"If you were going to make this the national policy, it is cost prohibitive"

Evansville Courier Press

Duke to boost rates as part of carbon study

Customers would see average increase of 1 percent

By Mark Wilson

July 9, 2009

Duke Energy is planning to finance at least part of the cost to study a proposed
carbon dioxide storage project by increasing its customers' electric rates.

Customers would see an average rate increase of 1 percent spread across the
three-year period of the study, beginning in 2010, according to the company.

The increase would be a rider added on customer bills and could fluctuate,
depending on the company's needs, said Angeline Protogere, a company
spokeswoman. It would not be an increase of the base rate.

Duke is planning to spend $121 million to study permanent underground storage of
carbon dioxide from its Edwardsport, Ind., coal-gasification power plant in Knox
County. It has filed plans for the project with the Indiana Utility Regulatory
Commission.

However, a Clean Coal Initiative grant from the U.S. Department of Energy could
offset up to 50 percent of the cost to implement the carbon capture technology
and some of it could go toward the study, Protogere said.
That would lessen the impact on customer rates, Protogere said.

Construction of the $2.35 billion coal gasification power plant already is under
way. Duke officials have said the project would result in an 18 percent rate
increase for customers to be phased in by 2013.

Although its pollution emissions will be lower than those of traditional
coal-burning power plants, it is estimated the Edwardsport plant will produce up
to 4 million tons a year of carbon dioxide.

Carbon dioxide is a "greenhouse gas" linked with global warming and climate
change. Without capturing it, that carbon dioxide would be released into the
atmosphere.

As part of its rate approval case with the Indiana Utility Regulatory
Commission, Duke agreed to study the feasibility of capturing up to 20 percent
of its carbon dioxide.

Protogere said the company will study whether it is possible to store 50 percent
to 60 percent of it carbon dioxide emissions. To do this, the company is
exploring pumping the gas into saltwater aquifers deep beneath the ground in the
region. The study would involve a detailed examination of the area's geology and
include drilling multiple wells in the area.

The carbon dioxide would be piped to storage sites nearby in Knox County, where
it would be injected into the ground.

The project also would include using the carbon dioxide to recover oil from
underground. That would be done by pumping the gas into the wells to force the
oil out.

Duke has filed initial plans and testimony for the project with the IURC.

"This will be one of the nation's first demonstrations of carbon capture and
storage at a power plant," said Jim Stanley, president of Duke Energy Indiana.

But Grant Smith, executive director of Citizens Action Coalition Indiana, said
he believes is too expensive. He said his organization, which joined other
groups in opposing Duke's requested rate increase to pay for the plant, would
also oppose the carbon capture and storage study.

"If you were going to make this the national policy, it is cost prohibitive," he
said.

Smith said he believes it would be better to encourage energy efficiency and
development of alternative energy sources.