North Carolina report sees tighter reserve margins for the future

A 20% electricity generation reserve margin used to be the standard for long-term planning, with North Carolina’s reserve margin forecast to be less than that over the next few years, but with mitigating developments like more extensive power system interconnections and more efficient generation making that not such a big deal.

That is a point that the North Carolina Utilities Commission made in the Nov. 7 version of an annual report on power generation submitted to the state General Assembly and governor. The commission noted that in recent years it has fielded integrated resource plans by the three North Carolina investor-owned utilities – Progress Energy Carolinas, Duke Energy Carolinas and Dominion North Carolina Power – that have less than a 20% reserve margin in some years. It pointed out that reserve margins tend to fall below the 20% threshold when certain generation is taken off-line, but picks up again as replacement generation is brought into operation.

Duke Energy Carolinas and Progress Energy Carolinas as of July are both subsidiaries of Duke Energy (NYSE: DUK), while NC Power is part of Dominion Resources (NYSE: D). The two Duke utilities together supply about 96% of the utility-generated electricity consumed in the state.

The 2012-2026 projected reserve margins by utility are:

  • Progress – 14%-27%;
  • Duke – 16.4%-24.3%; and
  • NC Power – 11%-17.3%.

Notable is that the report details the latest resource plans of all three utilities, with all three plans having a load of coal-fired generation retirements over the next few years, with a lot of gas-fired capacity replacements, along with some new nuclear and renewables. The report pointed out that gas plants are relatively cheap and quick to build, with low emissions as compared to coal, but there is a risk from possible gas supply scarcity and price volatility. It said that North Carolina is largely captive to the Transco Gas Pipeline for its gas supply.

The report pointed out that all of the nuclear units operated by the utilities serving North Carolina have been relicensed by the Nuclear Regulatory Commission.

  • Duke has three nuclear plants with a total of seven units. McGuire is the only one located in North Carolina, with the rest in South Carolina. All of the Duke nukes have new license expirations that fall between 2033 and 2043.
  • Progress has four nuclear units in three locations, with two of the locations – Brunswick and Harris – in North Carolina. Robinson is in South Carolina. These units all have license renewals that extend from 2030 to 2046.
  • NC Power has two nuclear plants, each with two units, all located in Virginia. Those license extensions range from 2032 to 2040.

The report noted the coal-fired retirements in the works, including: the ongoing retirement of about 1,600 MW of non-scrubbed capacity by Progress; about 1,080 MW of coal retirements by Duke in 2015; and 918 MW of coal-fired shutdowns in 2015 by NC Power at the Chesapeake and Yorktown plants in Virginia, with some coal-to-gas and coal-to-biomass conversions also in the works by NC Power.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.