Duke Energy Kentucky Requests Withdrawal of Limestone Conversion Application Due to Favorable Contract Opportunity

Strategic Insights -

The Kentucky Public Service Commission has been presented with a request from Duke Energy Kentucky, Inc. to withdraw its application for a Certificate of Public Convenience and Necessity (CPCN) to convert its Wet Flue Gas Desulfurization System from a magnesium enhanced quicklime (MEL) based handling system to a limestone based reagent system. The company cites a recently negotiated MEL contract with a supplier that provides a more favorable and secure terms, making the Limestone Conversion unnecessary. The new contract offers a net benefit to customers over the term of the contract, which is estimated to be approximately $125 million less than the original capital investment required for the Limestone Conversion.

Key Takeaways:

  • Duke Energy Kentucky, Inc. has requested withdrawal of its application for a Certificate of Public Convenience and Necessity (CPCN) to convert its Wet Flue Gas Desulfurization System from a magnesium enhanced quicklime (MEL) based handling system to a limestone based reagent system.
  • The company cites a recently negotiated MEL contract with a supplier that provides a more favorable and secure terms, making the Limestone Conversion unnecessary.
  • The new contract offers a net benefit to customers over the term of the contract, which is estimated to be approximately $125 million less than the original capital investment required for the Limestone Conversion.
  • The company has incurred some costs necessary to support its original application, including engineering, evaluation, and design costs.
  • The need for the Limestone Conversion was driven by four primary reasons: (1) a lack of competitive market for MEL, (2) increasing costs of MEL, (3) fuel security concerns, and (4) compliance with newly promulgated environmental regulations.
  • The company's analysis showed that the Limestone Conversion was the necessary and least cost solution for compliance, initially.
  • However, with the new contract opportunity, the company believes this is an acceptable and reasonable resolution of issues that produces a net benefit to customers over the expanded contract term.

Statistics:

  • The company's original capital investment for the Limestone Conversion was estimated to be approximately $125 million.
  • The new MEL contract offers a net benefit to customers over the term of the contract, estimated to be approximately $125 million less than the original capital investment required for the Limestone Conversion.
  • The company incurred engineering, evaluation, and design costs related to the original application.
  • The need for WFGD upgrades is driven by compliance with environmental regulations, including the Mercury Air Toxics Standard (MATS) update.

Sources:

  • Commonwealth of Kentucky Before the Public Service Commission: In the Matter of: Electronic Application of Duke Energy Kentucky, Inc. for a Certificate of Public Convenience and Necessity to Convert its Wet Flue Gas Desulfurization System from a Quicklime Reagent Process to a Limestone Reagent Handling System at its East Bend Generating Station and for Approval to Amend its Environmental Compliance Plan for Recovery by Environmental Surcharge Mechanism, Case No. 2025-00002 (5/14/2025)
  • Rebuttal Testimony of John A. Verderame (Apr. 30, 2025)
  • Reinvigorating America's Beautiful Clean Coal Industry and Amending Executive Order 14241 (Apr. 8, 2025), available at https://www.whitehouse.gov/presidential-actions/2025/04/reinvigorating-americas-beautiful-clean-coalindustry- and-amending-executive-order-14241/