Duke Energy, others manipulate electricity markets, waste billions of customer dollars as power plants sit idle while more are being built, says watchdog group
DURHAM, NC – Despite huge amounts of excess power generation capacity on hand now and for decades to come – and dozens of large plants sitting idle most of the year – southeastern utilities keep building more plants instead of buying power from each other as federal regulators have urged. Watchdog group NC WARN today told those regulators that electricity customers are being gouged by billions in unwarranted rate increases because Duke Energy and others are protected monopolies that thwart competition and wield undue influence over state regulators.
The group today called on the Federal Energy Regulatory Commission (FERC) to stop the massive waste by enforcing its own recommendations, and to order an independent study into how many billions are being wasted across the Southeast. NC WARN is also requesting that regulators in seven states cooperate with FERC to get clear on how much could be saved annually if utilities begin sharing power supply through regional cooperation, as FERC has pressed for.
NC WARN has requested FERC conduct a hearing in Raleigh to collect evidence and testimony.
NC WARN cited utility and federal data showing that southeastern utilities maintain power plant capacities ranging from 24 to 37 percent above the highest usage of the year. Those reserves are over twice as high as the industry standard of 14-15 percent, and for all but the very hottest and coldest months, excess capacity goes far higher in the Southeast.
The data show excess capacity is projected to last at least into the 2030s as Duke and others build power plants costing tens of billions of dollars while raising rates on captive customers. Duke’s customers in the Carolinas have already been punished with a 30 percent increase in recent years. Electricity users in Florida, Georgia and South Carolina have suffered up to six rate hikes for nuclear plant construction projects that have either failed or are experiencing delays and cost overruns.
Key elements of the NC WARN complaint:
- For the summer of 2014, a federal agency forecasted unused generation capacity in the Carolinas of 24 percent during the year’s hour of highest power usage; Tennessee had 26 percent of such reserves, Georgia-Alabama had 37 percent, Florida had 29 percent (the industry standard is 14-15 percent).
- Duke Energy projects large overcapacity during peak periods for the next 15 years, with reserves ranging from 23 to 33 percent from 2020 to 2029, when adjusted for a reasonable demand growth rate of 0.5 percent (the federal Energy Information Agency and others forecast long-term demand to be flat or declining).
- In months of lower usage, Duke’s reserve generation capacity ranges up to 57 percent – at the time of peak demand during those months.
- In its 15-year plan, Duke Energy plans to purchase only 0.2 percent of its supply needs from neighboring utilities in 2029.
- A recent study showed that regional sharing of resources would save customers $1.4 billion over ten years in the deep south region.
- FERC has determined many times that utility participation in regional sharing arrangements (aka Regional Transmission Organizations) results in many benefits, including lower prices for customers and increased reliability of the electric grid.
FERC has urged utilities to voluntarily participate in regional cooperation arrangements, but the Southeast’s monopoly utilities have ignored the recommendation, and continue to rely on state commissions to approve plant construction, rate hikes and guaranteed profit margins.
FERC has emphasized that it has the authority to order regional cooperation in order to remedy anticompetitive practices.
Instead of building unneeded power plants, Duke and others should be forced to buy power from each other while using more solar power – which is perfectly suited to handle periods of high demand.
Duke and others are able to get away with this massive waste due to their monopoly control and undue influence over state regulators across the Southeast. These giant utilities are profiting while ruining our state economies.