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Duke Energy unlikely to retire coal capacity in remote North Carolina

Philadelphia (Platts)--10 Jun 2014 443 pm EDT/2043 GMT


The lack of natural gas pipeline capacity to Asheville, North Carolina, and the need to maintain generating capacity in the remote area make it unlikely Duke Energy Progress will retire either of its two Asheville coal units or convert them to burn natural gas anytime soon, a utility official said Tuesday.

Jason Walls, district manager for DEP's Asheville region, said in an interview that while DEP and its sister utility, Duke Energy Carolinas, have been able to cut coal use and shift to gas-fired generation and renewables, many of the remaining coal units provide real benefits, including fuel diversity and reliable baseload power.

Walls said the Asheville region in mountainous western North Carolina is winter-peaking and somewhat isolated from the rest of the DEP and DEC grids.

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"When you look at the natural gas supply situation in the mountains, there is simply not enough pipeline capacity to serve both home heating needs and peak electric generation needs" in the winter, Walls said. "We have to rely on coal and fuel oil" to generate much of the region's power on cold winter days and nights, he said.

DEP owns four fossil-fired units at its Asheville station: two coal units totaling 376 MW and two combustion turbines units totaling 324 MW capable of burning either natural gas or oil. Walls said that in the winter when most of Asheville's gas supply is used for residential and commercial heating, DEP stockpiles oil to help run the CTs.

He said that while DEP and DEC have been jointly dispatching their generation fleets since Duke Energy acquired Progress Energy in July 2012 and DEP's isolated Asheville region can and does receive power from DEC, transmission interconnections are limited and power that could be imported into Asheville is not sufficient to allow the utility to retire the coal units.

In response to the integrated resource plans DEP and DEC filed in October, to environmental groups -- the Sierra Club and the Southern Alliance for Clean Energy -- urged regulators to direct the utilities to study the possibility of retiring several more coal units.

The Sierra Club and SACE said the economic rationale for continuing the operation of 5,065 MW of 'scrubbed' coal-fired units at Duke Energy Carolinas and Duke Energy Progress unravels when the capital and operating costs associated with keeping the units in compliance with tightening regulations is factored in.

The groups said that in their power-planning analyses, DEP and DEC failed to include a total of about $7.7 billion in future environmental compliance costs and that skewed the IRPs to favor coal-fired generation over other alternatives.

The organizations also said DEP's Asheville coal units "will be more expensive to maintain than to replace with a [gas-fired] combined-cycle unit."

--Housley Carr, newsdesk@platts.com
--Edited by Jeff Barber, jeff.barber@platts.com



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