On Nov. 20, Duke Energy announced that it had requested rate increases from the North Carolina Utilities Commission (NCUC) of 15.0 percent for Duke Energy Carolinas (DEC) customers and 15.1 percent for Duke Energy Progress (DEP) customers. If granted, the requests would raise the monthly bill of a typical residential customer by $17.22 for DEC and by $23.11 for DEP. (Readers will recall the Carbon Plan discussions at NCUC explaining that more solar and less nuclear in DEP’s fleet means that DEP’s customers face electricity rates that are about 20 percent higher than DEC’s.)
Gov. Josh Stein objected, saying the proposed rates were “too high” but then added something about Duke “retreating on more affordable clean energy.” The governor is either misled or misleading if he is referring to solar and wind energy as “more affordable” than baseload and dispatchable thermal generation, because they simply aren’t; they are necessarily more expensive. He also said that “we should be doing everything we can to make life more affordable, not less” — not just electricity, but life — and that he “will continue to fight on behalf of every North Carolinian to lower costs and grow the economy.”
It would be nice to believe Stein, but his actions speak louder than his words:
Duke cited grid reliability improvements and economic growth for the request for rate hikes. Specifically, Duke mentioned “investing $1.7 billion in battery storage projects across the region, complemented by nearly $400 million in solar and solar paired with storage projects — 276 MW of solar and 31 MW of paired storage.” Duke also mentioned adding new natural gas facilities in Person and Catawba counties and expanding nearly 300 MW of nuclear capacity at existing plants.
Why we have been warning that higher electricity rates are coming
The John Locke Foundation’s Center for Food, Power, and Life (CFPL) has been warning for several years that higher electricity rates are coming as a consequence especially of the Carbon Plan law.
First, in our 2022 analysis before the NCUC concerning the initial Carbon Plan, we showed that the four portfolios then under discussion were all too expensive. We provided a least-cost decarbonization portfolio that fulfilled the requirements of the law more cheaply and more reliably than the others. Our plan avoided the pitfalls of overbuilding expensive, land-intensive, intermittent, and short-lived renewable facilities and instead would transition from coal to zero-emissions nuclear, pumped hydro, and storage primarily through natural gas. Nevertheless, even this portfolio would have seen monthly bills increase by $13 by 2035 — much less than the range of $23 to $33 from the other portfolios under discussion.
In 2023 we discussed in Carolina Journal that “deliberate policy choices” would be responsible for future electricity rate increases. They included the Carbon Plan law and an initial order from the NCUC that Duke interconnect so much new solar that it would be “2.5 times more than the most solar Duke has ever interconnected in a single year.” We also highlighted testimony from utilities engineer Dustin Metz of the Public Staff to the NCUC warning that customer rates could “approximately double” before 2030.
Our 2024 “Lighting the Path” report detailed the enormous costs that North Carolina ratepayers would accrue if the Carbon Plan’s pursuit of carbon neutrality by 2050 relied on wind and solar as opposed to nuclear. Among other things, the report showed that the all-renewable scenario would require building eight times more new capacity than the nuclear scenario, need nine times more new transmission lines, and take up more than a fifth of the state’s land (7.7 million acres vs. just over 15,000 acres for the nuclear scenario).
Also, a series of research briefs in 2024 laid out six reasons why power bills would be increasing:
- Closing down working power plants and building new ones
- Having to build even more new power plants to account for expensive policy choices
- Legally guaranteeing utility shareholders a profit for building new power plants
- Dealing with different productivities of various generation sources
- Needing to overbuild solar and wind plus construct their necessary backup power sources
- Powering up perverse incentives over least-cost and reliable electricity
The policy change North Carolina ratepayers need
As discussed here, passage of SB 266 should have a mitigating effect on rate increases, but only insofar as it would keep the increases lower than they otherwise would be. In the long term, it would be much better for ratepayers in North Carolina to repeal the Carbon Plan law or at least amend it to make its carbon neutrality requirement a goal instead, secondary to the needs of consumers for reliable and least-cost electricity.
After all, in Stein’s words, “we should be doing everything we can to make life more affordable” for North Carolinians.
