“At some point in the future, 70 [percent] will be achieved and carbon reductions will be achieved as well,” Kendal Bowman, president of all of Duke Energy’s utility operations in North Carolina, told the North Carolina Utilities Commission during hearings Wednesday — it just won’t be by the target date of 2030.
Higher than forecasted levels of economic growth, in terms of people and production, were cited as the primary reason for behind asking to push the 70% emissions reduction target back to 2035. In addition to all the extra people calling the Tar Heel State home, major commercial energy-users are proliferating apace; think data centers, blockchain operations, manufacturing facilities, and the increasing number of electric cars that need a charge.
The Commission was receiving testimony Wednesday from expert witnesses regarding the Carbon Plan/Integrated Resource Plan. This guiding document outlines how Duke Energy plans to meet emissions reduction goals included in House Bill 951, Energy Solutions for North Carolina, passed in 2021, while also meeting growing demands for power with reliable and affordable energy generation.
It’s a complicated balancing act in one of the fastest growing states in the nation.
House Bill 951 maintained a mandate to prioritize, both, reliability and affordability, but lawmakers also added aggressive emissions reduction goals. As such, the law required a “Carbon Plan” to augment and inform the Integrated Resource Plan, that would spell out how the utility will reduce carbon dioxide emissions by 70% of 2005 levels by 2030, and achieve “carbon neutrality” by 2050.
New demand considerations are front and center as North Carolina booms. Meeting the demand will require robust generation sources, and those will retard progress toward the 70% carbon emissions reduction.
“We updated the modeling,” said Bowman regarding the changes. “In light of the load growth that we were seeing, we believed it was substantial enough that we needed to update the model.”
The update is captured in the graphic below, depicting Duke’s initially proposed portfolio energy mix, and the adjustments requested in the “P3 Fall Base.”
Duke Energy’s supplemental filing (P3 Fall Base) is requesting approximately 8.9 gigawatts of additional natural gas generation by 2035.
“And the models are showing that we need that from a reliability standpoint and the ability to meet load,” Bowman explained during her testimony.
While some of the additional natural gas generation is owed to projected raw demand increases, a portion is required to back up the notoriously intermittent solar and wind energy generation facilities. As seen in the chart above, the percentage of solar generated energy drops from 20% to 18% in the latest proposal, even while more solar capacity is being added.
In her testimony Bowman asserted that significant resource additions were needed to “reliably and affordably transition the system and retire the Companies’ remaining coal units in North Carolina by 2035 while meeting new load growth.”
Doing the bulk of the work to handle new load growth, it seems, natural gas generated power moves from 34%, to 39% of the overall energy generation mix in the P3 Fall Base. The newest portfolio mix also shows 300 megawatts less coming from advanced nuclear generation by 2038.
The Bottom Line
So what will the impact of these changes be for ratepayers across North Carolina? Duke Energy estimates, by 2038, customers should expect to pay between $80-$100 more on their power bills each month by 2038 under their P3 Fall Base portfolio.
Those testifying were quick to point out that electricity rates in North Carolina, and under these projections, are actually below the national average. That’s usually a selling point for economic developers looking to attract new businesses.
“If we’re below the national average, I think that puts us in a very competitive place, and I think for most customers being able to be under the national average is a good place to be,” said Bowman, adding, “It should be affordable for all of our customers.”
But the more energy one uses, the less affordable any rate increases become. That’s certainly the case for a company like Charlotte Pipe & Foundry, an energy-intensive manufacturer that also filed testimony with the Commission as part of Carolina Industrial Group for Fair Utility Rates, or CIGFUR.
While CIGFUR and its members likely appreciate the added 8.9 GW of natural gas reliability to keep their factory floors running (even small disruptions to power supply can spell ruin on the factory floor), they note in their testimony how exorbitantly expensive it is to chase carbon reduction targets.
“Charlotte Pipe analyzed the rate impacts of the Carbon Plan on our two major North Carolina plants,” wrote Brad Muller, vice president of marketing for Charlotte Pipe & Foundry, in the CIGFUR filing. “Our Monroe plastics plant, which is a [Duke Energy Carolinas] customer, 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—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.”
Businesses like these use a lot of energy to produce goods that make up our houses, buildings, vehicles and more. Almost every cost increase on the production side, results in an associated price increase on the consumer side, or a business going under.
Charlotte Pipe and Foundry is one of the nation’s leading producer of cast iron and plastic pipe and fittings for plumbing systems. Their costs are likely, then, are one factor in the price of your housing in an increasingly unaffordable housing market.
Unfortunately, the doubling of energy costs at the Monroe plant wasn’t even the most alarming result.
“The picture is more dire for our 72-MW foundry in Oakboro, North Carolina,” the CIGFUR testimony continues. “If the Oakboro Foundry was to become a [Duke Energy Carolinas] retail customer, its monthly electricity costs would triple by 2038—again, taking into account only the costs and associated rate impacts of new generation resources selected in the Carbon Plan.”
Such considerations are taken into account when developing future capital investment plans, for exiting businesses , as well as those interest in relocating production facilities to North Carolina. Not many businesses are able to avoid a doubling or tripling of energy costs, without consequence.
Duke’s proposal is, in a way, an acknowledgement of that fact. They presented the Commission with different energy portfolio mixes, noting they are all aligned toward Net Zero by 2050, but asserting a need to slow down in order to focus on reliability,
“Of the things that you can see in the recommended portfolio that we’re putting forward, and in the settlement that we put forward is, to take a slower pace, to not go as fast,” said an expert from Duke Energy to the Commission. “But I think if you look at that pace, if you get to 2035, they all start to converge and eventually all of the portfolios get to Net Zero by 2050.”
While some expert testimony from environmental activist groups registered disappointment that Duke isn’t doing more to reduce emissions, CIGFUR members worry the drive toward net zero will come at the expense of reliability and affordability.
“We’ve already seen the dramatic and near catastrophic rolling black outs and volatile grid conditions over the Christmas holiday in 2022,” reads the CIGFUR testimony, “If that situation had happened on a normal working day instead of a holiday weekend, the results would have been catastrophic – or at a minimum, would have posed a far greater hardship for North Carolina businesses and residents.”
“To avoid rationing and black outs,” the testimony concludes, “we need to extend the timeframe for implementation of HB 951’s aspirational emissions reduction goals unless/until DEP and DEC have merged and accelerate the transition to carbon-free nuclear power.”