WASHINGTON – During a second-quarter earnings call on Monday, Duke Energy executives told Wall Street analysts they don’t see offshore wind as a viable source of energy for at least another 10 years or more.
Michael Lapides, an analyst with Goldman Sachs, asked if offshore wind will play a part in Duke’s energy mix for the Carolinas going forward, and how it will factor into the utility’s investment strategy.
“I would think about it [offshore wind] as something that probably has greater potential toward the end of the next decade,” said Duke’s President and CEO Lynn Good.
The comments by Good confirm suspicions by clean energy advocates that Duke’s decision to put off investments in offshore wind is a scheme to avoid having its nuclear and natural gas plants in the Carolinas become uneconomic stranded assets that will result in billions of squandered ratepayer dollars. In other words, much of Duke’s added natural gas capacity were potential stranded assets as they were being built.
“Clinging to dirty and dangerous electricity generation when there are safe, cheap and renewable alternatives like wind is a business decision only a monopoly like Duke would make,” said EWG President Ken Cook. “The short-sighted posture by Duke to ignore wind power should anger long-term investors, ratepayers and state regulators, all of whom should insist Duke alter course and embrace renewables as the future of energy electricity.”
There was a brief moratorium for offshore wind development off the coast of North Carolina, but that ended in 2019, freeing up Duke to pursue wind initiatives throughout the Carolinas. Duke announced an offshore wind power pilot program more than a decade ago but quickly abandoned the project in favor of investments in natural gas plants and pipelines.
Offshore wind potential in the Carolinas is enormous. According to the most recent data from the National Renewable Energy Lab, the technical potential for offshore wind in depths less than 100 feet is enough to generate twice the power currently generated by North and South Carolina combined. Building out just a portion of the states’ technical potential over the next 10 years would drastically alter Duke’s business plan, including the ability to begin shuttering nuclear units in the near term.
During the Q&A portion of the earnings call, Good also lamented the possibility that Duke might be required to take responsibility for the entire cleanup cost of its coal ash pollution in North Carolina.
Duke reached a partial settlement with regulatory staff in its current rate case in the Carolinas that doesn’t include cost recovery for coal ash cleanup. Duke’s two affiliates, Duke Energy Carolinas and Duke Energy Progress, are requesting more than $600 million in cleanup cost recovery, plus profit on those expenditures.
Earlier this year, North Carolina regulators awarded Dominion Energy’s subsidiary Dominion Energy North Carolina cost recovery for its coal ash cleanups to date but did not include a profit on the cleanup costs. And “… if we were to receive an order consistent with Dominion,” Good told analysts on the call, “and absent any other provisions within the order that would be credit supportive, our balance sheet would be weakened.”
Furthermore, investment analysts at Moody’s said this would reduce Duke’s cash flow and hurt its credit rating, leading to lower earnings for stockholders and making Duke a riskier investment.
At an August 24 hearing, Duke will attempt to convince regulators that it deserves not only to recover its coal ash cleanup costs but also to earn a return on what should be its environmental liability, not a ratepayer responsibility.
For decades, Duke has dumped coal ash, a byproduct from its coal-fired power plants that contains highly toxic chemicals like mercury, into unlined pits near drinking water sources. Under a deal reached in January between Duke and North Carolina, the utility agreed to dig up 80 million tons of coal ash and move it to lined pits away from rivers and lakes. Left unsettled, though, is whether Duke’s shareholders or ratepayers will pay the billions in cleanup costs, as reported by the Charlotte Observer.
“We teach children to take responsibility for the messes they make,” said Cook. “The same rule should apply to polluters. Why should ratepayers be forced to pay the cleanup cost for the toxic coal ash contamination Duke dumped near drinking water sources in North Carolina?”
Duke Energy is the nation’s largest investor-owned electric utility, serving 7.7 million customers in the Carolinas, Florida, Indiana, Ohio and Kentucky.
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