UPDATE 3-Duke's Edwardsport coal-fired power plant enters service

Mon Jun 10, 2013 1:14pm EDT

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By Scott DiSavino

June 10 (Reuters) - Duke Energy Corp's 618-megawatt (MW) Edwardsport coal-fired power plant in Indiana has entered service, the power company said on Monday, one year late and $1.5 billion over budget.

Edwardsport is the largest U.S. power plant to use an advanced integrated gasification combined cycle (IGCC) technology, which strips out pollutants from coal before it is burned.

The IGCC technology was touted as a way for utilities to continue to take advantage of the nation's abundant coal supplies despite rising concerns about global warming.

However, the lack of federal limits on carbon dioxide emissions, high construction costs and new supplies of affordable natural gas have led developers to abandon more than three dozen IGCC projects over the last decade.

Only Duke, the biggest U.S. power company, and Southern Co have constructed IGCC projects.

The Edwardsport plant, in Indiana's southwest corner, entered service on Friday and is expected to slowly ramp up to its full capacity over the next 15 months.

"Coal has powered Indiana for more than a century," Duke Energy Indiana President Doug Esamann said in a press release. "But today's air quality standards require us to use that fuel in a cleaner, more efficient way. Edwardsport turns coal into a cleaner-burning fuel."

The plant cost about $3.5 billion, including financing, up 75 percent from early estimates of less than $2 billion in 2007, when Indiana regulators approved the project. Duke blamed the added costs on the project's "scale and complexity."

As critics complained about the rising cost, Duke's Indiana utility entered a settlement agreement that cut to about $2.6 billion the amount of money it can recover from its 790,000 Indiana ratepayers.

Since President Barack Obama took office in 2009, U.S. power companies have announced plans to shut or convert more than 50,000 MW of coal-fired power plants over the next several years. Weak natural gas prices make it uneconomic to upgrade pollution-control systems on coal-fired plants to comply with strict U.S. Environmental Protection Agency rules.

The price tag for Southern Co's IGCC project, the 582-MW Kemper plant in east-central Mississippi, has also increased during construction. Its cost has risen to more than $4.2 billion, double its initial estimate. The Kemper County plant is expected to begin operating in May 2014.

Edwardsport replaces about 500 MW of older coal-fired generation that Duke retired or expects to retire soon due to the new EPA regulations, Duke said.

Esamann said the average age of Duke's coal-fired plants in Indiana is 45 years.

Edwardsport, the first IGCC plant to be built in the United States in more than a decade, was constructed by Bechtel using General Electric gasification technology.

Duke said the plant will produce 10 times as much power as the former Edwardsport units, with about 70 percent fewer emissions of sulfur dioxide, nitrogen oxide and particulates combined.

It will also reduce carbon dioxide emissions per megawatt hour by nearly half compared to the plant it replaces.

Duke said the Edwardsport project created about 3,500 construction jobs and 140 full-time jobs.

The company also said the 1.7 million to 1.9 million tons of coal the plant will use each year will support about 170 mining jobs.

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