Nuclear and new gas-fired capacity are on the addition side of the power supply equation for Progress Energy Carolinas (PEC), while to-be-shut coal capacity is on the minus side.
All sides of the equation were outlined in a 2012 integrated resource plan that this Duke Energy (NYSE: DUK) subsidiary filed Oct. 31 with the South Carolina Public Service Commission. The majority of the nearer term supply-side and demand-side additions in the plan already have both management approval and North Carolina Utilities Commission (NCUC) and/or South Carolina PSC approval, while the longer term portion of the plan represents forecasts of undesignated resources that are still subject to both internal approval and regulatory review, the IRP noted.
On July 2, PEC parent Progress Energy was acquired by Duke Energy. At that point, the development of the 2012 IRPs for both PEC and Duke Energy Carolinas were well under way with each company using its own input assumptions and analytic tools. A significant portion of the IRP supporting data is proprietary and could not be shared prior to the closing of the merger, PEC noted. In addition, while both companies use industry accepted analytic approaches and models, several differences exist between them. So Duke Energy Carolinas (DEC) recently filed its own IRP with the South Carolina PSC. As more coordinated planning occurs over time, future IRPs will reflect the effects of coordinated assumptions and analytic approaches between DEC and PEC.
“As stated in previous resource plans several external challenges persist from a resource planning perspective,” the Progress Energy Carolinas IRP said. “These challenges include market based uncertainties such as significant fuel price volatility, tremendous economic uncertainty, and customer behavior and usage changes. In addition to market uncertainty, several existing and potential regulatory actions also present challenges to the planning process. These include potential federal environmental legislation dealing with regulation of carbon emissions including proposed Greenhouse Gas (GHG) New Source Performance Standards (NSPS), proposals for Federal renewable portfolio standards, the Environmental Protection Agency’s (EPA) new Cross State Air Pollution Rule (CSAPR), the EPA Maximum Achievable Control Technology (MACT) rule (also known as the Mercury and Air Toxics Standards or MATS rule), the expected EPA 316b rule, and the potential consideration of coal ash as hazardous waste by EPA.”
New gas-fired facilities near completion, coal units being shut
Over the past few years many of these factors, paired with lower natural gas prices, led to a PEC decision to retire three coal units at both its Lee and Sutton facilities and construct new natural gas combined-cycle units in their place. Beyond these two facilities, PEC also committed to retire its five remaining North Carolina unscrubbed coal units at the Weatherspoon and Cape Fear sites as part of a plan approved by the North Carolina Utilities Commission. The company announced on July 27 plans to retire its one remaining unscrubbed coal facility, its South Carolina-located Robinson Unit 1. Also, the company announced it had accelerated the retirement of Cape Fear Units 5-6 to October 2012.
As a cumulative result of the new gas-fired combined cycle facilities being constructed at the Lee and Sutton sites and the associated retirement of twelve coal units at Lee, Sutton, Weatherspoon, Robinson, and Cape Fear, the company will have replaced about 1,620 MW of unscrubbed coal generation with about 1,545 MW of new natural gas-fired generation. “Benefits of this portfolio modernization include both environmental benefits, in the form of significant reductions in the output of SO2, NOx, mercury and CO2, as well as fuel diversification benefits resulting from the addition of the new gas-fired generation,” the IRP noted.
The planned coal retirements, their total summer capacity ratings and assumed retirement months are:
- Lee Units 1-3 (382 MW) – September 2012
- Cape Fear Units 5-6 (316 MW) – October 2012
- Sutton Units 1-3 (575 MW) – December 2013
- Robinson Unit 1 (177 MW) – October 2012
In addition to gas-fired additions, ongoing efforts covered in the 2012 IRP include major commitments to alternative sources of energy and capacity, as well as demand-side options. Since 2008, PEC said it has been actively developing and implementing new demand side management (DSM) and energy efficiency (EE) programs throughout its North Carolina and South Carolina service areas.
PEC wants to share any new nuclear, won’t go it alone
With respect to baseload carbon-free generation, new nuclear generation continues to be an important component of PEC’s resource plan. The 2012 version of the IRP continues to contemplate the potential for regional partnerships rather than full ownership of a nuclear facility.
In its 2011 IRP, PEC showed a generic ownership of a 25% stake of a two-unit site but did not align the timing of such ownership directly with a specific project or projects. Solely for resource planning purposes, the 2012 IRP assumes that PEC would take a 5% share of SCANA’s V.C. Summer units and a 20% share of DEC’s Lee units. Under this regional assumption, nuclear projects would be jointly undertaken by utilities in the region with participating utilities and load serving organizations taking ownership stakes in each other’s projects.
“At this point in time, no specific contractual arrangements have been entered into and as such the nuclear blocks shown in the IRP simply represent baseload generation blocks that align with existing regional projects in order to assess the ongoing viability of regional nuclear within the integrated resource plan,” the plan said. “The exact timing and amount of ownership in a regional partnership will depend on the specific project and future contractual negotiations, which may result in adjustments of both timing and volume of new nuclear generation placed into the resource plan. Under the assumptions used in the 2012 IRP for future carbon legislation, carbon dioxide limits would continue to ramp down significantly beyond the study period. Such an outcome would likely require additional nuclear generation after 2027 to meet declining CO2 targets.”
In October 2009, the NCUC granted PEC a Certificate of Public Convenience and Necessity (CPCN) to construct the 920-MW Wayne County combined-cycle (CC) facility. The Wayne County CC is currently on schedule to meet its January 2013 commercial operation date. The NCUC in June 2010 granted PEC a certificate for construction of the 625-MW Sutton CC. The Sutton CC is currently on schedule to meet its December 2013 commercial operation date.
Nuclear and coal generation currently make-up about 51% of the utility’s total capacity resources, yet account for about 72% of total energy requirements. Gas and oil accounts for about 34% of total supply capacity, yet about 20% of total energy, basically all of that gas. The balance is from hydro and purchased power.
The company’s resource plan includes additions fueled by natural gas and oil, as well as possible new baseload generation. The company’s capacity and energy by fuel type in 2027, the end of the IRP period, has gas and oil resources projected to be 49% of total supply capacity, while serving about 42% (gas-42%, oil-almost zero) of the total energy requirements. In 2027, nuclear and coal are projected to be about 45% of total capacity resources and serve about 55% of system energy requirements. By 2027, the percentage share of system capacity is about the same between gas/oil resources versus nuclear/coal resources. However, nuclear and coal will continue to satisfy more than half of system energy requirements.
In 2006, PEC announced that it selected a site at the Shearon Harris Nuclear Plant (Harris) to evaluate for possible future nuclear expansion. PEC selected the Westinghouse Electric AP1000 reactor design as the technology upon which to base its application. In February 2008, PEC filed a construction and operating license (COL) application with the Nuclear Regulatory Commission (NRC) for two additional reactors at Harris. No petitions to intervene have been admitted in the Harris COL application to this point. “If we receive COL approval from the NRC in 2014 and applicable state agency approvals, and if the decisions to build are made, a new plant would not be online prior to 2026,” the IRP added.