NC WARN says Duke, Southern and others are gouging ratepayers for billions, blocking renewables
By Herman K. Trabish
The state-by-state fight between utilities and renewables advocates just went national.
A North Carolina group has asked federal regulators to investigate Duke Energy, the Southern Company, and other big Southeastern utilities for possible power price manipulations it says boost utility profits and block renewables and efficiency from the market.
NC WARN wants the Federal Energy Regulatory Commission (FERC) to calculate “how many billions are being wasted across the Southeast” due to the overbuilding of generation facilities, and to push seven southeastern states for data that would show “how much could be saved annually if utilities begin sharing power supply through regional cooperation.”
The charge is that southeastern utilities have built over twice the 14% to 15% reserve power generation capacity they need to meet peak demand. U.S. Energy Information Administration data shows they maintain reserve margins between 24% and 37%, NC WARN charged.
By convincing state regulators to approve new nuclear and fossil generation, NC WARN explained in its petition to FERC, the utilities have imposed higher rates on their customers.
“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,” NC WARN reported.
By owning more than ample excess generation, utilities keep electricity supply high. That drives electricity rates lower, below the break-even point for new resources like wind or solar. In effect, NC WARN argues, southeastern utilities are building more fossil fuel generation so they can price renewables out of the market. Even with recent rate increases, electricity prices remain lowest in southeastern states, where much of the generation still comes from coal and nuclear. At the same time, southeastern utilities rank near or at the bottom in renewable energy integration.
Duke Energy insists it has removed old coal capacity while adding new, cleaner generation sources like natural gas facilities and utility-scale solar arrays. NC WARN says the net change has increased Duke’s reserves.
Reserve capacity and load growth
While the North American Reliability Council (NERC) standard for reserve capacity is around 15%, EIA’s summer 2014 forecast put the Carolinas’ unused generation capacity at 24%, Tennessee’s at 26%, Georgia’s and Alabama’s at 37%, and Florida’s at 29%.
Duke Energy’s most recent 15-year Integrated Resource Plan (IRP) projects resource margins “in the 15% to 20% range,” explained Spokesperson Randy Wheeless. “We don’t think there is an overcapacity.”
Those reserve margins are based on projected overall electricity demand growth of 1.5%, net growth after energy efficiency impacts of 1.0%, and a 1.4% peak demand growth.
Because the EIA and the others forecast a flat or declining long-term growth in demand, NC WARN believes Duke’s estimate is high.
“Adjusted for a reasonable demand growth rate of 0.5%,” NC WARN charged, Duke’s reserves would be “23% to 33% from 2020 to 2029.” Its peak demand reserve capacity during months of lower electricity consumption would be as high as 57%.
Technologies ranging from LED lighting and efficient air conditioning to increasingly affordable solar and combined heat and power systems will keep electricity demand from rising, according to former FERC Chair Jon Wellinghoff.
“There will be virtually no load growth at the grid level for the foreseeable future,” he told Utility Dive.
Without load growth, Wellinghoff said, it will take some time before big plants being approved by state regulators in southeastern states will be useful.
