Indiana regulators approve deal over coal-gasification plant

INDIANAPOLIS (AP) - State utility regulators have approved a deal allowing Duke Energy to increase electricity rates by 2 percent to help pay for its $3.5 billion coal-gasification plant in southwestern Indiana.

The agreement approved Wednesday includes Duke picking up $87.5 million of operating costs deferred since the plant went into service in 2013 near the Knox County town of Edwardsport.

Duke customers will pay an average of $1.83 a month beginning in September under the decision that ends more than five years of disputes over how to pay for the plant where cost overruns nearly doubled its price tag from the original $1.9 billion estimate, The Indianapolis Business Journal reported (http://bit.ly/2bSc5lR ).

Duke Energy said that without the settlement agreement, the rate increase would have been about 3.6 percent.

Consumer and environmental groups that had unsuccessfully fought the project agreed in January to join Duke's settlement with the Indiana Office of Utility Consumer Counselor and a group of Duke industrial customers.

Under a 2012 agreement with ratepayers, Duke absorbed about $900 million in construction cost overruns plant which generates electricity by converting coal into a synthetic gas that's burned in a traditional turbine power plant.

Duke's new settlement deal calls for it to stop burning coal within seven years at its New Albany power plant near Louisville, Kentucky, provide $500,000 in energy assistance for needy customers and spend $500,000 for solar projects at churches, schools and other community sites.

"This settlement is a huge win for Duke's ratepayers and we are grateful that Duke and the other parties opened the settlement up and invited CAC and our allies to the discussions, where we were able to secure additional benefits for customers," said Kerwin Olson, executive director of the Citizens Action Coalition.

Duke is Indiana's largest electric utility with about 800,000 customers.

"This settlement has broad support of Indiana's consumer groups," Duke Energy Indiana President Melody Birmingham-Byrd said in a statement. "We joined with them in an agreement that limits what customers will pay for Edwardsport's operations while also dedicating funds to help low-income customers with their energy bills and communities interested in solar power."

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Information from: Indianapolis Business Journal, http://www.ibj.com