(The following is a reformatted version of a press release
issued by the Indiana Utility Regulatory Commission and received
via e-mail. The release was confirmed by the sender.)
December 27, 2012
IURC Decision Limits Cost Recovery on Duke Energy Edwardsport
Commission approves modified settlement agreement and credits
ratepayers an additional $28 million
INDIANAPOLIS - Today the Indiana Utility Regulatory Commission
(IURC) modified and approved a settlement agreement reached in
the Duke Energy Indiana case involving the revised cost estimate
for the electric utility’s new integrated gasification combined
cycle facility (IGCC) in Edwardsport, Ind.
The settlement agreement set a hard cost cap for the project at
$2.595 billion (as of June 30, 2012), which prohibits Duke
Energy from recovering project construction costs above this
amount from retail electric customers, excluding costs related
to force majeure situations defined in the agreement. It also
requires the utility to absorb nearly $900 million in cost
overruns given the plant is now projected to cost approximately
Although Duke Energy is limited in its recovery of project
costs, the settlement agreement does allow the utility to
recover financing charges accrued to fund the project’s
construction. This arrangement is otherwise known as allowance
for funds used during construction (AFUDC) and has been approved
thus far in this case in accordance with state law.
Through a modification to the settlement agreement, the IURC
also provided $28 million in additional value to ratepayers by
directing Duke Energy to credit customers for cost control
incentive payments found to be unwarranted, given the delays
that arose from the project cost overruns. The IURC also
modified the settlement agreement in such a way that if Duke
Energy should recover through litigation claims more than the
IGCC project costs absorbed by its shareholders, any surplus
recovery is required to be returned to ratepayers.
The investment recovery sharing coupled with the other terms of
the settlement agreement created value that was found to be in
the public interest. The settlement agreement was reached by the
utility, Nucor Steel Indiana, the Duke industrial group, and the
Indiana Office of Utility Consumer Counselor. Packaged with the
settlement agreement is also a guarantee by Duke Energy that it
will not file a rate case prior to March 2013, nor implement one
before April 2014.
For your reference, the IURC’s decision under Cause No. 43114
IGCC 4 S1 can be found online at www.in.gov/iurc. To read the
“Commission Discussion and Findings” section, please turn to
page 109. If you need to access other case-related documents,
visit our Electronic Document System at
https://myweb.in.gov/IURC/eds/. Instructions on how to best use
this database can be found at www.in.gov/iurc/2666.htm.
Media Contact: Danielle McGrath, (317) 232-2297
The Commission is a fact-finding body that hears evidence in
cases filed before it and makes decisions based on the evidence
presented in those cases. An advocate of neither the public nor
the utilities, the IURC is required by state statute to make
decisions that balance the interests of all parties to ensure
the utilities provide adequate and reliable service at
For more information, please visit: www.in.gov/iurc.
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