The customer advocate of Indiana’s utility is figuring put whether Duke Energy Corporation (NASDAQ:DUK) should be permitted to pass its repairing costs for the new $3.5 billion coal gasification plant to consumers. The plant is due to be set up in South West Indiana.
Tim Stewart, a lawyer for Lewis Kappes in Indianapolis who argues for the utility interests of big industries around the state is figuring out if Duke Energy can pass on its repair costs for the new plant to its customers.
The power plant near Edwardsport had been set up by Duke Energy in the year 2012 and it was in service although it wasn’t ready by then. This happened because of the 2012 settlement agreement, according to which the company had limited freedom on how much it could charge the ratepayers.
According to the settlement, Duke Energy can recover the capped amount from ratepayers, which accounts for $2.595 billion. This excludes the millions of dollars in financing costs, requiring Duke Energy to pay $900 million in construction overruns.
According to the settlement, Duke Energy can only cap construction costs and not the repair costs after the plant has been set up. The repair costs after the setting up of the plant will come under “operation and maintenance” and not “construction costs”.
The customer advocates have been itching to stop the company from passing on millions of dollars to its customers in lieu of construction costs. The companies charge higher rates in order to recover the construction costs from the customers. If Duke Energy’s petition is approved by the state regulators, the electricity bills for customers will hike by $2.40 a month.
The huge power plant has not had great luck in the past either. It opened in the year 2013 and just six days after the opening, the plant broke down. The damage of huge fans that vaporize wastewater at the plant was given as an explanation for the same. In 23 months of the plant’s service, it has been able to generate only 41 percent of the total electricity generation capacity it exercises.
The utility consumer office said, “We remain very concerned about the plant’s performance and its costs, and continue to closely review Duke Energy’s ongoing filings with the commission.”
The picture will be clear by the end of September, according to the experts.