North Carolina

Link to Testimony and Exhibits

Conclusions and Recommendations

• Better balancing of cost and reliability in Duke Energy’s resource adequacy criteria could avoid tens of millions of dollars in annual costs to ratepayers.

• Addressing historic winter outages and risk could significantly reduce the need to increase the reserve margin and costs, including improving fleet performance, more accurate short-term load forecasting, more realistic assumptions about islanding and neighbor assistance, modeling the impacts of actual and projected reserve margin levels of neighbors, and correcting for recent gas power plant and pipeline failures.

• Consider options for Duke Energy to maintain same level of reliability at lower reserve margin and lower cost to ratepayers, including using the Cost of New Entry (CONE) approach to calculate the cost of resource adequacy requirements, sharing capacity with non-RTO neighbors, importing available power, joining an RTO to reduce costs and curtailment of non-firm purchases, creating a regional resource adequacy sharing program like WRAP at a scale larger than VACAR, make supply-side payments to demand-side resources, and / or moving to all-source competitive procurement consistent with state law.

• Explained how adding more gas to a system where gas is repeatedly experiencing outages during winter peak may contribute less to reliability than Duke Energy assumes and recommended better accounting for how all resources prone to outages could improve resource accreditation and more accurate planning for reliability during extreme peaks.

• Natural gas fuel price volatility is returning to historic levels during a period where Duke Energy proposes generating an unprecedented 40% of electricity from natural gas, exposing ratepayers to many billions of dollars in cost risk.

• Duke Energy underestimated natural gas market fundamentals by using a low natural gas fuel price forecast and did not include the cost of increased regional and global gas market volatility in its planning assumptions.

• Improving accuracy of gas price forecasts and including a cost for increase fuel volatility on top of higher fuel prices would make Duke Energy’s preferred resource plan more expensive than other modeled portfolios, necessitating greater diversification to lower risk non-fuel supply, demand, and transmission options.

Rulemaking Proceeding Related to Biennial Consolidated Carbon Plan

New Energy Economics presented four general priorities for the CPIRP Rule:

• Move toward all source competitive solicitations for most or all of CPIRP approved resources.

• Ensure federal funding and policies are included in CPIRP rules and plans.

• Incorporate improved reliability and resource adequacy methods in rules and plans.

• Integrate resource planning and transmission planning to drive proactive regional transmission planning and market reforms.

NC CPIRP Rule Comments