Duke Energy Wants to Quit Coal Early, But Regulators Say No

(Bloomberg) -- Duke Energy Corp. planned to close its last six coal power plants in the Carolinas by 2030 to accelerate the company’s carbon-cutting goals. South Carolina regulators said no—ordering the US utility to keep the plants open longer.

The decision sets up a showdown as Duke Energy appeals a regulatory response that threatens the company’s preferred plan to speed up closures of coal-fired plants. The utility needs approval from both North Carolina and South Carolina to pursue its ambitions to shutter plants up to a decade earlier—raising the risk of regulatory divergence between the states. The Public Service Commission of South Carolina, which oversees public utilities in the state, hasn’t explained why it wants the plants to operate longer. Commissioners can’t answer questions about matters before them, a representative said.

“We’re disappointed with the Commission mandating the least proactive path for moving away from coal generation, because it carries unnecessary risks for customers and our system,” Duke Energy representative Erin Culbert said in an email. The risks include getting enough coal and maintaining access to capital given the premium investors place on decarbonization.

Duke Energy, the second-biggest US electric utility by market value, asked the South Carolina regulator to rethink its decision. Six groups including the Sierra Club and Natural Resources Defense Council also petitioned the regulator to reconsider earlier this month. The regulator scheduled a May 31 meeting to consider the request.

The rift between Duke Energy and regulators is an example of the difficulties that can emerge when trying to transform a global energy system dominated by fossil fuels into one that embraces less polluting power sources, with decarbonization, cost and reliability sometimes coming into conflict. The Carolinas disconnect is rare: utilities and regulators often agree on the best path forward, with clean energy advocates pushing for coal retirements and more renewable generation.

“We don't know where that choice came from,” Kate Mixson, a lawyer with the Southern Environmental Law Center, said in an interview on South Carolina’s decision. “It felt like the commission was playing another sport.”

A possible explanation for the decision is cost: Duke’s preferred plan is projected to cost about $83 billion while an alternate plan chosen by South Carolina’s commission would cost about $79 billion. Duke’s favored path also includes building onshore wind and adding about 50% more solar energy by 2035.

Meanwhile, North Carolina’s regulator is on the fence on accelerated coal plant closures, saying such plans need more study. The position comes after state lawmakers passed a law last year that requires a 70% reduction in carbon emissions by 2030. President Joe Biden has set a US goal of 100% carbon pollution-free electricity by 2035.

“We would like to see consistency between the states,” John Burns, lawyer for Carolinas Clean Energy Business Association, said in an interview. He called the decision by South Carolina regulators a surprise. “I don't envy [Duke’s] job if they have to deal with two different regulators going in different directions.”

(Corrects how much the competing plans would cost in the seventh paragraph.)

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