Advocates outline risks of North Carolina Utilities Commission approval of Duke’s rigid, outdated resource plan proposal.

Electricity is a necessity for modern life, so it is important that the electricity system be flexible, resilient, and built to minimize risks.

It’s no secret that the electricity sector is in a time of transition. Our electricity system was originally built around large, long-lived, monopoly-owned assets — typically large, fossil-fueled powerplants — that were designed for the one-way flow of electricity to inflexibly meet demand. That approach was understandable for its time, but is proving to be financially and operationally rigid in the face of evolving technology and new climate extremes.

During this time of fluidity in electricity policy and demand, and as we continue to face the impacts of climate change, Duke Energy continues to propose major new investments in long-lived, fossil-fuel powerplants that will likely become expensive relics. Instead of evaluating how to remove barriers to move faster on clean energy, Duke’s proposed Carbon Plan proposes to double down on increasingly risky fossil gas and to continue to operate old, costly, clunky coal. SACE joined with Sierra Club and NRDC, represented by the Southern Environmental Law Center, along with the NC Sustainable Energy Association, to submit testimony to the North Carolina Utilities Commission (NCUC) explaining the risks of Duke’s proposed plan.

Duke Energy’s Proposal

Every two years, Duke Energy has to file a “Carbon Plan and Integrated Resource Plan,” or CPIRP, for approval by the NCUC, outlining its forecasted load, along with a plan to meet that load for its customers in the Carolinas and achieve the state’s carbon pollution reduction requirements. Similarly, every three years, Duke has to file an Integrated Resource Plan (IRP) for approval by the South Carolina Public Service Commission (PSC). In 2023, those two requirements aligned, and Duke filed the same plan in both states in August (In NC in Docket E-100 Sub 190, in SC in Dockets 2023-8-E and  2023-10-E. However, Duke came back to both Commissions just a few months later with an update: the utility reported that it had under-estimated near-term load growth. In January 2024, Duke updated its proposed plans with both Commissions based on higher load growth projections.

The CPIRP and IRP are key steps to deciding what resources Duke will develop, including large-scale generation projects, renewable energy contracts, and demand-side programs. Organizations and companies can intervene at these Commissions, meaning can present arguments in support of or critical of Duke’s plan, with an aim of the Commission making a well-informed decision for a reasonable resource plan. SACE and co-intervenors submitted testimony from four experts:

• Maria Roumpani provided testimony on risks associated with Duke’s plan and ways that Duke’s modeling favors new gas resources;
• Jake Duncan’s testimony focuses on the need to incorporate consideration of distributed resources;
• Jim Wilson provided testimony on problems with Duke’s load forecast and resource adequacy study;
• Michael Goggin’s testimony showcases the need for better transmission planning and improvements to the process for interconnecting of clean energy resources.

This post gives an overview and the context of the case we’ve made about Duke’s proposed Carbon Plan. Future blogs will go deep into the issues surrounding reliability and key assumptions underlying Duke’s faulty plan.

Read the Blog Series on Duke’s 2024 CPIRP

Duke’s proposed plan does not address key barriers to deploying clean energy resources like solar and storage at the scale and pace needed to meet demand. Instead, Duke limits these resources or adds artificial cost adders in its modeling, resulting in the delay of retiring old, costly, clunky coal plants. These modeling choices also drive Duke to propose the addition of new gas plants that, if built, would only be useful for a short time and would not comply with new federal pollution limits. As Roumpani stated in her testimony, inclusion of these gas resources “stems from an artificial lack of alternatives at a time of high load growth.”

Fossil generation, both coal and gas, carries unnecessary risks to the electric system, to our pocketbooks, and to the environment. And once built, fossil power plants can persist for decades — committing future generations to live with these risks. Duke’s plan to keep coal generation resources online past their previously planned retirement dates is in conflict with Duke’s own acknowledgment of the challenges these plants face: fuel supply issues, declining workforce, lack of critical parts, and aging units.

“Even if those large gas assets were the least-cost option in this snapshot in time – which they are not— they should not be considered part of a least-cost, least-risk approach as they are locking ratepayers into a system that evidence suggests might become very expensive.” ~Maria Roumpani testimony filed with the NCUC on May 28, 2024 in the CPIRP, Docket E-100, Sub 190

As Dr. Roumpani points out, “It seems that the timing of retirements is primarily driven by [Duke’s] intention to invest in another fossil fuel resource that carries some of the same risks: natural gas.” The risks of gas were made clearly evident in 2022, when price spikes driven by the war in Ukraine were passed directly on to customers and when Duke cut off power on Christmas Eve because of failures across the gas system and at gas power plants themselves. Once events like these occur, there is little a Commission can do to blunt the impact on ratepayers. Thus Roumpani “calls for additional scrutiny in cases like the current CPIRP—before costs are incurred.”

The Only Constant is Change

Change is the law of life, and those who look only to the past and present are certain to miss the future. -John F. Kennedy

The electricity sector is changing at an unprecedented speed that requires unprecedented innovation. The plan Duke presented to the NCUC in January does expand the pace of renewable energy additions compared to the present day, and it would gradually retire coal. BUT, given the huge scale of financial, reliability, and environmental risks that attend Duke’s proposed new, multi-decade extension of fossil fuel dependence, it is not up to the challenge of meeting load in a reliable and affordable way in the dynamic future we face.

Dr. Roumpani states that, as Duke’s own modeling shows, “clean energy resources should be added as fast as possible. I recommend that the Commission approve the solar, wind, and battery storage procurement levels identified in the Companies’ [near-term action plan from its portfolio designed to comply with the 2030 carbon pollution reduction requirement] as a floor and instruct Duke to present a plan on how additional clean resources could be interconnected.”

We have presented plenty of evidenced-based reasons for the NCUC to direct Duke to stop looking to the past and to instead focus on a resilient clean energy future.

Read the Blog Series on Duke’s 2024 CPIRP

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