Duke Energy targets 2,297 MW of coal retirements

As of June 30, Duke Energy (NYSE: DUK) has plans to retire a total of 2,297 MW of coal-fired capacity, broken down as 200 MW at Duke Energy Carolinas, 873 MW at Duke Energy Florida, 556 MW at Duke Energy Ohio and 668 MW at Duke Energy Indiana.

  • The Duke Energy Carolinas figure of 200 MW includes Lee Units 1 and 2, Duke Energy noted in its Aug. 7 quarterly Form 10-Q report. It excludes the 170-MW Lee Unit 3 that is expected to be converted to gas in 2014. Duke Energy Carolinas expects to retire or convert these units by December 2020 in conjunction with a settlement agreement associated with the Cliffside Unit 6 air permit. Cliffside 6 is a coal unit in North Carolina added recently to the Duke fleet.
  • The Duke Energy Florida figure of 873 MW includes Crystal River Units 1 and 2. In part to replace these two units, plus the already retired Crystal River nuclear Unit 3, Duke Energy Florida on May 27 petitioned the Florida Public Service Commission to: construct the 1,640 MW Citrus County combined cycle natural gas plant next to the Crystal River site to be in service in 2018 with an estimated cost of $1.5bn; construct a 320-MW gas combustion turbine plant at its existing Suwannee generating facility with an estimated cost of $197m; and add inlet chilling to its existing Hines gas combined cycle units which will increase the output of those units by 220 MW at an estimated cost of $160m.
  • The Duke Energy Ohio figure of 556 MW includes Beckjord Units 5 and 6 and Miami Fort Unit 6.
  • The Duke Energy Indiana figure of 668 MW includes Wabash River Units 2 through 6. Wabash River Unit 6 is being evaluated for potential conversion to gas. Duke Energy Indiana committed to retire or convert these units by June 2018 in conjunction with a settlement associated with the 618-MW Edwardsport coal gasification project air permit. The Edwardsport project went into commercial operation in June 2013.

On Feb. 17, 2014, Duke’s Commercial Power arm announced that it had initiated a process to exit its nonregulated Midwest generation business, which includes coal-fired capacity. Commercial Power expects to dispose of this business by the end of the first quarter of 2015. Commercial Power recognized a pretax loss of $1.4bn for the six months ended June 30, 2014, which represents the excess of the carrying value over the estimated fair value of the business, less estimated costs to sell. The impairment will be updated, if necessary, based on changes in the estimated fair value as additional information related to the potential transaction becomes available, Duke noted.

Said the Form 10-Q about that power plant sale process: “Duke Energy continues to believe the carrying value of the nonregulated Midwest Generation assets are recoverable under a scenario where it would continue to own and operate the assets. However, merchant power plants have in the recent past delivered volatile returns in the competitive energy markets in the Midwest. In Ohio, the [Public Utilities Commission of Ohio] had granted revenue support from regulated retail markets to help stabilize returns during the transition to competitive markets. However, in early 2014 a request for continued revenue support was denied by the PUCO. This decision made it clear the energy markets in Ohio were to be fully unregulated.”

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.