Summary
Duke Energy Corporation (DUK) filed an 8-K on September 17, 2010, to report a material impairment related to its subsidiary, Duke Energy Indiana, Inc. The report details a settlement agreement reached concerning the construction cost increases for the Edwardsport clean coal gasification plant. This settlement involves a reduction in equity return for costs exceeding $2.35 billion and establishes a cap on recoverable construction costs for customers at $2.975 billion.
Key Highlights
- 1Duke Energy Indiana, Inc. has reached a settlement regarding cost overruns for its Edwardsport clean coal gasification plant.
- 2The company will record a pre-tax charge to earnings of approximately $35 to $45 million in Q3 2010.
- 3This charge is based on an estimated project cost of $2.88 billion.
- 4A 150 basis point reduction in equity return will apply to construction costs exceeding $2.35 billion.
- 5Customer recovery for project construction costs will be capped at $2.975 billion.
- 6The settlement is subject to approval by the Indiana Utility Regulatory Commission (IURC), meaning the final impact could change.