Not so fast: Tell Duke Energy to put the brakes on expansion plans

BY BRAD ROUSE

Duke Energy should go small and slow with its planned Lake Julian expansion.

As a 20-plus-year veteran of utility industry economic planning, I have serious concerns about Duke Energy’s proposed “modernization plan,” which would double the capacity of its Arden plant with three new natural gas-powered units. I’m also disturbed that the General Assembly has required the N.C. Utilities Commission to short-circuit the normal thoughtful process that accompanies the billion-dollar investments we consumers will have to pay for. Big and fast is simply not the right approach.

The commission is now studying Duke’s application and all the ensuing public comments. Usually there are months of discussion for a project this size. But in this case, our state lawmakers basically gave Duke a free pass, mandating that there be no expert witnesses, no cross-examination, no ability to question Duke, and a compressed 45-day review. If the Legislature’s desired outcome were a really good idea, that might be OK. But it’s a really bad idea, and we all need to raise our voices and say, “Not so fast!”

Small and slow is better than big and fast because this is a tumultuous time for the energy and electric utility industries: Twin tsunamis are headed their way.

The first tsunami is the growing clamor to end the fossil fuel era. Greenhouse gases from burning fossil fuels and natural gas leakage are the primary cause of climate change.

The world scientific community has concluded that we must ramp down fossil fuel use by 80 percent or more by 2050 to avoid dangerously destabilizing the climate. More than 190 nations agreed to this in Paris late last year. And as governments take action to meet this goal, either through regulation or carbon pricing, the new Duke plant will be increasingly uneconomic to operate soon after its projected 2020 completion date.

The second tsunami is technological, much like the massive waves of change that have already overtaken landlines, cable TV, cellphones, computers, the music industry, book publishing, newspapers, etc. Technological alternatives to fossil fuels are coming on fast and furiously. A blend of solar, wind and energy efficiency is already less expensive than Duke’s proposed plant.

Between 2009 and 2015, solar and wind costs declined by 82 percent and 61 percent, respectively, and the trend shows no sign of slowing down. LED lights reduce electricity use by up to 90 percent at reasonable cost. Storage battery costs continue to decline. And as we gain experience, we keep realizing new ways to expand our use of these technologies while still providing reliable electrical service. According to Stanford University scientists, the National Renewable Energy Laboratory and others, we can now see a clear path, within the next few decades, to meeting 80 to 100 percent of our electricity needs via renewables, storage, increased efficiency and a better, smarter electrical grid.

These twin tsunamis could render the Arden plant economically obsolete on its very first day of operation, because it would be using a fuel that’s viewed as so undesirable that it’s sharply constrained by regulation or taxation. And since Duke is guaranteed a profit on investments “made on our behalf,” ratepayers will bear the burden of these “stranded investments.”

Instead, Duke should go small and slow, rather than rushing to replace the current coal-powered units. Are we really better off replacing a dirty technology with one that may be only slightly less dirty and will soon be obsolete? Maybe we should skip natural gas entirely and go straight to new technology, using coal less and less as we gradually ramp up energy efficiency and renewables.

Then again, Duke could choose to build smaller gas-fired units. The Arden plant’s two 188-megawatt coal-powered units are already the biggest in Western North Carolina; the largest of the three gas-fired units Duke is proposing would be a whopping 280-MW. But federal regulations require utilities to maintain reserve generating capacity across the region (to pick up the slack in case one or more units suddenly fails), and the size of the largest and second-largest units in the system affects the amount of that reserve capacity that’s available for actual use. So the proposed increase essentially offers no real advantage, since it would dramatically increase the reserve capacity needed. Meanwhile, it would also increase both the cost for ratepayers and the risk of premature obsolescence. Thus, Duke could just as easily replace the coal plant with two 188-MW gas units at proportionally lower cost and risk.

This interim approach could help us achieve a reasonable long-term solution. Low-income families typically have the most inefficient homes and appliances and are least able to invest in energy-efficiency improvements. Having worked with local families, I know that Duke’s current programs barely scratch the surface of the many ways we could reduce the extreme amount of waste. Since the legally mandated rush to determine our energy future is largely based on the area’s power demand in recent winters, we should focus intensely on reducing energy use during the system’s winter peak time — 7 a.m. on bitterly cold days — using available, off-the-shelf solutions. We just need to mobilize the cooperative efforts of Duke and local civic, political and faith leaders to make it happen, and do it in a way that also helps residents — particularly low-income residents — cut their energy costs.

With concerted community effort bolstered by Duke’s financial and technical help, we could ramp up the local deployment of renewable options like solar, wind, low-head hydro and load control. We’ll also need to reconsider building new transmission lines, which were part of the utility’s initial proposal but were scrapped in response to public outcry.

Duke’s original plan called for a high-capacity transmission line running from Asheville to South Carolina, allowing gas-powered electricity produced here to be sold in other parts of its system. But a true “modernization plan” would use transmission lines to coordinate locally produced renewable energy with renewable energy generated elsewhere. After all, even when it’s neither sunny nor windy in WNC, it’s still sunny and/or windy somewhere. And studies show that tying together a wider area can counteract the intermittency problem. Increasing transmission capacity to the west to connect with the Tennessee Valley Authority’s hydro and planned wind power would help make renewables more reliable here.

In the current rapidly evolving energy environment, building a plant that’s bigger than the absolute minimum required, and doing it sooner than it’s really needed, is risky. Taking such a risk when better options are readily available is nothing short of foolhardy.

Contact the Utilities Commission today and urge it not to approve more than the minimum fossil fuel-driven capacity that’s needed to ensure a reliable supply of electricity. Email statements@ncuc.net, and reference docket number E-2 Sub 1089 in the subject line.

Energy policy consultant Brad Rouse volunteers with the Asheville chapter of the Citizens’ Climate Lobby and the Alliance for Energy Democracy. He can be reached at brouse_invest@yahoo.com.