Emissions

Indiana’s consumer advocate wants to thwart Duke Energy’s carbon capture study

The OUCC filed testimony last week to the Indiana Utility Regulatory Commission, arguing that the commission should reject Duke’s proposal due to the “speculative nature of the feasibility and affordability of a CCS system.”
Indiana’s consumer advocate wants to thwart Duke Energy’s carbon capture study
Edwardsport IGCC (integrated gasification combined-cycle) plant. Credit: Duke Energy.

Duke Energy Indiana has proposed a carbon capture and sequestration (CCS) study for its Edwardsport Generating Station, and it wants to “defer expenses” while raising rates for its customers. The Indiana Office of Utility Consumer Counselor (OUCC), a consumer advocate, is not happy with this development.

The OUCC filed testimony last week to the Indiana Utility Regulatory Commission, arguing that the commission should reject Duke’s proposal due to the “speculative nature of the feasibility and affordability of a CCS system.”

Duke Energy’s request would raise annual revenues for its Indiana electric utility by nearly $492 million, the OUCC said, which would be implemented in two phases. The utility’s testimony and exhibits project that an average monthly residential bill for 1,000 kWh would be $170.67 when new rates are fully implemented in March 2025.

“Duke’s proposal would impose extreme rate shock and unfairly burden its residential customer base, which has experienced significant and worsening affordability challenges,” said Ben Inskeep, Citizens Action Coalition program director. “This rate case is inconsistent with the policy of the State of Indiana and the General Assembly’s repeated emphasis that electric utility bill affordability is a priority. Disappointingly, while Duke proposes a destabilizing rate increase that places a disproportionate burden on residential customers, it has not offered material improvements to its programs that would meaningfully help residential customers with their unaffordable electric bills.”

The OUCC argued its analysis shows that an increase of approximately $184.7 million (6.1%) is warranted instead, based on the case’s evidence and applicable law.

Duke was awarded a Department of Energy (DOE) grant to conduct a front-end engineering design (FEED) study on CCS systems at its Edwardsport Generating Station. The estimated cost of the project is more than $17 million, with an estimated offset of roughly $8 million in federal funding.

In his testimony, Brian Wright, a utility analyst in the electric division for Indiana’s OUCC, noted that Duke’s first CCS feasibility study concluded that CCS was not feasible at Edwardsport due to the “lack of geological formations onsite that could act as a good carbon storage medium.” However, more recent studies at the location have shown that dolomite formations in the area could provide carbon storage capacity.

While Duke Energy has claimed it cannot estimate whether any of its out-of-state subsidiaries could benefit from the study, the OUCC said at “at the very least” the study should improve Duke’s knowledge and experience in evaluating the technological and geographical feasibility of CCS at other sites. Therefore, OUCC argued, the benefits of Duke’s study will likely extend beyond Indiana’s borders, and portions of the cost should be allocated to Duke’s other jurisdictions.

In its petition, Duke Energy said it has been nearly five years since it last filed for a general rate increase, and the test year in the company’s last general rate case was a fully forecasted calendar year 2020 – meaning the case establishing its current rates and charges was filed and the record was closed before the COVID-19 pandemic. Since then, Duke Energy said, the economic climate has changed “significantly,” including increased inflation, increased cost of capital, and Duke Energy Indiana’s capital investments to its electric system.

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