Progress Energy CEO: No cookie-cutter approach to fleet modernization

Source: Progress Energy

With major changes in environmental regulations and fuel economics, many U.S. electric utilities are increasing their reliance on natural gas as the fuel of choice for new power plants. But each utility must continue to evaluate its near- and long-term resource needs based on many factors, Progress Energy Chairman, President and CEO Bill Johnson said to industry leaders Monday. 

“There’s no cookie-cutter approach to modernizing an aging fleet,” Johnson told participants in the Electric Power Research Institute’s Summer Seminar in Marina Del Ray, Calif. “The path forward for a utility must be based on its unique situation as well as its view of the future.” 

Johnson told the story of Progress Energy Carolinas, the company’s electric utility that serves 1.5 million customers in North Carolina and South Carolina. In 2009, the company announced an ambitious plan to retire about 30 percent of its coal-fired generation fleet in North Carolina – 11 fossil units at four sites – and replace the plants with natural gas-fueled generation. The first retirement, of the company’s Weatherspoon coal-fired plant, will take place this fall. 

The decision to pursue the retirements was based on a number of factors, including increasing and expected environmental constraints on coal (both state and federal), significant new domestic shale gas supply and improvements in gas-fueled generation technology, among others. Progress Energy also drew on the successful repowering of its 50-year-old Bartow Plant in Florida, from heavy oil to natural gas, in 2009.
“In the end, we decided to lower environmental risk by increasing fuel risk,” Johnson said, “knowing that the fuel risk would be greatly mitigated by the emergence of shale gas and by our flexibility to burn more coal and less gas if prices shoot up. 

“We recognize gas is no panacea and is not the long-term answer to a low-carbon future. It’s dangerous to indulge in irrational exuberance for any energy source. We take a pragmatic, balanced view, knowing we’re bound by the laws of physics, economics and politics. 

“There is tremendous innovation potential in how a company leverages the interplay of technologies, markets and public policies to deliver value to customers and investors.” 

Progress Energy has invested more than $1 billion in the Carolinas and $1 billion in Florida to install state-of-the-art retrofits on the company’s largest and most efficient coal-fired plants, and coal will continue to be an important, albeit smaller, portion of the company’s energy mix of the future, with nuclear and natural gas making up most of the balance. 

Retiring coal-fired plants has been a very positive public story, Johnson said, but the change in strategy also has implications for the company’s work force and for the communities in which the coal-fired plants have operated for up to 60 years. Progress Energy has worked to be transparent with employees and communities and has engaged in special redeployment initiatives for plant workers, as the future of the generation fleet continues to evolve. 

Johnson noted the importance of preserving what matters most to customers – price and reliability – and of continuing to collaborate with policymakers, regulators and others to develop innovative, responsible solutions that minimize negative effects on customers and communities.



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