By John Murawski
The N.C. Utilities Commission has told two nonprofits that they must put up a $98 million bond for the right to appeal a power plant construction permit issued to Duke Energy.
A bond is required by a 1965 state law enacted to protect electric utility customers from any increased costs that result from construction delays while a permit is under appeal. The bond provision has never been invoked in anyone’s recollection because power plant permits are not challenged after they are issued, said James McLawhorn, director of the Electric Division of the Public Staff, the agency that represents the public in utility rate cases before the commission.
“The statute plainly places on the appealing party the financial risk of what potentially could be extensive additional costs,” the Utilities Commission said in its order. “Otherwise, these costs would be added to the cost of the generating facility to be recovered from consumers through higher rates.”
The commission issued the power plant permit – called a certificate of public convenience and necessity – in March, and Duke had planned to begin building the $1 billion natural gas power project in October. Charlotte-based Duke said the plant in Buncombe County will replace a coal-burning plant scheduled to be demolished, and must be operational before Jan. 31, 2020, under deadlines set by the state legislature in the Coal Ash Management Act and the Mountain Energy Act.
NC WARN, based in Durham, and Climate Times, based in Boone, planned to challenge the permit in court. The two groups say that natural gas, largely derived from fracking – an energy industry technique used to extract oil and gas from rock by injecting high-pressure mixtures of water, sand or gravel and chemicals – results in methane leaks that release more greenhouse gas into the atmosphere than burning coal does.
Initially the Utilities Commission had set the bond at $10 million. The nonprofits appealed, and the N.C. Court of Appeals rejected the commissioners’ amount, telling them to recalculate the bond based on “competent evidence.”
The nonprofits had proposed a bond of only $250, while Duke said it would need $240 million to cover potential losses. Duke estimates an appeal of the permit could delay construction by up to two years.
The Utilities Commission rejected both requests and on Friday set the bond at $98 millionbased on several estimates: $40 million in cancellation costs for three major equipment contracts, $8 million in development costs that cannot be recouped and $50 million in increased labor and material costs.