Duke Energy Customers Could Pay $5 Billion For Stranded Plants

Customers of Duke Energy in the Carolinas could end up paying more than $4.8 billion for planned natural gas-fired capacity that could become stranded as part of the company’s pledge to achieve net-zero carbon emissions by 2050, a report published by the Energy Transition Institute has found.

The report, authored by Tyler Fitch, regulatory manager for the Southeast at advocacy organization Vote Solar, examined Duke Energy’s 2020 Integrated Resource Plans (IRPs) in North and South Carolina. These were the first plans the utility has filed with regulators since it pledged in September 2019 to reach net-zero carbon emissions from electric generation by the middle of the century.

The IRPs entail the addition of 9.6 gigawatts (GW) of new gas-fired generation capacity in their baseline scenarios, which, the report’s author Fitch says, is one of the largest proposed expansions of fossil fuel generation capacity of any utility in the United States.

However, in order to meet its net-zero goal, Duke Energy may have to remove a substantial portion of its power plant fleet by 2050, shortening the lifetime of what would be newly-built gas-fired power plants, according to the report.

“Without regulatory intervention, ratepayers will continue to pay off these plants for decades, even while they remain neither used nor useful,” Fitch wrote in the report.

Related: Why Gazprom Cut Gas Supply To Europe Amid Rising Prices

According to the author’s analysis, the so-called carbon stranding costs from existing and proposed investments in the IRPs will be $4.8 billion. This means $900 for every residential customer of Duke Energy in North and South Carolina.

“While our IRPs involved significant stakeholder participation and stand up to intense scrutiny through a transparent regulatory review, there’s virtually no way to validate the assumptions and conclusions in this report,” Erin Culbert, a spokeswoman for Duke Energy, told John Downey of the Charlotte Business Journal, commenting on the report.

“The scenario of building no new natural gas sounds simple, but it’s the most expensive option for our customers and actually requires coal units to operate longer,” Culbert told the CBJ.  

By Michael Kern for Oilprice.com

More Top Reads From Oilprice.com:

• Was Saudi Arabia's Surprise Production Cut A Good Idea?
  
• Goldman Bullish On Oil As It Eyes Major Relief Package
  
• Can Shale Resist The Lure Of Another Output Surge?