Coal Power: Duke reaches settlement on Edwardsport air permit

Source:Duke Energy

Duke Energy (NYSE: DUK) has reached a settlement with the Sierra Club, Citizens Action Coalition, Save the Valley and Valley Watch over outstanding issues with air permits for the coal-fired Edwardsport power plant.

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 coal-fueled 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.

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