The monument to former Duke Energy CEO Jim Rogers’s boondogglery – a “clean coal and carbon capture” power plant in Edwardsport, Ind. – has become the rate-busting gift that keeps on giving.
Over the weekend the Indianapolis Star reported that the facility that Duke Energy’s Indiana president called “state-of-the-art” continues to have premature breakdown and decay problems. Repair costs are likely to be passed on to customers, who have already seen their electric bills increase by up to 16 percent because of construction estimate overruns.
“Cracking welds. Eroding pipes. Frozen transmitters. Slag building up. Coal slurry spilling on floors,” the Star reported, citing disclosures to the Indiana Utility Regulatory Commission. “And all that was just in December.”
The plant has been operating for two years and was promoted as one of the “world’s cleanest” with the ability to deliver dependable, low-cost electricity. According to Power magazine, Edwardsport was expected to take up to 15 months to attain its “long-term level of availability” for energy output. But it has fallen short.
According to the Star, the problems in December shrank the plant’s production to 23 percent of capacity. Over its short lifetime it has only averaged 41 percent of capacity – about half of what was promised.
The problems began early. The plant had to be shut down due to breakdowns after only 6 days of going “online,” which raised suspicions that it was launched prematurely. The timing was crucial as a legal settlement dictated that of the $3.5 billion in construction costs, Duke’s Indiana ratepayers would have to cover $2.6 billion, with the company eating the rest. But once Edwardsport became operational, customers were to bear all maintenance and repair costs. Any capital expenditures for the facility incurred after opening day were no longer part of “construction,” but part of ongoing upkeep.
Edwardsport’s inefficiencies continued. Through the end of 2013 the plant was able to reach only 37 percent of its generating capacity. To add insult to injury, the state agency that looks out for (monopoly) utility customers discovered that Edwardsport used more energy than it produced from September to November of 2013.
“We’ve never seen an episode of negative generation as large as this,” said Anthony Swinger, a spokesman for the Office of the Utility Consumer Counselor, at the time.
Then, in an extremely cold January 2014, the much-touted technological marvel eked out only 4 percent of its potential – brrr! Unbelievably, it was worse in February, when Edwardsport didn’t even deliver 1 percent of its capacity. Ratepayers, or course, were not relieved of the additional cost increase on their electric bills.
“It’s a large, complex project, and it has taken time to work out technical issues,” said Duke spokeswoman Angeline Protogere to the Indianapolis Business Journal.
Now we are well past the 15 months that Duke said it would require for the plant to reach maturity, and glitches still abound. The company told the Star that Edwardsport generated at 75 percent in March and that maintenance issues such as corroded pipes are not unusual in new plants. But according to filings with the state’s utility commission, possibly costly repairs will persist.
“Managing erosion and corrosion will be a constant maintenance challenge for the plant,” said facility manager Jack Stultz in the filing.
Already Duke is seeking to recover tens of millions of dollars in costs incurred through March 2014, which advocates for residential and industrial customers are resisting. The rate case is still pending. If granted, Duke’s residential customers would see an average additional increase of $2.40 per month on their electric bills.
The Star detailed some of Edwardsport’s technical problems in its weekend story. Over the last several months the plant has experienced holes in pipes, broken welds, frozen transmitters, leaking tubing, smoldering pumps, slag buildups in valves, and control system errors. An engineering expert often called on behalf of utility customers to testify in rate cases, David Schlissel, has warned for years that Edwardsport’s technology is not ready for prime time.
“Now those very risks are coming home to roost,” he said. “That’s why (Duke Energy) ratepayers are feeling the pain that they’re feeling now, and will continue to feel for the foreseeable future.”
The current challenges at Edwardsport are piled on top of other difficulties it has faced in its brief history – most of them self-inflicted by Duke and former CEO Jim Rogers. As NLPC has detailed in the past, as the cost overruns accumulated, Rogers went in a desperate search for relief from former Gov. Mitch Daniels and from the Obama administration. Also, two Duke officials were fired after the successful recruitment of an Indiana Utility Regulatory Commission lawyer to join Duke, while the lawyer still oversaw cases that concerned the utility.
And the Indiana Office of Utility Consumer Counselor has been sharply critical of Duke’s management of Edwardsport, calling it “a compelling case of a company that, through arrogance or incompetence, has unnecessarily cost ratepayers millions of dollars and has set back the public’s trust in our regulatory process.”
Duke said it would take 15 months for problems to subside and for the Edwardsport plant to start humming along. It’s been two years and their reports to their regulators don’t sound any better.
Paul Chesser is an associate fellow for the National Legal and Policy Center and publishes CarolinaPlottHound.com, an aggregator of North Carolina news.