NC Experts Spar Over Future Energy Plans

Guest Blog | March 18, 2010 | Coal, Energy Efficiency, Energy Policy, Nuclear, Utilities

John D. Wilson co-wrote this blog.

What’s the future for energy in the Tarheel state? This week, the North Carolina Utilities Commission (NCUC) considered the energy plans of Duke Energy, Progress Energy and Dominion Power. Each year, North Carolina utilities are required to update their 15-year plan. An Integrated Resource Plan (IRP) explains how each utility will serve its customer’s electricity needs with the lowest cost mix of resources, which can include existing and new power plants, renewable energy facilities, and energy efficiency.

Southern Alliance for Clean Energy intervened in the IRP proceeding with legal representation from Southern Environmental Law Center and in partnership with Environmental Defense Fund and Sierra Club.  The evidence we put forward was focused in two areas: energy efficiency and coal-fired power plants.

Energy Efficiency

Are North Carolina utilities really committed to energy efficiency, or just doing enough to skate by?  That’s the question our Research Director, John D. Wilson, addressed in his testimony on Wednesday.  He explained that North Carolina utilities are not considering the full potential of energy efficiency over the 15-year planning period, and that their methods for comparing energy efficiency to power plants put energy efficiency at a disadvantage. From a planning perspective, energy efficiency continues to be left in a “second-class status.”

Utility Energy Efficiency Resource Forecast System Impacts

North Carolina Utilities - Forecast Efficiency Resource Impacts (Calculated from utility plan forecasts.)
North Carolina Utilities – Forecast Efficiency Resource Impacts (Calculated from utility plan forecasts.)

We understand that utilities invest in capacity, but customers pay for energy.  That helps to explain why utilities are interested in pushing energy efficiency when it reduces what they have to invest (MW) but not so much when it reduces what customers pay (GWh).  This basic logic is one way to understand why North Carolina utilities are more enthusiastic about saving MW than GWh.

Focusing on the energy savings benefits to customers, Wilson’s testimony emphasized the distinction between the utilities’ near-term efforts to implement new energy efficiency programs, and their long-term commitment to choose energy efficiency rather than new generation to meet customer needs.  Both Duke Energy and Progress Energy have new energy efficiency programs that appear to be a sincere effort to offer customers some opportunities.  However, Duke Energy’s effort appears to be more vigorous and has sought broader input into its design.

Looking beyond 2015, however, it is apparent from the utility resource plans that they are not currently relying on energy efficiency to provide the substantial level of benefits that it could offer, or that other utilities around the country offer.  Based on the studies of energy efficiency potential, utility accomplishments in other parts of the country, and utility goals in other parts of the country, Wilson advised the Commission that up to 15% of North Carolina energy demand could be met through efficiency – about five times more than the state’s utilities currently forecast.

While Wilson didn’t testify regarding Dominion or the smaller public utilities, it is worth briefly explaining what the numbers mean for those utilities.  Dominion Power serves only a small part of North Carolina, and its energy efficiency programs are being introduced in Virginia before being transferred to North Carolina.  Due to its slow start in North Carolina, it is unlikely that it will actually achieve stronger results than Duke or Progress in North Carolina by 2015, but its strong 2015 goal is a plausible target for its entire service territory.handsaroundthesun

SACE hasn’t conducted an in-depth review of the smaller utility efficiency programs either, but the 2015 forecasts submitted by these utilities indicate that almost every North Carolina utility customer could have access to meaningful energy efficiency programs in the near future.

These energy efficiency investments would be good news for energy customers and the North Carolina economy.  With North Carolina ranking 26th in the nation on energy efficiency according to ACEEE, our state agencies and utilities must be doing better.  Energy efficiency is far and away the least cost energy alternative – we must set aggressive targets to increase the amount of energy we are meeting through simple conservation.  Energy efficiency reduces customer bills, produces no air emissions, and protects both customers and utilities from fuel price spikes.  Energy efficiency also creates jobs – ACEEE found that nearly 2 million jobs are supported by efficiency-related investments nationwide.

Coal-Fired Power Plants

David Schlissel, President of Schlissel Technical Consulting, Inc. and expert on electric utility engineering and economics, testified on Tuesday. Schlissel’s testimony highlighted grave concerns about the utility’s lack of planning around future federal carbon dioxide, coal ash, and ozone and particle pollution regulations, which are all imminent.  Neither Duke nor Progress adequately factored into their IRP studies the risk to customers of operating coal-fired power plants in the face of new or more stringent regulations.

Even though Duke Energy aspires to cut its “carbon emissions in half by 2030,” its resource plan shows that Duke plans for its annual carbon dioxide emissions to actually increase between 13 percent and 42 percent (depending on the scenario) between 2009 and 2029, despite a number of planned coal retirements.  David Schlissel’s expert testimony explains that the reason for this growth in emissions is because of the enormous contribution the new Cliffside Unit 6 will add to their CO2 emissions stacksportfolio (even though Duke cites this as one of its carbon-cutting strategies):

The new Cliffside Unit 6, on its own, can be expected to emit approximately six million tons of CO2 each year, or more than two million tons more CO2 than was emitted in 2008 by all of the cycling coal units that Duke discusses retiring.

Progress Energy has not set a target for cutting its global warming pollution, and David Schlissel’s testimony demonstrated that it has not even projected future CO2 emissions as part of its IRP analysis. Nevertheless, Progress has made some substantial coal plant retirement announcements recently.

In order for both utilities to reduce their CO2 emissions, Duke and Progress will need to retire additional coal units beyond those already proposed for retirement. The alternatives for displacing additional coal units include substantial investments in natural gas-fired combined cycle facilities, renewable resources and energy efficiency.

Schlissel’s testimony concludes:

The Commission should require Duke and Progress, as well as other utilities, to submit as part of their IRP in this docket a detailed and accurate discussion of the expected new pollution control standards and a demonstration of how the utility is factoring the financial risk of these standards into its IRP.

Utilities Show the Nuke Card

While neither Wilson nor Schlissel testified directly about the utilities’ interest in nuclear power plants, cross-examination by attorneys for Progress Energy and Duke Energy indicated that this resource plan was very much about building the case for constructing new nuclear power plants.

SACE has reviewed numerous new nuclear power proposals in the region. We have found that they face serious regulatory hurdles and that they are too costly, putting customers at unreasonable risk of cost overruns and delays.  Just as David Schlissel demonstrated that the utilities are failing to consider the full environmental impacts of coal plants, we have also seen that utilities tend to underplay or ignore the environmental impacts of nuclear power plants.

Furthermore, as John D. Wilson demonstrated in his testimony, the long-term benefits of energy efficiency have not been fully considered in utility resource plans.  SACE also remains unconvinced that the region’s renewable energy resources are or will soon be appropriately utilized.  Based on these factors, SACE would be opposed to new nuclear capacity unless a specific proposal satisfactorily addressed all of these concerns.

John D. Wilson’s testimony can be downloaded here.

David Schlissel’s testimony can be downloaded here.

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