Duke prepares for Florida PSC fight on new gas-fueled generation

Duke Energy (NYSE: DUK) expects the Florida Public Service Commission (PSC) to decide later this year on whether the company should be allowed to self-build extensive new natural gas-fueled power generation in Florida.

Utility subsidiary Duke Energy Florida plans to build the 1,640-MW Citrus County combined-cycle power plant and also add capacity to two existing plants. During an Aug. 7 quarterly earnings call, a financial analyst asked how the PSC might view the self-build plans given that there already seems to be significant merchant combined-cycle and gas peaking capacity available.

Calpine (NYSE: CPN), for example, has intervened in the case and said it has an existing natural gas-fired plant that could be used by Duke at a cheaper cost than the self-build option.

In response to the analyst question, Good acknowledged that the merchant power firm’s challenge will be an issue considered by the commission. However, Good said Duke issued a request for proposals (RFP) that indicated the self-build option was the best deal available.

Meanwhile in North Carolina, “we do not see a market power issue” with Duke’s plan to buy roughly 700 MW of generating capacity owned by the North Carolina Eastern Municipal Power Agency (NCEMPA), he said. The North Carolina purchase price is roughly $1.2bn. Good expects a FERC filing to be made by the end of this month.

In South Carolina, Duke is making progress on regulatory approvals for the 750-MW W.S. Lee combined-cycle gas plant. The project planned in Anderson County, S.C., received its state certificate in May. Duke has already started buying long lead-time equipment for the plant.

Good talks solar, natural gas pipelines

In April, Duke and Piedmont Natural Gas (NYSE: PNY) announced plans for a major natural gas pipeline in North Carolina. The pipeline capacity would be at least 900 MCF/day.

Duke plans to take an ownership interest in the pipeline and hopes to see it completed by late 2018. Currently, North Carolina is served primarily by a single major wholesale interstate natural gas pipeline that runs through the state. When asked by an analyst, Good declined to say what percentage of ownership that Duke was seeking in the project.

On the renewable energy front, Duke is pleased with the strong response to a regulated solar RFP issued in the spring in North Carolina. The company is seeking about 300 MW through a mixture of power contracts and turnkey projects.

In addition, South Carolina has passed solar-related legislation. Duke is looking at the potential for 150 MW of solar power in South Carolina.

Good said that Duke recently marked the second anniversary of its merger with Progress Energy and said the combined company has already realized much of the promised cost savings.

Duke announced second quarter 2014 adjusted diluted EPS of $1.11, compared to 87 cents for second quarter 2013, and reported diluted EPS of 86 cents, compared to 48 cents for the same period last year.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.