Duke Energy (NYSE:DUK) reported in a Jan. 17 SEC filing that on Jan. 12, Duke Energy Vermillion II LLC, a non-regulated indirect subsidiary of Duke Energy Ohio, sold its 75% undivided ownership in a gas-fired power plant located in Vermillion County, Ind., to Duke Energy Indiana and the Wabash Valley Power Association (WVPA).
Duke Energy Indiana is a regulated affiliate of Duke Energy Ohio. The total purchase price for the plant was $81.6m. The closing of the transaction was subject to the approval of the FERC and Indiana Utility Regulatory Commission (URC), which were received in September and December 2011, respectively.
As a result of the closing of the transaction, Duke Energy Indiana now owns a 62.5% undivided interest in the plant as a tenant in common with WVPA, which owns a 37.5% undivided interest.
In May 2011, Duke Energy Vermillion II entered into the agreement to sell its 75% undivided ownership interest in the Vermillion plant to Duke Energy Indiana and WVPA. As a result of this purchase, which adds to its generating capacity, Duke Energy Indiana has said it may retire the coal-fired Gallagher Units 1 and 3 or convert them to natural gas.
The Indiana URC approved the deal on Dec. 28, 2011. The Vermillion facility sells energy into the wholesale market, is subject to FERC jurisdiction and makes no retail electricity sales, the commission noted in the Dec. 28 approval order. The Vermillion plant is an eight-unit, natural gas-fired, 640-MW facility.
In the Dec. 28 order, the commission declined to issue, at least for now, a Certificate of Public Convenience and Necessity for the Gallagher Units 1 and 3 conversion to natural gas. Duke Energy Indiana has to report to the commission within five business days after the Vermillion purchase transaction closes and can then request approval for the Gallagher Units 1 and 3 gas conversions. Duke on Jan. 17 filed that report about the closing of the deal with the commission, but the report did not say anything about current plans for the Gallagher units.