Dive Brief:
- North Carolina regulators have denied Duke Energy’s proposal to construct and operate a 255-MW natural gas-fueled simple cycle combustion turbine at its Smith Energy Complex in Richmond County, North Carolina, citing uncertainty around load growth and the cost of the proposal.
- The North Carolina Utilities Commission’s Sept. 18 decision cited staff testimony calling the proposed $584 million price tag “staggering” and “very expensive.” The commission also questioned the need for the project and its value to ratepayers.
- Although Duke’s modeling does currently project significant load growth, “much of the growth appears to be based upon anticipated data center customer additions,” the order said. “Any such anticipated load growth is insufficiently reliable for the Commission to act at this point.” In an email to Utility Dive, a Duke spokesperson said that the company is “disappointed” by the commission’s decision and is “reviewing the order and assessing potential next steps.”
Dive Insight:
In February, Duke executives told investors that the company’s $103-billion capital spending plan was the largest on file at any regulated U.S. utility as it sought to capitalize on the data center boom.
The Duke spokesperson said the company believes it has “demonstrated that the Smith [combustion turbine] is part of a least-cost path to maintain reliable and affordable service for customers as energy demand continues to grow across North Carolina.”
“We remain committed to working constructively with regulators and stakeholders to identify the best path forward to meet our customers' future energy needs while maintaining reliability and keeping costs as low as possible,” they said.
In its order, the commission referenced Duke’s commitment to the White House Ratepayer Protection Pledge — a voluntary promise by utilities and hyperscalers not to shift data center costs on to other customers.
“Although the pledge is not a substitute for the statutory CPCN standard, Duke’s agreement to its provisions is relevant to the Commission’s consideration of ratepayer impact and determination of whether the Proposed Facility is in the public interest,” it said. “The record does not adequately establish the specific extent to which the Proposed Facility is intended to serve the anticipated growth in data center customer demand and therefore does not demonstrate how [Duke] intends to adhere to its commitments under the Ratepayer Protection Pledge with regard to the Proposed Facility.”
The proposed turbine was a hydrogen-capable F-class unit, with capacity originally estimated at 240 MW, but NCUC said in its filing that Duke Energy Progress — a Duke utility subsidiary that serves North Carolina — had finalized negotiations with the unnamed turbine vendor and determined its estimated nominal capacity would actually be 255 MW.
The Smith Energy Complex where Duke proposed installing the turbine began commercial operation in 2001 and presently houses five existing F-class simple cycle CT generating units and two F-class combined cycle generating units, according to the order. The site was originally configured for a sixth F-class CT, but the sixth unit was never constructed. One witness said the new generator could be installed by Jan. 1, 2030.
Though the commission’s public staff testified that the turbine was not an ideal solution, they ultimately supported the turbine proposal and recommended its approval, despite initially opposing it.
In an errata sheet filed June 30, public staff pointed to Duke’s “aggressive signing of new load” and said they found “there is a capacity need on the system, and the Proposed Facility is the only resource that is executable on a constrained timeline.”
“Because Duke hasn't put forward an alternative that actually can be implemented in a timeline to mitigate that reliability concern that we're seeing, we are now, for lack of a better word, stuck with this resource,” NCUC Public Staff engineer Dustin Metz said in July 1 testimony.
“If we could go potentially back in time, I would recommend a very different resource,” he said.
Another NCUC public staff engineer, Leah Weaver, said the staff is concerned that Duke is “moving toward violating” a requirement for a 22% planning reserve margin in 2031.
Metz said Duke’s capacity needs will require the development of some resources to be accelerated, and other resources to come online without any delays.
“We are banking on a plan of perfection, and that has me very nervous,” he said.
In testimony prefiled for the July hearing, Duke Energy Director of IRP Advanced Analytics Michael Quinto noted that Duke had supported the planning reserve margin being increased to 22% to “ensure reliability during peak periods, especially to meet load conditions during extreme weather, unplanned unit outages and with load growth uncertainty over time.”
In its Sept. 18 decision, the commission wrote that it “understands the Public Staff's expressed concerns about future reserve margins,” but that they do not outweigh the commission’s concerns about the reliability of Duke’s demand and cost modeling, nor about evaluating the proposal in parallel with its assessment of Duke’s Consolidated Carbon Plan and Integrated Resource Plan, or CPIRP.
“While a delay in approval, in [Duke Energy Progress’] words, ‘could increase construction costs’, granting approval prior to the conclusion of the Commission's evaluation of DEP's modeling in the 2025 CPIRP proceeding will increase substantially the costs that ratepayers will need to bear and will impose a significant risk that new generation is approved before the need for that generation is determined,” the commission said.
The commission’s decision on Duke’s CPIRP is not expected until late 2026.
In prefiled testimony, Duke argued that the proposed gas project “presents a unique opportunity to deploy new [combustion turbine] capacity on an accelerated timeframe,” and that delaying the process until after a CPIRP decision will materially delay the resource’s construction and in-service date.
