by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor, John Locke Foundation
Background: At year’s end 2022, the North Carolina Utilities Commission (NCUC) released an initial “Carbon Plan” for future electricity generation in North Carolina. The NCUC issued this plan in response to a law passed in late 2021, House Bill 951. That law took Gov. Roy Cooper’ arbitrary, aspirational goal in certain executive orders to reduce the state’s carbon dioxide (CO2) emissions from electricity generation by 70 percent from 2005 levels around 2030 (and then to net zero by 2050).
What the law does that the governor would not, however, is institute extremely important protections for the grid and for electricity consumers.
Those protections in law include the following requirements that a plan approved by the NCUC must meet (emphasis added):
• be “reasonable“
• set forth the “least cost path … to achieve compliance”
• comply with “current law and practice” regarding “least cost planning of generation“
• “maintain or improve upon the adequacy and reliability of the existing grid”
They are in keeping with North Carolina’s longtime protections in law. Recognizing that “the rates, services and operations” of electric power utilities are “affected with the public interest,” the law makes it state policy to require “adequate, reliable and economical utility service to all of the citizens and residents of the State” as well as “the least cost mix of generation and demand-reduction measures which is achievable.”
The State of North Carolina has long recognized that least-cost, reliable electricity at the flip of a switch is in the public interest. By seeking the “reasonable,” “least cost path” to emissions reductions with “least cost planning of generation” that would “maintain and improve upon the reliability of the grid,” the text of the law seeking to reduce North Carolina’s electricity-based CO2 emissions recognizes the very same ideal.
The previous brief discussed the plan’s mandates to retain existing nuclear power plants (absolutely critical for reliable, least-cost, and zero-emissions generation), look into adding more nuclear (the most sensible way to add new zero-emission generation that maintains or improves grid reliability while keeping the costs of adding new generation reasonable and lower), and also to retire all coal plants by 2035 (which the emissions-reductions goals make necessary but which also forecloses any possibility of breakthrough in carbon-capture technology).
This brief examines the plan’s mandates regarding natural gas and focuses on whether they would help keep the plan within the law’s all-important parameters.
Adding more baseload (combined cycle, or CC) and peaker (combustion turbine, or CT) natural gas generation is very important since the plan aims to retire all coal-fired generation by 2035. It would remove over 9,000 megawatts (MWs) of power generation, which is one-fourth of North Carolina’s generation capacity. Coal is a baseload generation source.
Electricity is consumed when it is produced, which is what makes baseload generation so vital. Power system engineers can do many things, but they cannot cause families and businesses to funnel their daily electricity needs within the few, variable, and unpredictable hours that weather-dependent resources such as solar and wind are able to produce. People’s electricity needs are variable throughout the day and week as well, and especially in the summer and winter they are affected by temperature extremes.
With so much baseload coal to be replaced, the relatively small amounts of CC and CT natural gas production the NCUC authorized Duke to plan for — only 1,200 MWs of CC and 800 MWs of CT — are perplexing. The NCUC’s decision was, however, heavily influenced by bad decisions at higher levels of government.
Looming over the discussion of natural gas production is, as stated in the plan, that North Carolina is “currently deficient of interstate pipeline firm transportation capacity due to the cancellation of Atlantic Coast Pipeline (ACP).” Furthermore, “the major interstate pipeline supplying the Carolinas is fully subscribed, and during the coldest winter days, the gas demand for electricity generation coincides with peak Local Distribution Company demand.”
The ACP was a major pipeline project of Duke along with Dominion Energy in Virginia, which would have brought natural gas supplies from West Virginia into those states. It was canceled in 2020 after years of weathering expensive environmental lawsuits, withheld and slow-walked permits, and other government shenanigans that caused it to become too costly to build. As to the latter, Carolina Journal’s Don Carrington provided a timeline of the ACP’s opponents’ machinations with the administration of Gov. Roy Cooper concerning the pipeline.
Another pipeline project that would traverse West Virginia and Virginia and make additional supplies available to North Carolina, the Mountain Valley Pipeline (MVP), has likewise been beset with court challenges and permit delays. MVP is about 94 percent completed and was originally supposed to be finished by 2020, but it now has a completion date of 2026.
Current supply deficiencies of natural gas are especially problematic for achieving the plan’s CO2 emissions reduction within the law’s strictures, not only setting the “least-cost path” to compliance, but more importantly ensuring the “adequacy and reliability of the grid.” As Duke testified before the commission, “delay of the new natural gas-fired resources would limit its ability to retire its existing coal units.”
The NCUC’s plan discussed the importance of natural gas as a “bridge to integrate more renewables and batteries” until sufficient zero-emissions resources “are available and can replace at scale what gas contributes to the system.” The idea of lower-emissions natural gas as the “bridge fuel” from high-emissions coal to zero-emissions generation and storage stretches back to at least the Obama administration (Pres. Barack Obama even used it in his 2014 State of the Union address). Pres. Joe Biden and his administration, however, have fought domestic natural gas from exploration to pipelines.
New nuclear plants would, as previously discussed, provide for reliable, zero-emissions, baseload generation. They take much longer to build, however, which the law acknowledged by allowing for an extension in reaching the interim emissions-reduction goal “in the event the Commission authorizes construction of a nuclear facility or wind energy facility that would require additional time for completion due to technical, legal, logistical, or other factors beyond the control of the electric public utility, or in the event necessary to maintain the adequacy and reliability of the existing grid.”
The law and the NCUC plan need natural gas as a bridge fuel as coal plants are retired in order to keep the grid reliable while staying on a least-cost path of lowering emissions from electricity generation. New natural gas CC and CT resources in the near term are, as stated in the plan, “essential to achieving the Interim Target [70 percent reduction of CO2 emissions], while maintaining or improving reliability, and doing so along a least cost path.” Given, however, the “significant uncertainty” of future access to additional natural gas resources “if the MVP is never completed or not timely completed,” the NCUC plan limited the amount of new natural gas capacity to only 2,000 MWs of CC and CT generation.
It’s not enough. North Carolinians therefore need the Biden administration and the Cooper administration to drop their self-defeating opposition to pipeline projects.
The next briefs will examine the NCUC plan’s mandates involving solar and storage and also onshore and offshore wind, plus what the plan has to say about their potential effects on electricity rates and jobs.