Air Pollution Control Equipment Services, Coal

Cinergy expresses interest in new coal gasification process

CINCINNATI, Ohio, Feb. 11, 2004 — Cinergy Corp. Chairman, President and CEO James E. Rogers expressed the company’s interest in building an integrated coal gasification combined-cycle (IGCC) generating station to replace one of its older coal-fired power plants.

Rogers made the announcement at a workshop on IGCC development sponsored by the John F. Kennedy School of Government at Harvard University. “IGCC provides a way to continue to use coal, reduce emissions and take a serious look at how we might deal with greenhouse gas emissions,” he said.

“We are going to have to continue to rely on coal as a major source of electric generation for the foreseeable future, and this technology could well be the way to get that done,” Rogers said.

Cinergy has already begun preliminary engineering and site analysis to determine the feasibility of a state-of-the-art IGCC commercial plant. The primary constraint is the higher construction, operating and financing costs for an IGCC facility compared with a conventional coal-fired plant.

Rogers endorsed a proposal developed by William Rosenberg, a senior fellow at the Kennedy School, that would make the project possible through a cooperative arrangement among the federal government, state regulators and the utility that would construct and operate the facility.

The Kennedy School’s proposal calls for the U.S. Department of Energy to establish a loan guarantee for 80 percent of a new IGCC program with the utility committing 20 percent equity and the state regulators assuring dedicated revenues to the utility to cover the plant’s costs through rates and construction-work-in-progress allowances.

“This approach brings everyone together in a partnership with a common goal of harmonizing energy and economic needs,” Rogers said. “This is a rare window of opportunity for our industry and society to create a public good for future generations by using our most abundant resource, coal, in an environmentally benign way.

“Because of the coal gasification project at our Wabash River Generation Station, we have considerable experience working with DOE and the State of Indiana that increases our willingness to take on a project such as this.”

IGCC uses a coal gasification system to produce a synthetic fuel that drives a gas turbine. The by-product steam is processed through a heat exchanger to generate superheated steam that drives a steam turbine. IGCC facilities can also use a variety of fuels besides coal, such as petroleum coke, various oil products and biomass.

IGCC would provide significant reductions in plant emissions over a conventional coal-fired plant with currently required pollution control equipment. An additional benefit is the removal of mercury at a much lower cost than conventional methods.

Cinergy Corp. has a balanced, integrated portfolio consisting of two core businesses: regulated operations and commercial businesses. Cinergy’s regulated delivery operations in Ohio, Indiana, and Kentucky serve 1.5 million electric customers and about 500,000 gas customers.

In addition, its Indiana regulated operations own 7,000 megawatts of generation. Cinergy’s commercial business unit is a Midwest leader in low-cost generation owning 6,300 megawatts of capacity with a profitable balance of stable existing customer portfolios, new customer origination, marketing and trading, and industrial-site cogeneration. The “into Cinergy” power-trading hub is the most liquid trading hub in the nation.