.

August 30, 2013

News Release

INDIANAPOLIS, Ind. - A coalition of Indiana environmental and citizens groups including the Sierra Club, Citizens Action Coalition, Valley Watch, and Save the Valley announced a legal settlement today that requires Duke Energy Indiana to cease burning coal at most of its Wabash River coal-fired power plant in Vigo County and to invest in new renewable energy projects.

Under the terms of the settlement, Duke Energy will retire units 2, 3, 4, and 5 at the Wabash River plant and will also stop burning coal at Wabash River unit 6 by June 1, 2018. A total of 668 megawatts of coal-fired power will come offline as a part of this agreement.

Duke Energy also agreed to pursue either a new feed-in tariff program to purchase at least 30 megawatts of solar power from its Hoosier customers or to purchase or install at least 15 megawatts of wind or solar generating capacity from new facilities built in Indiana. A feed-in tariff enables customers to earn money from their own solar panels by selling excess power back to electric utilities.

"While today's settlement is a step in the right direction, more must be done to ensure that Hoosier families are protected from rising energy bills and the enormous health threats posed by Indiana's reliance on coal-fired power plants," said Jodi Perras, Indiana campaign representative for the Sierra Club's Beyond Coal campaign. "Hoosiers want clean, renewable energy and local jobs. Duke Energy and other electric utilities need to step into the 21st century and continue to move beyond coal."

The settlement ends an appeal of Duke's Title V air pollution permit issued by the Indiana Department of Environmental Management for the Edwardsport coal-gasification and combined-cycle power plant. However, it does not end the parties' parallel case before the Indiana Court of Appeals to overturn Indiana Utility Regulatory Commission (IURC) decisions regarding the Edwardsport plant, which is more than $1.6 billion over budget and still not operating at full capacity after eight years of design, construction, and testing.

According to estimates from the Clean Air Task Force, the Wabash River plant currently contributes to 74 deaths, 110 heart attacks, and 1,200 asthma attacks each year.

"Any progress toward greater utilization of renewables and less dependence on fossil fuels like coal is a step in the right direction," said Richard Hill, senior advisor for Save the Valley.

The Edwardsport coal gasification plant has been mired by scandals involving cozy relationships between Indiana regulators and Duke Energy executives, corporate malfeasance, and soaring cost overruns. The total cost of the Edwardsport coal-gasification project stands at $3.5 billion, an enormous overrun of the initial cost estimate of $1.9 billion.

In July, mechanical problems at the plant caused it to cease operation just six days after being declared "in-service" by Duke Energy. Citizens Action Coalition, Save the Valley, the Sierra Club, and Valley Watch have appealed the Indiana Utility Regulatory Commission's December 2012 approval of additional rate increases tied to the Edwardsport coal gasification plant, and will file briefs by September 9th in the case pending before the Indiana Court of Appeals.

At stake in the appeal are: 1) whether the IURC violated the law by failing to consider the long-term costs to Duke Energy ratepayers of controlling the plant's carbon pollution, despite the fact that the issue was raised in testimony by citizens groups and ignored in the IURC's decision, in violation of Indiana law; 2) whether the IURC should have appointed a Special Administrative Law Judge to conduct a formal investigation into reports of behind-closed-d