Duke Energy Plans to Retire 20 Percent Of Coal-Fired Generating Capacity by 2015

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RALEIGH, N.C.—Duke Energy plans to retire 20 percent of its coal-fired generating capacity over the next three–and-a-half years—about 3,500 megawatts— nudged along in part by pending environmental regulations, utility representatives told BNA.

A significant driver of the decision is the Environmental Protection Agency's pending maximum achievable control technology rule for air toxics emissions from utilities, known as the “utility MACT,” Duke Energy spokeswoman Erin Culbert said Aug. 12. Culbert added that a variety of other factors are being considered in determining plant or unit retirements.

The pending interstate air pollution transport rule under the Clean Air Act and cooling water intake regulations under the Clean Water Act also are having an impact on the utility's plans, she said.

The electricity generating capacity will be primarily replaced through newer, more efficient plants or retrofitted facilities using fuel other than coal, Culbert told BNA.

Units at Two Ohio Plants to Close

Two plants in Ohio are among those affected by the closures planned by 2015, Sally Thelen, another company spokeswoman, told BNA Aug. 11.

According to Thelen, Duke Energy plans to retire all six coal-fired units at its Beckjord Station plant in New Richmond, Ohio, and one unit at its Miami Fort Station in North Bend, Ohio. The units at Beckjord Station represent 1,124 megawatts of generating capacity (Duke Energy's ownership share is 862 megawatts), and the unit at New Richmond has a capacity of 163 megawatts.

Over the long term, new combined-cycle generating capacity is planned to replace the lost capacity, according to Thelen. Such decisions are subject to future resource planning and regulatory approval, she said.

Thelen said the primary drivers for the plans to close the units in Ohio are pending environmental regulations. However, she added, “these are older plants and units and would be nearing the end of their normal operating life at some point in the coming years eventually.”

Regulators See Rising Energy Costs

Matt Butler, a spokesman for the Public Utilities Commission of Ohio (PUCO), told BNA Aug. 11 that Duke Energy's plans to close the units in Ohio could conceivably increase wholesale market rates for electricity in the greater Cincinnati area.

Although the commission has not directly assessed the impact of Duke Energy's plans, it submitted comments on the utility MACT proposed rule to EPA Aug. 4 analyzing all of Ohio utilities' threatened coal-fired plant closings. The analysis indicated that wholesale market prices could increase by 36 percent, he said.

In June, American Electric Power said it would retire 25 percent of its coal-fired generating capacity to comply with pending federal air pollution control rules (112 DEN A-6, 6/1/11).

The proposed utility rule has drawn fire from a large share of the electric power industry, with utilities asserting they will not have enough time to comply, although companies with significant nuclear- and gas-fired generating capacity have supported the rule (155 DEN A-1, 8/11/11).

Energy-Efficient Plants a Key

Keeping pre-existing plants operating with utmost energy efficiency is the solution favored by the Office of the Ohio Consumers' Counsel, spokesman Anthony Rodriguez told BNA Aug. 12, since Duke would seek to recover the costs of any plant closings or new construction through rate increases. The counsel is the state's residential utility consumer advocate.

Earlier this year, Rodriguez said, Duke Energy Chief Executive Jim Rodgers said in an interview that many of the utility's Ohio customers were shopping for better electricity rates from outside providers.

If consumers can buy energy elsewhere, with Duke simply distributing it to homes, then perhaps the plant closings would not have a severe impact, Rodriguez said. Moreover, Rodriguez said it is his understanding that the plants Duke has targeted have been operating at low capacity, another sign that the shutdowns would not be too detrimental.

Duke has been improving the efficiency of its generating units in the state, so the plant closings should not harm power availability, Ohio Sierra Club spokeswoman Jen Miller told BNA Aug. 12.

“These closings are part of the nation's energy transformation,” Miller said. Utilities, as a whole, have had decades to cleanup polluting processes, so reacting with dismay to the MACT rule is disingenuous, she told BNA.

Older Units in Carolinas Also to Be Retired

In the Carolinas, Duke Energy's Culbert said, the utility has identified dozens of units it may retire by 2015, for a variety of reasons.

According to Culbert, Duke Energy plans to build and operate a new 825-megawatt clean-coal-fired boiler at its Cliffside facility in western North Carolina. The utility has committed to retire older, higher polluting units as a result of building that new unit, which is scheduled to come on line in 2012, she said.

The utility also will add two 620-megawatt natural gas-fired combined-cycle generating units at existing facilities: Buck Steam Station in Rowan County, N.C., and Dan River Steam Station in Rockingham County, N.C., to replace older, coal-fired capacity at those plants, Culbert said.

Pending federal environmental regulations—in particular the utility MACT rule—are significant drivers of the decision to retire older coal-fired capacity, but other factors are taken into consideration as well, Culbert told BNA. Many of the older units also currently are used to meet peak demand and not baseline load, she said.

Culbert said she could not provide an accurate estimate of the environmental impact in reduced air pollution that the planned plant closures would achieve. “That would be difficult to do with a high degree of accuracy, since our generation and the units that are dispatched fluctuate all the time based on customer demand and other variables,” she said.

By Andrew M. Ballard and Bebe Raupe (Cincinnati)

More information about Duke Energy is available at http://www.duke-energy.com/company.asp .

A list of planned unit closures in the Carolinas submitted by the utility to South Carolina regulators in September 2010 is available at http://dms.psc.sc.gov/pdf/matters/CDC74074-AEC8-24CA-7945B27DF577A34D.pdf .