Duke Energy says it expects the cost of generating power to moderate over the next decade despite soaring demand for electricity.
Several factors are responsible for the apparent contradiction, including shifting federal and state policies about the best options for producing electricity.
Today, the Charlotte-based utility released its biennial “Carolinas Resource Plan” that provides insight into how it expects to provide electricity for its nearly 4 million N.C. customers over the next decade. The N.C. Utilities Commission, which regulates the utility, will receive comments on the required plan from a variety of groups over the next three months. The commission will then make a ruling late next year.
Duke now expects the plan will cause average customer bills to increase by 2.1% annually over the next decade. That is about half of what Duke projected two years ago.
The average customer is now likely to pay about $30 more per month for electricity due to the impact of the plan, versus $54 per month more according to previous projections, says Kendal Bowman, Duke’s North Carolina president. Separately, the company also expects to seek rate increases tied to improving its transmission system to protect against natural disasters, along with fluctuating fuel prices.
The big picture for both Duke and much of the U.S. electric utility industry is that overall rates have risen 30% or more over the past three years, after being relatively flat between 2012-22.
Meanwhile, the company expects customer energy needs to grow eight times as fast over the next 15 years as occurred over the prior 15. That is double what the company projected in 2023, mostly because the state is attracting datacenters that require vast amounts of power to serve artificial intelligence computing. Google, Amazon and Meta are among the companies that are expanding N.C. operations.
“We’re trying to do everything we can to keep rates as low as possible while doing our part to keep the Carolinas open for business,” Bowman says. This year, companies have announced more than 25,000 jobs and $19 billion in investment in the state, highlighted by Amazon’s $10 billion plan for data centers near Rockingham in Richmond County.
In 2023, about 41% of North Carolina electricity generation came from natural gas-fired plants, 29% from nuclear and about 15% from both coal-fired and renewable sources, according to the U.S. Energy Information Association. Duke accounts for most of that generation.
Duke’s report suggests an increasing reliance on nuclear power, and the company operates one of the largest U.S. nuclear power operations. But it will take at least a decade for that new generation to come online because of regulatory and technology issues, along with a potential shortage of qualified nuclear workers, Bowman says.
The utility should prioritize nuclear power expansion as the best long-term source to meet greater baseload demand, says Kevin Martin, CEO of the Carolina Utility Customers Association, which represents commercial and industrial companies. “We know we are going to need electric power for the next 100 years. We need something that is efficient, carbon free and will run for generations.”
Duke is targeting 2037 as the year it expects to add new nuclear generation at either its Belews Creek site near Winston-Salem or the W.S. Lee site in Cherokee County, South Carolina. The type of nuclear technology and timing is evolving, officials said. “A lot of things are rowing in the same direction,” Bowman says. “It would be great if we could get things on track earlier… We are taking what we believe is an executable approach.”
While environmental groups favor a greater focus on solar, wind and other alternative energies, the Trump Administration supports greater reliance on fossil fuels. Duke’s plans appear responsive to federal efforts to end subsidies for solar and wind power. The GOP-led state legislature passed Senate Bill 266 earlier this year, which makes regulatory changes that are also affecting Duke’s strategy.
The company says it wants to extend the life of its Belews Creek, Cliffside and Marshall coal beyond the previous goal of plant retirements by 2035. The company now expects to have coal-fired production at Belews Creek and Cliffside until 2040. It made a similar move in Indiana, extending the life of the second-largest U.S. coal-fired plant by three years to 2038. President Donald Trump has shown outspoken support for the coal industry, while environmentalists have decried its harmful impacts for decades.
Regarding natural gas, Duke is planning expansions of plants in Catawba, Person, Rowan and Richmond counties, and a new site in Anderson County, South Carolina. Other locations for additional plants haven’t been announced.
A large majority of new energy production in North Carolina has come from solar power over the past decade, but that expansion is moderating. Duke now expects about 7,900 megawatts will be added via solar through 2033, down from 8,200 megawatts projected through 2031 in the previous plan.
Duke’s planning envisions “a very diverse energy mix” and making incremental changes that balance affordability and reliability, says Glen Snider, managing director of Integrated Resource Planning. The company is trying to accelerate its new solar projects before tax credits expire at the end of the year, he notes. The “pace of adoption [of solar]” will continue at a measured pace, he notes, and the company expects it to remain an important factor.
As for wind, Duke had projected adding 3,600 megawatts by 2035 in its previous report. Now, the utility doesn’t foresee any wind projects coming on line through 2040.
The company is also stepping back through 2040 from plans to expand its pumped storage hydro project, which involve massive amounts of descending water that power turbines to create electricity. The company had projected adding 1,834 megawatts by 2034 at is Oconee County, South Carolina pumped storage site. One megawatt can typically provide enough power for several hundred homes for a year.
Pulling back on expansion of renewable power sources is shortsighted because of their increasing economic advantages, which is why they have accounted for more than 90% of the industry’s growth in recent years, says Matt Abele, executive director of the N.C. Sustainable Energy Association. The group plans to comment on the Duke resource plan.
“We have to be adding everything at our disposable,” he says. “Solar is a resource that can be developed in a short multiyear timeline versus a multidecade one.”
A key issue facing the commission will be determining how to “insulate ratepayers from having to bear the brunt of the costs” from the data center-inspired demand boom, Abele adds.
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.