Duke Energy’s latest long-term plans for the Carolinas show the company expects power demand to grow more slowly than previously projected. But plans still call for building more new generation than it did a year ago.
Critics contend Duke (NYSE:DUK) manipulated the calculation of how much reserve power it will need over the next 15 years to justify unnecessary plant construction. Charlotte-based Duke contends the larger reserves are necessary.
The latest projections are included in the Integrated Resource Plan for Duke’s two Carolinas utilities. The IRP is a report submitted annually to regulators in both states to lay out, in a general way, what the utilities see as their needs and expectations for power supply over the coming 15 years.
Utilities are required to have reserve margins in their power supply to ensure power is available in case of unexpected outages. In the Carolinas, utilities determine those margins, but their calculations must be approved by the N.C. Utilities Commission and the S.C. Public Service Commission.
For 2015, Duke Energy Carolinas and Duke Energy Progress have proposed reserve margins of 17%. That is up from 14.5% in 2014.
“Demand is down, and we’ve complained for some time that there is a glut of juice available in the Southeast,” he says. “What better way to claim under these circumstances that you still need to build new plants than to inflate the reserves needed and claim you need a boost in standby power.”
Duke spokesman Randy Wheeless says there is no manipulation. The two Duke utilities commissioned a new study of reserve margins that showed the need for additional capacity.
One key consideration, he says, is that the utilities now find themselves in what had once been the unusual situation for Southeast utilities of hitting the highest demand of the year in the winter months rather than in the summer months.
“When you start peaking in the winter, some resources for responding to those peaks are not available as they would be in the summer,” he says.