Appellate court upholds Indiana commission’s approval of IGCC plant

The Indiana Court of Appeals on Thursday ruled against four environmental and consumer groups and upheld a decision by state regulators to allow Duke Energy to build a $2.35 billion integrated gasification combined cycle (IGCC) plant at its coal and oil–fired Edwardsport facility in Knox County, Ind.

Duke and Southern Indiana Gas and Electric Company had filed a petition last year seeking approval to build a 630-MW IGCC plant and extend the economic life of an existing 160-MW facility that had been placed into service between 1944 and 1951.

After lengthy review, the Indiana Utility Regulatory Commission approved the petition in November 2007. In its order, the commission found that Duke had appropriately documented the need for additional generation capacity and met statutory requirements necessary for approval.

The commission allowed the incentive of timely recovery of costs, and it established a mechanism for continuing oversight of project costs. At that time, Duke estimated the plant would cost $1.99 billion, and that ratepayers would see an overall increase in rates of approximately 16%. The commission also told Duke it would have to justify and seek approval in a separate proceeding to recover any costs above the approved $1.99 billion.

The commission’s decision was immediately appealed by environmental and consumer groups, including the Sierra Club, Citizen Action Group of Indiana, Valley Watch, and Save the Valley.

The groups disputed four specific points: They argued that the commission failed to reopen proceedings to allow new evidence; they questioned whether state law allowed Duke to recover costs during construction; whether officials adequately considered the plant’s future costs; and whether state laws favoring use of Indiana coal violated interstate commerce clause of U.S. Constitution.

On Thursday, in a 25-page decision (PDF), the court ruled against the appellants on all four issues.

The evidence of increased construction costs and other factors did not require reopening proceedings because those factors were anticipated in the commission’s order, the court said.

It also ruled that the commission did not err in allowing Duke to recover costs during construction, and that the commission had considered the potential costs that might have to be imposed by federal greenhouse gas limits.
 
Though Duke Energy did not publish a statement in reaction to the court’s decision—or confirm plans to construct the plant—news reports suggest “the company was pleased.”

If built and opened by 2012 as planned, the Edwardsport project would be the first major coal-fired power plant to be built in Indiana in more than 20 years.

Sources: Indiana Court of Appeals, Indiana Regulatory Utility Commission, Duke Energy