June 1, 2011 

# Duke Energy Likely to Shutter Two Coal-Fired Units in Indiana POWERnews Duke Energy will retire two coal-fired units at the four-unit 560-MW Gallagher Station in New Albany, Ind., instead of converting them to natural gas if regulators approv e the company’s plans to buy the 640-MW natural gas –fired Vermillion Energy Facility in Cayuga, Ind. The company was required to shut down Units 1 and 3 at the Gallagher plant or convert them to natural gas as part of the 2009 settlement between Duke Energy and the Environmental Protection Agency (EPA) and Justice Department to resolve Clean Air Act violations at t he plant. The settlement, reached after a decade of litigation, called for Duke Energy to spend about $85 million, which included converting the units as well as inst alling pollution controls for sulfur dioxide at Units 2 and 4 at the plant. Duke Energy Indiana spokesperson Angeline Protogere told POWERnews that the company’ s plans to retire the two units depended on approvals from the Indiana Utilit y Regulatory Commission (IURC) and the Federal Ener gy Regulatory Commission. Decisions from both agencies are expected in mid-November. The settlement requi res the company decide whether to convert or retire the uni ts by Jan. 1, 2012. “If we elect to retire the unit s, we would need to do so within 30 days of that date,” she said. Duke Energy currently owns 75% of the Vermillion Pl ant; Wabash Valley Power Association owns the remai nder. Buying the plant would cost much less than converti ng the Gallagher units to gas, which would require installing a new 19-mile gas pipeline, Protogere said. The conve rsions could cost up to $263/kW compared with $173/kW to buy the Vermillion plant. Construction of the 560-MW Gallagher Plant was comp leted in 1961. Unit 2 began operating in 1958, Unit 1 in 1959, Unit 3 in 1960, and Unit 4 in 1961. The Vermillion Energy Facility began commercial operation in June 2000, and it consists of eight combustion turbines operating in simple-cycle mode. Analysts estimate that, facing regulatory uncertain ty from a rainbow of recently proposed or finalized environmental rules, the U.S. could see up to 64,000 MW in coal c apacity retirements. The bulk of these retirements—u p to 46% of the total—will be in the Midwest, though the Southe ast will see 31% of the retirements, as Black & Vea tch Managing Director for Management Consulting Mark Griffith to ld attendees at a meeting in Houston, Texas, on Thu rsday. “Coal asset owners are facing major capital and ope rating costs that will impact asset value asset rem aining life and market conditions,” he said. Griffith also said tha t there are many older—and smaller—units needing sign ificant air quality control improvements to meet “Best Availabl e Control Technology” standards. For more on possible coal capacity retirements, see the May issue of POWER at www.powermag.com. Sources: POWERnews , Duke Energy Indiana, Black & Veatch 

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Duke Energy Likely to Shutter Two Coal - Fired Units in Indiana

7/18/2011 http://www.powermag.com/print/POWERnews/Duke - Energy - Likely - to - Shutter - Two - Coal ...