Citizens group wants North Carolina review of Duke gas-fired project

Dan River Combined Cycle Station

A citizens group, NC WARN, on March 10 asked the North Carolina Utilities Commission to open up a review of a Duke Energy (NYSE: DUK) plan for a gas-fired power plant in South Carolina, even though the group conceded that the North Carolina commission has no explicit power to do so.

The group wants the commission to use its “discretionary authority” to conduct a full review of the costs and need of Duke Energy's proposed 750 MW combined cycle (CC) generating plant located near Anderson, S.C., as part of its on-going review of the integrated resource plans of Duke's Duke Energy Carolinas and Duke Energy Progress subsidiaries. Or, the group said the commission could open a separate docket on the costs and need for the Anderson plant.

In October 2013, Duke Energy Carolinas (DEC) and the North Carolina Electric Membership Corp. (NCEMC) applied with the Public Service Commission of South Carolina for a Certificate of Environmental Compatibility and Public Convenience and Necessity to construct and operate this facility, located at the existing Lee plant. At present, the expected cost of the Anderson plant is a minimum of $750m. It would be expected to provide service to both the North Carolina and South Carolina jurisdictions, with costs allocated to each. DEC proposes to own 650 MW of the plant, and NCEMC the other 100 MW. To date, the South Carolina PSC is still reviewing that application.

“DEC and NCEMC have not demonstrated to the Commission the Anderson plant is necessary to provide reliable power for the ratepayers of North Carolina or that it is in the public interest,” NC WARN said. “They have not shown that the construction costs and financing charges they forecast are reasonable and prudent. It appears DEC simply intends to construct the plant and then offer it as a fait accompli at the next rate case in North Carolina, without any preliminary scrutiny by the Commission or any determination it is necessary or in the North Carolina ratepayer's interest.”

It makes more sense to deal proactively with the significant cost of the Anderson plant now rather than include it as just one of a multitude items in a future rate case, the group argued. The principal purpose of the IRP statute is to prevent costly overbuilding, it added.

NC WARN said it is aware DEC and NCEMC are not required by statute to apply for a certificate in North Carolina for this project. “Indeed, the N.C. Supreme Court determined a utility is not required to apply for a certificate before beginning construction of generating plant in South Carolina that would provide service to customers in North Carolina,” it wrote. “It should be noted though that this case does not preclude the Commission from fully and closely reviewing the costs of any utility practice, no matter where or when, that has the potential to impact rates in North Carolina. The Commission has wide discretionary authority, and often uses it in matters that are consequential, i.e., have a potential rate impact.”

The need for the Anderson plant should be examined, in light of the potential use of the Anderson plant as a baseload unit, DEC's high reserve margin and the viable alternatives, the group said.

Duke said in a March 11 response: "NC WARN's Motion states the latest of its long series of ideological oppositions to another new cost-effective base load and intermediate DEC generating plant needed to serve the Company's customers in North Carolina and South Carolina, and which is part of the Company's fleet modernization efforts to retire and replace aging, less efficient coal units with some of the cleanest, most efficient natural gas plants in the United States."

Duke conceded that the North Carolina commission has broad authority to conduct investigations and seek information from the company. DEC submits, however, that if construction is approved by the South Carolina PSC and proceeds, this commission will have the full opportunity to review the reasonableness and prudence of any costs incurred by the company to construct the Lee combined cycle plant in any future general rate case. "NC WARN does not appear to appreciate that it is DEC's investment in the construction of the Lee Combined Cycle plant that would be at risk until the Company seeks to recover such investment from customers in future proceedings before this Commission and the [South Carolina commission]," Duke added.

Duke has said the need for this project is largely driven by coal retirements Duke has told the South Carolina PSC that the new addition at its existing Lee Steam Station is part of a broader plan that is in part needed to make up for the shutdown of coal-fired capacity on the system, including at the Lee site.

Following the completion at the end of 2013 of the coal-fired Cliffside Unit 6 (825 MW) and the 620-MW Dan River Combined Cycle gas facility, and the recent retirements of the coal-fired Riverbend Units 4-7 (454 MW) and Buck Units 5-6 (256 MW), the Duke Energy Carolinas existing generation portfolio mix includes 7,172 MW of coal, 1,240 MW of combined cycle, 2,770 MW of combustion turbine, 5,965 MW of nuclear, 3,229 MW of hydro, 251 MW of purchases, 911 MW of demand side management and 185 MW of renewable energy.

In the current planning horizon, the coal-fired Lee Units 1-2 (200 MW) are projected to retire on or before April 15, 2015. Lee Unit 3 (170 MW) is projected to retire as a coal unit and to be converted to natural gas before the summer of 2015.

The retirement of these units, as well as those already retired, is driven by the requirements of air permits for the company's new coal and combined cycle units at Cliffside, Buck and Dan River, as well as the North Carolina Utilities Commission approval order on Cliffside Unit 6, and expected and known environmental regulations such as the federal Mercury and Air Toxics Standards.

The coal-fired Buck Steam Station Units 3 and 4 were retired in May 2011. The Cliffside Units 1-4 and Dan River Units 1-2 coal facilities were retired in October 2011 and April 2012, respectively, in advance of the initial testing of new generation at those locations. The remaining un-scrubbed coal units at Buck and Riverbend were retired in April 2013, nearly two years earlier than previously planned.

The existing Lee station is located on the Saluda River, near the town of Williamston in Anderson County, S.C. Lee began operation in 1951 and has three operating coal-fired units: Units 1 and 2 are 100 MW units that began operation in 1951. Unit 3 is a 170 MW unit that began operation in 1958. There are also two existing simple cycle combustion turbine units at the Lee site with a combined capacity of 84 MW that began commercial operation in 2007.

The planned Lee combined cycle facility will use two combustion turbine generators (CTGs), two heat-recovery steam generators (HRSGs), and one steam turbine generator in a“2x1” configuration. Duke Energy Carolinas evaluated F Class and Siemens H Class combustion turbine technologies in various configurations. The 2x1 technology selection was chosen based on the need as well as the company's and industry experience.

This article was republished with permission from GenerationHub.

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