By John Downey
It didn’t take long for battle lines to be drawn as state regulators opened their hearing on Duke Energy Corp.’s $100 billion proposals for the state-mandated N.C. Carbon Plan to reduce emissions to net zero by 2050.
In the first day of hearings before the N.C. Utilities Commission today, Duke (NYSE: DUK) and some of the 16 intervening parties disputed the future role of natural gas plants; the pace of new solar construction; the advisability of relying on as-yet unavailable technologies like hydrogen fuel and small modular reactions; and how much and how quickly wind power will be available in the state.
There were even questions raised about whether South Carolina can be relied upon to pay any part of the projected costs. That’s after the S.C. Supreme Court held this year that customers in that state cannot be forced to pay cost increases attributable to North Carolina laws that South Carolina has no voice in.
Carrie Grundmann, representing Wal-Mart Inc., even challenged whether the $100 billion price tag Duke has calculated comes anywhere close to estimating what customers will eventually have to pay. She noted, for instance, that Duke does not account for costs such as relicensing its nuclear plants — vital to any carbon reduction plan — and some transmission upgrades. And she asserted that Duke’s estimate is “not a full picture” of the ultimate cost and asked if there would be “any proceedings to determine the all-in total costs.”
Still to come is testimony from experts for Duke’s opponents that will challenge the detailed calculations that the Charlotte power giant is citing to justify its proposals.
These will eventually include an independent study submitted by the N.C. Sustainable Energy Association, the Natural Resources Defense Council and several other groups. And it will contend that a plan which builds no new gas plants, accelerates the construction of established solar, storage and wind technologies, and shuts down Duke’s final coal plants more quickly would achieve the state’s goal for as much as $25 billion less than Duke says its proposals would cost.
Duke stands by its proposals, and often defended itself by noting that it was not asking regulators to approve the whole plan now.
The company is asking the commission to consider only the earliest steps it proposes — between now and 2026 — to set Duke on course to achieve the state goals adopted by the N.C. General Assembly last October. While some flexibility is allowed, the 2021 law generally calls on Duke to reduce carbon emissions by 70% from their 2005 peak in 2030 and reach carbon-neutral energy production by 2050.
Duke can only make suggestions about how to best achieve those goals, much as its opponents can. The legislature specifically ordered the commission to develop the formal N.C. Carbon Plan for Duke’s two utilities in the state.
So, Duke and the others involved were all looking to make their key points quickly on the hearing’s first day.
Opening witness Kendal Bowman, Duke’s vice president for regulatory affairs and policy, had been testifying less than 20 minutes before reminding the N.C. Utilities Commission of a favorite Duke talking point — that N.C. electric rates are below the national average. And she related that directly to the “all of the above” strategy and “balanced portfolio” approach that Duke loves to promote.
But Duke opponents were just as quick to bring up some of their own favorite talking points. Christina Cress, an attorney for the Carolinas Industrial Group for Fair Utility Rates, started her cross examination challenging Bowman on whether Duke can guarantee South Carolina will pay its share of the carbon plan — an issue S.C. officials have raised.
John Burns, representing the Carolina Clean Energy Business Association, took issue with Bowman and other witnesses over Duke’s contention that proposals from clean-energy advocates were “results oriented” to skew toward their business interests. But, he argued, Duke made no accounting for how its business interest in profits for shareholders was not considered as possibly skewing Duke’s proposals.
Ben Snowden, representing the Clean Power Suppliers Association, made much of the fact that Duke’s near-term proposals, through 2028, would not add solar capacity at the rate necessary to achieve the only plan Duke proposed that would reach the state’s interim goal of cutting emissions 70% from their 2005 peak by 2030.
Matthew Quinn, representing the advocacy group NC WARN, attacked testimony from Bowman and other Duke witnesses that the company could build natural gas plants to meet the net-zero goal. He argued repeatedly with Duke witnesses on if the company’s projection that hydrogen would eventually replace natural gas is reasonable. He also debated whether Duke could build any gas plants that would not be unusable before customers finished paying for them.
Bowman testified for most of the morning. She was followed by a four-person panel presented by Duke to discuss the company’s modeling studies to develop the six separate proposals it eventually drew up for the commission’s consideration.
The proposal must comply with the carbon plan developed by Gov. Roy Cooper and adopted by the legislature last fall in the Energy Solutions for North Carolina Act — also known as House Bill 951.
The commission asked Duke to present its own proposal for how that might be done, and the company provided four separate portfolios it contends would meet the requirements. It then asked interested parties to submit comments in support or opposition, and more than 30 responses had been filed by July 15.
The hearing will continue tomorrow. There is expected to be three-weeks worth of testimony from Duke and its opponents.