Summary
This Form 8-K filing by Duke Energy Corporation and Duke Energy Indiana, Inc. reports on the Indiana Utility Regulatory Commission's (IURC) approval of a settlement agreement concerning the Edwardsport clean coal gasification plant. The key takeaway for investors is the finalized cost cap for rate recovery, set at $2.595 billion, which includes estimated financing costs through June 30, 2012. The approval also outlines mechanisms for recovering Allowance for Funds Used During Construction (AFUDC) post-June 30, 2012, with a reduction in recoverable AFUDC to 85% for amounts accrued after November 30, 2012. While the settlement provides a ceiling for rate recovery, investors should note that the IURC made modifications. These include requiring customer credits for incentive payments deemed unwarranted due to project delays and cost overruns, and a provision for any surplus recovery above project costs absorbed by Duke Energy Corporation shareholders to be returned to Indiana ratepayers. The plant remains on track for commercial operation by mid-2013.
Key Highlights
- 1Indiana Utility Regulatory Commission (IURC) approved a settlement agreement regarding the Edwardsport clean coal gasification plant.
- 2The cost to be recovered in customer rates for the Edwardsport plant is capped at $2.595 billion, including estimated financing costs through June 30, 2012.
- 3Duke Energy Indiana, Inc. can recover AFUDC after June 30, 2012, until rates are revised.
- 4Recovery of AFUDC accrued after November 30, 2012, will be reduced to 85%.
- 5IURC mandated customer credits for cost control incentive payments found to be unwarranted due to project delays and cost overruns.
- 6Any surplus recovered exceeding project costs absorbed by Duke Energy Corporation shareholders will be returned to Indiana ratepayers.
- 7The Edwardsport plant is scheduled for commercial operation by mid-2013.