What’s Going on in the Power Supply World - Carolina Country
From H. Wayne Wilkins, CEO November 2017
From H. Wayne Wilkins, CEO
November 2017

Wilkins headshotIn order to cost-effectively maintain a power supply portfolio sufficient to meet the demand of our members, we must accurately predict and plan for future events. This can include local and regional matters, over which we have some level of control, but also national and even international financial and regulatory issues that directly impact our service territory.

Not too long ago, before the steady decline in natural gas prices brought about by improvements in technology and increased pipeline capacity, certain utilities started to embark upon the construction of nuclear power plants for the first time in decades. This second wave of nuclear plants, which followed the initial wave of the 1960s and 1970s, was seen as part of the answer to high gas prices, and as a way to reduce emission levels by reducing our reliance upon fossil fuels.

However, due to the recent bankruptcy of Westinghouse, which was the main contractor on two significant new nuclear projects here in the Southeast, and with the decline in gas prices and other economic events, these projects are being reconsidered or, in some cases, abandoned altogether despite the expenditure of billions of dollars. This type of uncertainty can arise quickly, and it directly affects our future planning and the cost of ensuring that we meet our members’ long-term energy and capacity needs.

The regulatory and legal climate also impact our planning and, in turn, our costs. Two years ago, the U.S. Environmental Protection Agency (EPA) promulgated new rules and standards, known as the Clean Power Plan, that were designed to reduce carbon emissions from power plants.

The industry reeled for several months while it reacted to and analyzed the proposed rules and standards, and attempted to determine how best to cost-effectively comply. In some cases, utilities feared they would have to shut down coal plants that still had many years of useful life remaining. For others, it was unclear whether the emissions targets were achievable at any cost. It now appears that the Clean Power Plan may never become effective, but it serves as a cautionary tale as to how quickly changes in regulations can impact our planning.

EnergyUnited certainly supports increased use of renewable energy and the beneficial tax and regulatory structure in North Carolina that has led to a proliferation of solar generation throughout the state. However, solar power is not always available, and therefore as a capacity resource it is not as dependable as one which can be dispatched to operate 24/7.

While solar energy is an important part of a diverse resource mix, it doesn’t necessarily reduce the amount of capacity we must be prepared to provide to our members on a moment’s notice as demand increases.

Perhaps the cost-savings equation with solar, and other renewable sources of energy such as wind, will improve with the advancement of energy storage technologies. Until that time, we will continue to monitor these developments and, as always, strive to cost-effectively provide safe, reliable and environmentally friendly power to our members.

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