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Saturday, July 09, 2011
Ind. Gov't. - "In a stunning reversal, the state's utility consumer agency now says Duke Energy Corp. -- and not its ratepayers -- should shoulder more of $530 million in cost overruns at its coal-gasification plant in Edwardsport" [Updated]
Updating a long list of earlier ILB entries on Duke Energy, Alex Campbell and Heather Gillers report today in the Indianapolis Star in a story that begins:
"Duke should no longer have a direct and endless line of project funds supplied solely by the ratepayers," Barbara A. Smith of the Office of Utility Consumer Counselor told the state's regulatory body in a new legal filing.[Updated at 11:25 am] The ILB has located a copy of Ms. Smith's testimony and has OCRed it. Here are some quotes:She said new information filed with regulators shows "Duke's imprudent management" of the project, which has been plagued for months because of an ethics scandal.
Smith's testimony to the Indiana Utility Regulatory Commission comes as consumer advocates prepare for a second round of testimony and filings next week that could call into question other, earlier cost overruns. The filings will examine whether Duke's actions on the $2.9 billion project "constitute fraud, concealment and/or gross mismanagement," Smith said.
Tim Stewart, an attorney at Lewis & Kappes who represents Duke's industrial consumers, said it's a "reasonable assumption" that other cost overruns will be scrutinized.
The consumer counselor's about-face comes after its decision in September to sign off on an agreement that would have passed most of $530 million in cost overruns on to consumers.
The agreement fell apart in December after The Indianapolis Star published some of the hundreds of internal emails that showed a cozy relationship between Duke and state regulators. Duke agreed to reopen negotiations on the cost overruns after Duke's industrial customers complained that the emails had tainted the regulatory process.
I will begin by providing a brief regulatory history of Petitioner's Integrated[More] This is Docket Number 43114-IGCC-4S1. Here is how to duplicate the search -- basically I went to the IURC's electronic document center, selected the "Document center" tab, then typed in "43114", asked for a list of subdocuments, selected "IGCC-4Si", and clicked "search." I got a long list, newest first.
Gasification Combined Cycle ("IGCC") Project in Edwardsport Indiana
(hereinafter "the Project" or "the IGCC Project"). I will then overview and
introduce the OUCC witnesses. Finally, I will provide a summary of major
concerns related to the IGCC Project and offer the OUCC's recommendations on
Petitioner's requested relief. * * *Q: Does the OUCC continue to support the IGCC project?
A: Some of the factors that initially led the OUCC to support the project remain,
such as Indiana's need for additional generation, the possibility of carbon
legislation, and the environmental benefits, as set forth in my May 15, 2007
testimony. However, recently factors have been brought to light that have a
significant bearing on this case, which have caused an increasing level of concern
for the OUCC. As stated above, the OUCC's testimony in this Phase will focus on
Duke's claim that its management of this project, since approval of its last
updated cost estimate, has been prudent.Q: How does the OUCC's testimony address these concerns?
A: My testimony will provide an overview of the OUCC's concerns and
recommendations for the Commission's consideration. Mr. Anthony Alvarez
addresses the OUCC's concerns regarding Petitioner's revised cost estimates. Mr.
Robert James addresses issues surrounding Petitioner's mishandling of its grey
water problem. Mr. Wes Blakley discusses the OUCC's recommended regulatory
treatment in this case.Q: What are the OUCC's primary concerns with the current status of this
project?The OUCC's concerns include the excessive project cost mcreases and the
ongomg inaccurate project cost estimates, as well as the underlying reasons
thereof. As previously stated, the concerns outlined herein pertain to a prudence
review of Duke's conduct associated with those costs it is attempting to recover in
Cause No. 43114 IGCC 4.Q: Does the OVCC have additional concerns? [Please explain]
A: Duke has not demonstrated any budgetary constraints on this project. There
appears to be a lack of responsibility or accountability on the part of those causing
these multi-million dollar cost overruns. In addition, there has been no evidence
presented to indicate that Duke management, or any other entity, has conducted
any kind of timely prudency review regarding these cost overruns. It remains
incumbent on Duke to demonstrate that these additional increased costs are
reasonable and necessary and have been prudently incurred, a burden Duke has
failed to meet in this proceeding. The overarching issue is more than simply a
justification of the cost overruns. The escalating costs have been borne solely by
ratepayers, with the benefits going to the shareholders. I will expand on each of
these concerns throughout the remainder of my testimony.
Posted by Marcia Oddi on July 9, 2011 11:00 AM
Posted to Indiana Government