The country's third largest energy company says it is trying to meet carbon reduction standards. But Duke's actions don't seem to match its words.

In its most recent transmission planning meeting, conducted on August 12th, Duke Energy made a stunning revelation: they are not planning any new modeling to determine the relative costs and benefits of new power lines over the next ten years.

This may sound technical, but it’s a big deal for everyone who pays an electric bill.

Planning a power grid is hard, and the stakes are high. The power lines utilities build affect how much pollution they put into the air, how often the power goes out, and how much we pay for one of our core necessities. Decisions about which lines get built, and where, are based on an array of factors like regulations, pricing, energy flows, and more.

Energy transmission lines can easily pay for themselves, but you have to do the math to find out where and when to build them to get the most power for your dollar. If you decide not to do that math–well, you’re in trouble. And, unfortunately, we are.

Duke is the third largest energy company in America, and its footprint covers six states, including large parts of both Carolinas and Florida. The consequences of Duke’s planning, or lack of it, will be felt throughout the Southeast.

Background

In 2011, the Federal Energy Regulatory Commission (FERC) issued FERC Order 1000, which mandates regional planning of electricity transmission, among other requirements. This was an effort to ensure that our lights stay on, that we can weather hurricanes with minimal disruption, and that we’re not left turning out our pockets when the bill arrives.

Order 1000 also requires that Duke plan its multi-state power grid to effectively comply with laws enacted by the affected states and localities. This includes North Carolina’s Carbon Plan, which mandates that the state, and specifically Duke Energy, achieve a 70% reduction in carbon dioxide emissions compared to 2005 levels, by 2030. Duke says that it’s been doing the best it can to meet this goal. But its recent actions don’t seem to match its words.

Duke Energy says they’re complying, but a closer look at their efforts raises some concerning questions.

In its federally approved tariff, Duke has created a process, known as the Carolinas Transmission Planning Collaborative (CTPC), to adhere to these and other FERC rules. But in its most recent hearings before the North Carolina Utilities Commission (NCUC), Duke indicated that it would not meet the North Carolina Carbon Plan by 2030 (even though it still has six years to meet it), and asked for an additional five years to comply with the law, even though the law itself includes a maximum grace period of two years.

Then, last week, during Duke’s latest CTPC meeting with stakeholders, they unveiled their latest draft transmission study plans. For the second time in a few weeks, Duke appeared to be doing less planning than it claims: Duke’s planning documents indicate it will study three scenarios for energy supply over the next ten years, in the process measuring six potential benefits of new transmission lines. (This is short of the 20-year timeline and seven benefits required by FERC’s newly issued Order 1920, which covers regional planning. While the CTPC is a local process and thus not required to comply with 1920, the wider regional planning process will ultimately rely on research and modeling from Duke.)

Only one of the three scenarios appeared to generate enough carbon-free electricity to meet the 70% reduction threshold–and Duke ruled that scenario out as too expensive, based in part on a suspiciously high cost estimate. Duke apparently prefers a different scenario to get to a 70% reduction by 2035, based mainly on an aggressive buildout of new nuclear plants. But that year is notably outside the ten-year window of Duke’s current plan.

SACE was among the groups who requested that Duke examine a scenario in which all that nuclear energy did not materialize, but Duke has declined to do so.

Duke suggests guessing at benefits instead of modeling

Finally — and perhaps most starkly — Duke indicated during the CTPC meeting that it would not be conducting any new production cost modeling on its three future scenarios. This means, in effect, that Duke has no specific idea of all the costs that go into building new transmission lines, specifically whether those lines will pay for themselves in the form of cheaper electricity, less need for repairs, greater choice and flexibility for customers, less congestion on the wires, or any of the numerous other economic and non-economic benefits the new lines may deliver.

When pressed on this point, Duke said that it would use existing zonal model results (created for Duke’s annual Integrated Resource Plan, which is a separate process not devoted to transmission) to infer costs for its future scenarios. Zonal electricity pricing is generally understood to be less accurate than more granular “nodal” pricing, which is the method used by nearly every transmission planning group in America, including the mid-Atlantic states, New England, Texas, California, New York, and the midwest.

More simply, though, Duke is inferring transmission costs from a different set of facts than its transmission plans. This makes about as much sense as trying to furnish a new house by looking at a floor plan of the one next door. It simply won’t work unless you are extravagantly lucky, or you’re fine with asking half your family to sleep on the floor (which is to say, charging them too much for power, failing to handle outages and winter storms, and so on).

It doesn’t have to be this way

Transmission planning is a technical and frequently abstract affair, and it can be hard to see what effective planning looks like. It’s instructive, though, to compare Duke’s process with that of its peers. In MISO, the body responsible for transmission planning in the upper Midwest, as well as in nearby states like Louisiana, Arkansas, and Mississippi, a very different process is unfolding: MISO’s regional planning considers eight different benefits, determined with feedback from stakeholders. It plans over a 20-year timeline. And it conducts nodal production cost modeling with and without the specific transmission solutions to get an accurate estimate of the benefits of those solutions.

Much of Duke’s planning work is proprietary, so we don’t know exactly what assumptions it makes, how it decides what information to collect and quantify, or how it deals with the information it doesn’t gather. Maybe, as Duke keeps telling us, its planning process is the most efficient use of its considerable resources. But there is a clear need for those of us impacted by their choices – the ratepayers, the lawmakers, and energy buyers, the public – to take a look at the data and decide for ourselves. If we don’t, we’re choosing to trust them, and when the time comes, to pay the bill.