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Group issues report blasting Duke Energy for nearly $12B in 'failed' projects

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Under a rate case approved by Indiana regulators in late June, cost recovery for Duke Energy Indiana's 618-MW Edwardsport coal gasification power plant moves into base rates and will no longer be tracked through a rider.
Source: Duke Energy Corp.

An environmental watchdog has released a new report that criticizes Duke Energy Corp. for nearly $12 billion in "failed" natural gas and nuclear projects, while calling on policymakers to require the investor-owned utility to tie its capital-intensive investments to shareholders, not ratepayers.

The Environmental Working Group, or EWG, released its scathing report less than two months after the decision by Duke Energy and Dominion Energy Inc. to cancel the $8 billion Atlantic Coast natural gas pipeline project. Duke Energy also held a minority stake in the scrapped Constitution Pipeline Co. LLC project in the Northeast.

EWG, which is part of the broader Duke Energy Accountability Coalition launched in May, noted in its Aug. 31 report that Duke Energy and project partners have shut down natural gas pipelines and nuclear plants totaling $11.6 billion since 2013.

"EWG's analysis estimates that Duke's share of losses from those failures is more than $4.3 billion," the group wrote in its report. "That's not counting the $3.5 billion cost — $2 billion more than projected — of its coal-to-gas plant in Edwardsport, Ind., which has been plagued by scandal and failed to deliver affordable and efficient electricity."

The Indiana Utility Regulatory Commission in late June approved a two-step, $146 million increase for Duke Energy Indiana LLC that "transitions the cost recovery" for the utility's controversial 618-MW Edwardsport integrated gasification combined-cycle power plant into base rates.

"Like the Atlantic Coast Pipeline, Edwardsport wasn't needed. Two years before it opened, the amount of wind power in Indiana was about three times Edwardsport's capacity," EWG wrote in its report.

Duke Energy Indiana reached settlement agreements in 2016 and 2018 laying out how much ratepayers should be charged for the more than $3 billion project, given delays and technical difficulties during its startup.

The commission approved a cost cap of $2.651 billion in 2016 to be recovered through retail rates.

"Regulators in other states in Duke's vast service territory have allowed the company to stick ratepayers with an additional $2.6 billion for other failed plants," EWG wrote, pointing to cost recovery for the retired Crystal River and canceled Levy nuclear plants in Florida, as well as the William States Lee III Nuclear Station in South Carolina.

The group also pointed out that Duke Energy is recovering nearly $800 million from customers in North Carolina for its coal ash management, while eventually seeking to recover $8 billion for coal ash pond closures.

"To drag Duke and other utilities into the clean energy future, politicians and regulators must disrupt the monopoly model that has ceded control of energy to profit-first corporations," EWG said in an Aug. 31 news release. "Electricity rates should be tied to efforts to increase efficiency and promote renewables like rooftop and community solar — both of which Duke has fought to deny the captive ratepayers in its vast expansive service area. And stockholders, not ratepayers, should bear the costs and risks of big capital projects."

After ending the development of the Atlantic Coast natural gas pipeline project, Duke Energy said it will funnel capital toward its gas distribution business, renewables and grid improvements.

Duke Energy said it expects an approximately $2 billion to $2.5 billion pretax hit to 2020 earnings as a result of the cancellation but is sticking with its $56 billion capital plan for 2020 to 2024.

"[T]he investments really center around clean generation, the energy delivery system and natural gas infrastructure, all of which are intended to improve our customers' experience," Duke Energy Chairman, President and CEO Lynn Good said when the company unveiled its plan in February.

Duke Energy has said it plans to bring 16,000 MW of solar, wind, biomass online by 2025 to help hit its target to achieve net-zero carbon emissions by 2050.

The company will file a new integrated resource plan in the Carolinas this week that analyzes the retirement of its coal fleet within the next decade and potential investments in offshore wind resources and nuclear technology to further reduce carbon emissions.

"After we've spent the last several months engaging with more than 200 various stakeholders on our integrated resource planning efforts in the Carolinas, it's disappointing to see this group continue to send out false reports rather than rolling up their sleeves and working together to benefit customers," Duke Energy spokesman Neil Nissan said in an Aug. 31 email. "The fact is that for more than a decade, we've been leading the charge to a cleaner energy future and reducing emissions. And moving forward, no company is moving faster and doing more to deliver cleaner energy than us. Hopefully this group will start to contribute meaningful dialogue like other stakeholder groups and leave the cynical stunts behind."