JEFF MOORE
Carolina Journal
The North Carolina Utilities Commission will conduct hearings beginning Wednesday, July 24, to hear from experts on the potential consequences of Duke Energy’s Carbon Plan. The hearings are part of the statutory requirements related to the State’s emissions reduction goals.
The Carbon Plan describes which mix of generation sources — coal, gas, nuclear, hydro, solar, and wind — will be used to satisfy emission reduction goals. Stakeholders worry changes to the mix of energy generation sources will come at the expense of affordability and reliability.
THE CARBON PLAN
In late 2021, the General Assembly passed House Bill 951, Energy Solutions for North Carolina, reforming energy policy and codifying carbon neutrality goals in statute; while retaining regulatory emphasis on, both, the reliability of energy generation sources, and the affordability for residential and business customers. As such, the law requires Duke Energy, the state’s primary electric utility, to design an initial “Carbon Plan,” in which Duke describes how the company will reduce carbon dioxide emissions by 70% by 2030, and achieve full carbon neutrality by 2050.
The electric utility was already required to produce an Integrated Resource Plan (IRP), outlining how they were leveraging resources to meet power demand. Now, the two reports are consolidated (CPIRP), and presented to the Commission “to reliably plan and execute this critical energy transition of their generation fleets to achieve” carbon reduction targets.
Statute directs the Commission to review the plan every two years after the adoption of the IRP.
Duke filed its proposed 2023 CPIRP in August 2023, and the Commission subsequently conducted five public witness hearings to receive testimony on the plan. The final hearing, for testimony and cross-examination of expert witnesses, begins this Wednesday, July 24, at 9:30am.
In Duke’s 2023-2024 CPIRP, the energy provider admitted that changing market conditions required adjustments to meet the ambitious carbon reduction goals — adjustments that could hurt the bottom line of families and businesses.
These significant changing market conditions and the growing energy needs of customers have also informed the Companies’ assessment of the most reasonable, least-cost plan for the energy transition in the Carolinas and are reflected in the significant acceleration in the pace of execution to add new resources as presented in Chapter 4,” reads the plan update.
“As highlighted in Chapter 4 and illustrated in Figure NC-1 below, this next decade is a critical execution phase for the Companies’ electric system and the Resource Plan must chart a course to implement a diverse set of resources sufficient to maintain or improve reliability in light of both the resources to be retired and the projected growth in load that must be served.”
The chart in question highlights the retirement schedule for existing coal plants (where the much of the emission reduction comes from) and the resulting gap in energy that must be filled by a different energy source. How they fill that gap could be the difference in keeping energy affordable in North Carolina. The most recent proposals included additional wind energy generation — perhaps the most expensive, and least reliable form of renewables currently en vogue.
Critics have pointed to the challenges of replacing relatively reliable generating capacity (coal), with less consistent generation technologies as an oversight of the reduction plans. The extraordinary stresses of an aggressive transition can endanger operability of the grid, as in the rolling blackouts during the Christmas holidays of 2022.
INTERVENORS
Those stakeholders with a vested interest in the details of the CPIRP — basically those that purchase a lot of power, think industrial customers — can file to intervene and, if accepted, can offer evidence and testimony at relevant Commission hearings.
The intervenors to testify Wednesday include representatives from Carolina Industrial Group for Fair Utility Rates, or CIGFUR. CIGFUR members are natural proxies for the impact of changes in state energy policy because the industrial concerns simply rely on and pay for so much of it to produce the goods we use everyday.
CIGFUR has already filed testimony with the Commission, in anticipation of this hearing. According to the testimony, some industrial customers worry that implementation of the carbon-reduction proposal could increase their energy costs by two to three times.
According to the testimony, monthly rates nearly double from 2024 to 2038 based on bill impacts associated with proposed new generation assets called for by Duke’s most recent Carbon Plan filing—but this is not an all-in cost projection.We do not view this as meeting the “least cost” requirement of HB 951, nor do we view this as a “reasonable step,” contrary to what is required by law as the Carbon Plan is implemented.
One factory, a plastics manufacturing facility, “is projected to see monthly rates nearly double from 2024 to 2038 based on bill impacts associated with proposed new generation assets called for by Duke’s most recent Carbon Plan filing,” noting the cost figure isn’t even a comprehensive projection.
According to the filing, under the CPIRP another plant location would see its monthly electricity costs triple by 2038.
“These rate increases are unsustainable, and it is simply not possible for any manufacturer to pass electricity rate increases of this magnitude on to customers and hope to keep those customers,” reads the written testimony. “Not many businesses can absorb doubling or tripling of their energy costs and remain in business, as we would be unable to pass such massive price increases along to our customers to cover our costs. Our customers would be forced to buy from producers not subject to such high electric rates—most likely foreign producers who pollute heavily and make relatively few efforts to reduce their reliance on fossil fuels compared to the United States.”
Historically, North Carolina has been an attractive destination for high-energy businesses because the power supply was relatively cheap and reliable. The lights come on when you flip the switch, and it doesn’t break the bank. Energy, after labor and raw materials, is often the largest input cost manufacturers must pay.
The flavor of testimony from industry groups like CIGFUR, though, suggests they think such comparative advantages are getting squeezed out by the aggressive carbon neutrality goals codified in House Bill 951.
“To avoid rationing and black outs, we need to extend the timeframe for implementation of HB 951’s aspirational emissions reduction goals,” concludes the submitted testimony from CIGFUR. You can read the full CIGFUR testimony here.
Watch the public hearing scheduled for 9:30am Wednesday, July 24, here.
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