Ind. agency blasts Duke for cost overruns at plant

INDIANAPOLIS

The Indiana agency representing utility ratepayers blasted Duke Energy Corp. for the high cost of its Edwardsport coal-gasification plant, saying regulators should deny Duke's request to charge customers $530 million for cost overruns.

The Office of Utility Consumer Counselor said Duke hasn't demonstrated budgetary constraint in its management of the project, the Indianapolis Business Journal reported. The agency told the Indiana Utility Regulatory Commission that records it has reviewed raise questions of whether Duke's actions "constituted fraud, concealment and/or gross mismanagement."

"There appears to be a lack of responsibility or accountability on the part of those causing these multimillion-dollar cost overruns," said Barbara A. Smith, director of OUCC's resource planning and communications division. "The escalating costs have been borne solely by ratepayers, with the benefits going to the (Duke) shareholders."

Duke has not formally replied to the office's statement. But Duke spokeswoman Angeline Protogere told the Indianapolis Business Journal on Friday that Duke has "prudently and diligently" managed costs at the plant, which is about 90 percent complete.

"We recognize the importance of managing the cost impact for customers, which is why we've proposed capping the plant's construction costs that customers pay," Protogere said. "If our proposal is approved by regulators, the near-term rate impact to customers would be approximately the same level as it would have been under the previous cost estimate."

Duke originally said the cost of the plant would be about $1.98 billion. Last September, the OUCC and industrial customer groups reached a settlement with Duke that would cap project costs at $2.9 billion.

But the OUCC and industrial customers pulled out weeks later. That's when Gov. Mitch Daniels fired then-IURC chairman David Hardy after it become known that he failed to pull administrative law judge Scott Storms from the Edwardsport case even after learning that Storms had applied for a job at Duke. E-mails showed that Hardy and Duke executives appeared to have a cozy relationship, and the OUCC said such improper communications raised the possibility that Duke had not negotiated the settlement in good faith.

The OUCC now says Duke should not be able to recover from ratepayers anything more than $2.35 billion. Smith said Duke shareholders should bear some of the risks of cost overruns, but the utility should no longer have "a direct and endless line of project funds supplied solely by the ratepayers."

While the OUCC raised concerns, spokesman Anthony Swinger said the agency is not recommending shutting down the project. Others think it should be stopped, including the utility watchdog group Citizens Action Coalition.

"It is evident that Duke had to mislead the public and the state of Indiana, and corrupt the entire process to enable this fiasco. From our perspective, this is an illegitimate power plant that should be stopped immediately," said Kerwin Olson, CAC's executive director.

The coal-gasification plant will convert coal to a gas, strip out pollutants and burn the gas instead of dirtier, pulverized coal. Protogere said the Edwardsport project will provide cleaner power while continuing to use an Indiana resource -- coal.

Duke has 4 million electric customers in North Carolina, South Carolina, Ohio, Kentucky and Indiana, along with 500,000 natural gas customers in Ohio and Kentucky.