March 17, 2008
Industry Data Proves Utilities Don’t Need More Nuclear or Coal Plants
NC WARN to Commission: Over-supply would hand Southeast the risks for power
sold to others
Statement from Executive Director Jim Warren:
Durham, NC – Power companies across the Southeast are planning to build massive, lucrative coal and nuclear power plants – with customers shouldering unprecedented financial risk – despite a large excess supply of electricity for years to come. In a filing before the NC Utilities Commission today, NC WARN cites industry forecasts showing inflated growth projections involving dozens of new power plants that far exceed regional needs, and a glaring lack of energy efficiency measures that belies power company claims of “going green.” The legal brief calls for an evidentiary hearing before the Commission.
DOZENS OF EXCESS PLANTS: Data from SERC, a southeastern utility consortium, show that planned expansions, if completed, could create excess generation capacity of 63,000 megawatts in the next decade, equivalent to 60 large plants. According to the SERC report, “This is significantly more than the generation capability needed for reliability/adequacy in the region.” The agency also confirms that out-of-region sales are already occurring and likely to increase.
While utilities are required to maintain excess capacity to allow for peak demand periods, the projected southeastern over-supply is much higher than those margins, and ignores potential demand reductions due to efficiency, as well as the rapid advances in solar and other renewable generation. The effect of oversupply, along with regional interconnection agreements, is that utilities can rely on lower margins than before. This option is already used by Duke Energy, which recently entered into a long-term purchase agreement of 520 MW as insurance against shutting down coal and nuclear plants in the face of persistent drought, another factor making water-cooled power plants a liability.
COMPLIANT PUBLIC OFFICIALS: Over the past few years, big utilities in these “regulated” states of the southeast – where customers are captive to utility monopolies – have used their enormous financial and lobbying muscle to pressure compliant regional legislatures into shifting the immense risks of new plants, including prepayment, onto customers. One result is that – if ever completed – dozens of coal and nuclear plants would very likely sell power to other regions.
While southeastern customers would bear the financial impact, health damage and hazards of coal and nuclear energy, power companies would reap enhanced profits from soaring power bills based on multi-billion dollar plants from sales outside the Southeast. One key incentive to over-build new big plants lies in the fact that many existing plants are fully depreciated, meaning they are no longer counted as assets in the rate base on which utility profits are calculated.
Five new coal and nuclear plants planned for the Carolinas by North Carolina-based Duke Energy and Progress Energy are so financially risky and have such significant environmental impacts, they should be summarily taken out of the plans, NC WARN attorney John Runkle stated in our filing before the NC Utilities Commission today. Collectively, those plants have nearly tripled in estimated cost – possibly up to $38 billion – while still on the drawing board.
OVER-PROJECTION: Since the last presidential election and a promise of billions in taxpayer subsidies for coal and nuclear plants, southern power companies have pressed an aggressive public relations campaign arguing that growing annual demand exceeds two percent – a figure that’s become a utility version of an urban legend – and arguing that dozens of plants must be built to meet this demand.
Even SERC confirms that regional utility growth projections have plummeted by over 40% since 2002.
But in NC WARN’s brief to the Commission relating to a long-term planning docket, attorney Runkle explains how the growth projections are exaggerated. In North Carolina, for example, demand growth between 2001 and 2006 was less than one-third the widely hailed 2% figure. Conventional thinking about long-term southeastern growth is also challenged by continuing losses in manufacturing, an overbuilt commercial sector, an economy being hammered indefinitely by drought, severe storms and other impacts of accelerating climate change, and a national recession of unknown length.
WASTING ENERGY vs TRUE SECURITY: The filing contends that despite a two-year image-polishing PR drive touting Duke’s commitment to go green, its long-range forecasts on energy efficiency can barely be seen on the charts – under 2% total for the next 20 years. In fact, both Duke Energy and Progress Energy use multiple programs that encourage customers to use more electricity. One such program was banned by the NC Commission last Friday, but 170,000 customers were grandfathered into the plan, so they will be wasting up to 30% during peak usage periods for years to come.
Plants planned by Duke and Progress in the Carolinas could cost the average North Carolina family at least $12,000 through higher bills. Less than half that amount could make every home energy efficient, including installation of solar hot water. This move would be a tremendous economic benefit for the State, creating tens of thousands of jobs, and would be the fastest way to reduce greenhouse gases.
A TIME FOR CONSERVATISM: Billions of dollars could be wasted if the utilities’ cost projections and demand forecasts are wrong again. In the 1980s, many rate commissions erred badly by going along with power companies’ inflated demand projections and cost-plus projects, with the result that some 60 nuclear plants had to be cancelled in midstream, nine in the Carolinas alone. We now need our utilities commissioners to be conservative in these shaky and fast-changing economic times.
If these projected new coal- and nuclear-fired plants had to compete in open market, they’d never be built. They’re moving ahead only because of their regulated, or protected, status, along with the promise of billions in federal public subsidies that siphon off resources which should go toward efficient energy.
If the technical experts and public interest groups are wrong about efficiency and renewables, the power companies can always compensate by quickly building more natural gas-fired plants and cogeneration – with no risk that customers would “freeze in the dark.” But if the utilities are wrong, and drag society through years of fighting over new plants, we’ll have ruined any chance of averting climate catastrophe.
The encouragement of energy efficiency and renewable energy sources has become a significant part of State policy. Nuclear and coal plants have such high costs, uncertainties and adverse environmental impacts, they should not be part of our energy future.
See NC WARN’S Legal Brief: https://www.ncwarn.org/IRP%20brief%20final%203-17-08.pdf