The Indiana Utility Regulatory Commission (IURC) has approved Duke Energy Indiana's (DEI) plans to build a $1.985 billion, 630 MW integrated gasification combined cycle (IGCC) baseload project in Edwardsport, IN, the first baseload capacity to be built to supply DEI since 1982 and the cleanest baseload plant in operation in the state, the company said.

The decision was something of a rarity in the ongoing battle over IGCC technology, which is seen by some as the coal industry's "green" future, while others view it as an unattainable panacea. The IURC approval came on the heels of a recent spate of roadblocks set before IGCC projects.

The IURC found that DEI had demonstrated the need for additional generation capacity and met the statutory requirements necessary for approval. The commission denied DEI's request for an enhanced return on equity but said DEI was entitled to timely recovery of its construction, operating and maintenance costs. Cost recovery will be phased in throughout construction by the use of semi-annual reviews by the commission. DEI estimated that customers will see an overall increase in rates of approximately 16%.

The Edwardsport plant will use coal gasification technology similar to that used in DEI's Wabash River Power Station in West Terre Haute, IN. DEI agreed to sell one unit of the Wabash River facility to the Wabash Valley Power Association last year.

The existing Edwardsport station was constructed in 1918 with the three existing generating units constructed predominantly in the 1940s. The station has a nominal total 160 MW nameplate rating. In conjunction with the completion of construction and the start up of the IGCC project, DEI will retire the existing generating station and salvage any remaining usable equipment. In its petition to the IURC, DEI indicated that it expects to demolish the stack and precipitators and any remaining structures that are determined not to be useful for the IGCC project.

Speaking to the Economic Club of Indiana late last month, Duke Energy CEO Jim Rogers said the Edwardsport project would help the company in its efforts to be part of Gov. Mitch Daniels' vision to turn Indiana's "homegrown natural resources into an economic engine."

In an interview with Power Market Today Wood Mackenzie's Anthony Damiano, research manager for North American power, said about 42% of the 6,700 MW of new U.S. coal plants proposed this year were IGCC projects (see related story).

But the news of delayed or canceled IGCC projects has been widespread. Earlier this month representatives of the Orlando Utilities Commission and Southern Power, a subsidiary of Atlanta-based Southern Company, canceled plans for a 285 MW IGCC power generation facility near Orlando, FL, citing continuing uncertainty surrounding potential state regulations relating to greenhouse gas emissions (GHG). Instead, construction of a gas-fired combined-cycle generating facility will proceed as originally planned. That decision came one week after Xcel Energy CEO Dick Kelly said his company has decided to go slower with its plans to build and operate an IGCC generation plant in Colorado. Kelly said that Xcel is comfortable with the IGCC technology but the project has now been pushed back two years because power supplies will not be needed as soon as previously estimated.

Tampa Electric said last month it no longer plans to meet its 2013 need for baseload generation through the use of IGCC technology because it fears the potential for project cost increases. Tampa Electric had petitioned the Florida Public Service Commission to build a 632 MW IGCC facility. However, Tampa Electric said it "remains steadfast in its support of IGCC as a critical component of future fuel diversity in Florida and the nation, and believes the technology is the most environmentally responsible way to utilize coal" for power generation.

Tampa Electric's decision was quickly followed by the release of a draft of the California Energy Commission report that said barriers to clean coal's sequestration are daunting -- and California energy planners won't count on clean coal projects to help the state's efforts to curb GHG emissions before 2020.

The Northwest Power and Conservation Council concluded last month that there will be no need for any clean coal facilities in the Pacific Northwest before 2016 at the earliest, despite growing demand.

In Washington state, a proposed 680 MW IGCC plant on the Columbia River is opposed by critics, mostly from organized environmental groups, who say the Energy Northwest project does not have specific plans for carbon reduction.

SouthWestern Power Group, developers of a long-ago permitted 1,000 MW electric generation plant, once planned as an IGCC facility, announced in September that they will instead construct a natural gas-fired facility. SouthWestern Power had originally conceived the project as a gas-fired facility and altered its plans to an IGCC facility in the midst of wholesale gas price spikes two years ago before deciding in September to revert to its original plans.

Last year, in an effort to spur development of clean coal-fired power plants and coal gasification technologies, the U.S. Treasury and Energy departments awarded $1 billion in tax credits to nine companies including DEI, which received $133.5 million in tax credits for the Edwardsport IGCC project and another $125 million in tax credits for its 1,600 MW Cliffside Modernization project in North Carolina.

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