By contrast, SB 261 would allow Duke to seek rate increases as often as every 12 months to recoup outlays for building “baseload” plants, which can provide electricity around the clock. While regulators would still have to ensure the charges were prudent, they would do so without a full picture of the utility’s finances. Many experts believe such “single-issue ratemaking” can be worse for consumers than the holistic approach.
Legislation could harm state’s nuclear energy aspirations
Duke has no plans for a large, Vogtle-style nuclear reactor right now, and the earliest it envisions bringing a small modular reactor online is in 2035, according to its latest long-range plans. That’s part of why Justin Somelofske, senior regulatory counsel for the North Carolina Sustainable Energy Association, said the construction-cost provision will likely benefit plans to build gas plants in the near term.
As power demand grows nationwide, Duke and other utilities are all trying to build more gas plants, Somelofske said. That “is going to constrain the supply chain and increase the demand for these turbines and units and run up costs.”
Duke could be eager to see those costs recouped annually rather than waiting for a general rate case. The effect, said Somelofske, is that SB 261 “could pave the way for more carbon-based resources powering our grid.”
Then there is the other part of the bill, which would erase the 2030 deadline by which Duke must cut its carbon pollution 70% from 2005 levels. Regulators have already allowed the company to plan to miss the date by about five years. It must still reach carbon neutrality by 2050, but without a midway target, advocates believe Duke is likely to build gas plants to meet baseload needs.
In modeling the bill’s impact, North Carolina’s consumer advocacy agency, Public Staff, estimated that Duke would build half as much nuclear energy by 2035 as the utility recently projected in its long-term plan, according to Tyler Norris, a Duke University doctoral fellow who previously worked as a solar developer and as a special advisor at the U.S. Department of Energy.
“Repealing the interim standard significantly weakens the rationale for nuclear deployment in the 2030s,” Norris wrote in March in his Power & Policy newsletter.
Advocates say it also decreases the rationale for building solar, wind, and other renewables. “What the interim target does,” said Somelofske, “is require the utility to scrutinize all the best available technologies that can be deployed in the near term and interim term and not wait until we’re past the point of no return” on climate change and meeting the 2050 deadline.
Still, arguments about the climate crisis aren’t likely to carry the day in a General Assembly where Republicans are just one vote shy of a supermajority and the ability to override vetoes from Gov. Josh Stein, a Democrat. The fate of SB 261 will likely hinge on the level of support for the cost-recovery provision, and even some of the bill’s backers want to see that section amended.
Kevin Martin, head of the manufacturing and industry trade group Carolina Utility Customers Association, previously told Canary Media that SB 261 needs “more guardrails” to protect customers, although he also said his group is “directionally supportive” of the bill.
Testifying on behalf of the conservative John Locke Foundation, lobbyist Drew Heath told the Senate Agriculture, Energy, and Environment Committee that his organization supports the bill, but it wants “clarification” on the section allowing Duke to charge customers for the up-front cost of power plants.
“We have questions about the cost-recovery system,” Jon Sanders, director of the foundation’s Center for Food, Power, and Life, told Canary Media. “We are curious what may happen to that aspect in House debates.”
