Duke may rethink plant

Higher projected costs for a coal plant may lead Duke Energy to revise its plans

News & Observer, North Carolina
John Murawski, Staff Writer
November 18, 2006 (see previous day's article on costs)

The ballooning price of a pair of proposed power plants near Charlotte could force Duke Energy to cancel the costly project. Duke Energy's lawyer said Friday that a new cost estimate of $3 billion to build the coal-fired plants could prompt the company to look for alternatives, such as buying surplus electricity from other utilities.

This year, Duke Energy had been aggressively pursuing the Cliffside coal plants, which the utility had estimated would cost $2 billion, as recently as two months ago. But the realization that price has increased 50 percent has thrown the company's planning into disarray.

Duke Energy will submit a new energy road map to state regulators on Nov. 29 that would detail how it plans to provide cheap and reliable electricity for a rapidly developing region. The state Utilities Commission will hold public hearings in January on Duke Energy's proposals.

Duke Energy could decide to stick with the Cliffside project if the coal plants prove more economical than the alternatives. But the utility could decide to build natural-gas-fired plants, buy electricity from other utilities or buy a power power plant from another utility. "We've seen cost increases, not only with pulverized coal, but with other technologies," said Bo Somers, Duke Energy's assistant general counsel. "We're in a dynamic marketplace, and things have changed rapidly in the past three months." Duke Energy's customers would pay for the costs of any decision through rate increases.

Duke Energy has 1.6 million customers in North Carolina, including more than 160,000 in the Triangle. In September, when the utilities commission held hearings on the Cliffside proposal, environmentalists tried to quash the coal plants, saying that they are dangerous sources of greenhouse emissions and other pollutants.

The environmentalists regard the 50 percent price increase for the Cliffside plants as a new opportunity to block the project when it comes up for hearings in January. "We have agreed we're not going to walk into the room and say, 'We told you so,' " said Stephen Smith, executive director of the Southern Alliance for Clean Energy, which has opposed the Cliffside project. "We're going to build on our case that the commission needs to look at the alternatives."

The Southern Alliance, along with the Durham-based N.C. Waste Awareness and Reduction Network, wants state regulators to approve efficiency programs instead. Programs could include financial incentives for customers who buy energy-efficient appliances, low-interest loans for homeowners and small businesses that invest in high-efficiency heating and cooling, and incentives to encourage energy audits and upgrades.

Environmentalists say that an aggressive efficiency program could offset the need for two coal plants, a claim that's disputed by Duke Energy, as well as the Public Staff, the consumer advocacy arm of the utilities commission. The Cliffside project, when priced at $2 billion, had won the Public Staff's backing. But now that the price has soared to $3 billion,the Public Staff has not decided whether it will continue backing the project.

The state's attorney general urged the utilities commission in September to approve one of the Cliffside plants but to reject the second unit. Duke Energy's proposed Cliffside power plants, about 60 miles west of Charlotte, are part of an energy plan that includes two nuclear reactors in South Carolina. Duke Energy generates 52 percent of its energy in the Carolinas with coal-fired plants and 46 percent with nuclear power plants. Replacing the proposed coal plants with nuclear plants is not an option because it's not feasible to build a nuclear plant by the 2011 deadline for Cliffside, Somers said.