By Mark Wilson, Evansville Courier & Press
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 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.