Duke Energy's 2025 integrated resource plan shows natural gas cost projections that are completely divorced from reality. They're using $4.50/MMBtu as their base case through 2025-2027, but the futures market is showing closer to $6.00/MMBtu. This is going to result in massive fuel cost adjustments that hit customers later. Anyone else reviewing their IRP filing? The capacity expansion modeling seems designed to justify more gas plants when renewables would be cheaper.
Duke Energy Carolinas 2025 fuel cost projections way off
Derek, I'm seeing the same thing here in Charlotte. Duke's fuel cost forecasting has been consistently low-balling gas prices for the past three years. Remember their 2019 projections? They said gas would stay under $3.50 and we hit $8.00 during the winter. Customers ended up paying an extra $340M in fuel adjustments that could have been avoided with better planning.
The renewable cost assumptions are even more problematic. Duke is using solar costs that are 25% higher than what we're seeing in actual PPAs here in Tennessee. They want to build more gas peakers instead of battery storage, but their cost comparison is rigged. A 100 MW battery system should cost around $125/kWh installed, not the $180/kWh they're showing in their analysis.
Holly, you're spot on about the battery costs. Duke's also not properly valuing the grid services that batteries can provide. They're treating them as simple peaking units when they can provide frequency regulation, voltage support, and transmission deferral benefits. The avoided cost calculation is way understated.
Down here in Georgia, we challenged Southern Company on similar modeling issues in 2019. The key was getting access to their PROMOD runs and showing that their gas price forecasts were consistently below EIA projections. We saved clients $2.8M in avoided fuel costs by getting them to reconsider a proposed gas plant. Derek, have you requested Duke's modeling assumptions and input files?
Derek H, yes we've requested the PROMOD files but Duke is claiming trade secret protection on most of the inputs. Typical utility response - they want rate recovery for their investments but won't let anyone verify the economics. We're considering filing a motion to compel discovery through the NCUC.
I've been tracking Duke's fuel cost performance versus projections since 2015. Their forecasting error averages 35% low on gas costs and 20% high on renewable costs. It's almost like they have an institutional bias toward conventional generation. The NCUC staff has started pushing back on their methodology but not hard enough.
Terry brings up the institutional bias issue, which is huge. Duke makes money on building rate-based generation but not on purchased power agreements. Their economic analysis always seems to favor the option that increases their rate base, regardless of what's actually cheapest for customers.
The transmission cost allocation is another issue with Duke's IRP. They're proposing new gas plants in areas where the transmission system is constrained, which means customers will pay twice - once for the generation and again for the transmission upgrades needed to deliver the power. A distributed battery solution might avoid both costs.
Chris makes an excellent point about transmission costs. Duke's integrated planning process is supposed to consider these interactions, but their analysis treats generation and transmission as separate silos. We're seeing this same problem with their Western Carolinas modernization project.
Here in Kentucky, we dealt with similar issues when LG&E filed their 2020 IRP. The key was hiring our own consultant to run independent modeling with realistic cost assumptions. Cost us $75K but saved our industrial clients over $3M in avoided rate increases. Sometimes you have to fight modeling with modeling.
Jack, that's probably what we'll end up doing. The NCUC process allows for intervenor testimony, and we're thinking about retaining Synapse Energy or similar to do an independent economic analysis. Duke's IRP is going to drive billions in customer costs over the next decade - it's worth getting right.
Synapse is good - we used them for a TVA case in 2019. Make sure whoever you hire has experience with Duke's specific modeling platform. Different utilities use different assumptions for things like forced outage rates and heat rates, and you need someone who understands Duke's historical data.
This is a great discussion everyone. Derek, if you do end up intervening in Duke's IRP case, focus on the gas price forecasting methodology and the renewable cost assumptions. Those are your two strongest points based on what you've found. The NCUC has been more receptive to these challenges lately, especially after the 2021 winter storm showed how volatile gas prices can be.