Judge orders Duke power plant shutdowns

PLAINFIELD, INDIANA - Judge Larry McKinney issued a ruling in U.S. District Court for the Southern District of Indiana calling for Duke Energy to shut down three units at the company’s West Terre Haute Wabash River Station no later than September 30.

The majority of the plant’s capacity is unaffected by the ruling, which calls for units 2, 3 and 5 to be retired, while the remaining Duke Energy-owned units at the station – 4 and 6 – will be unaffected. Shutting down units 2, 3 and 5 will remove a combined capacity of 265 megawatts, which is 39 percent of the station’s 677- megawatt power generating capacity.

Following an adverse ruling by a jury in May 2008, Duke Energy had proposed as a remedy that units 2, 3 and 5 be retired in 2012, when the new IGCC plant in Edwardsport comes on line. The court’s order today accelerates that timetable by two years.

“We are disappointed with the court’s decision to accelerate the shutdown of Wabash River Units 2, 3 and 5,” said Duke Energy Chief Legal Officer Marc Manly. “But even though disappointed, I will reiterate our satisfaction that after 10 years of litigation, the company’s position regarding power plant projects was vindicated in the vast majority of instances about which the government originally complained. We will continue to review the Court’s ruling and evaluate our options.”

The judge also ruled:

• The company will not have to install additional emissions reduction equipment on units 4 or 6.

• Duke Energy will have to surrender sulfur dioxide (SO2) allowances for the period between May 22, 2008 and Sept. 20, 2009. This amount is significantly less than requested by the government.

• Judge McKinney reduced the government’s proposed fine on Beckjord Station from $1.32 million to $687,500.

“The units at Wabash River impacted by this decision are more than 50 years old," said James L. Turner, president and chief operating officer of Duke Energy’s Franchised Electric & Gas segment. “This order should not have an impact on Duke Energy’s operation in 2009 because of changes we already made to our operating plans following the jury’s verdict last summer. However, we will have to re-evaluate our plans for meeting peak demand the next two summers and work with the Midwest Independent System Operator to ensure we have an adequate plan for the reliable operation of the system.”

In addition to the new coal gasification plant, Duke Energy will have invested nearly $5 billion to substantially reduce emissions of sulfur dioxide, nitrogen oxide and other pollutants from the company’s coal-based power plants in the five states it serves. The net result of these investments will be a reduction of sulfur dioxide and nitrogen oxide emissions by approximately 70 percent across Duke Energy’s five-state service area by 2010.

Duke Energy Indiana’s operations provide 6,500 megawatts of electricity capacity to approximately 775,000 customers, making it the state’s largest electric supplier.



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