Neighboring states' nuclear debacles loom over North Carolina bill

Yahoo

06-05-2025

Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience.
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience.
Yahoo is using AI to generate takeaways from this article. This means the info may not always match what's in the article. Reporting mistakes helps us improve the experience. Generate Key Takeaways
Proposed legislation in North Carolina that would allow utility Duke Energy to charge customers for power plants still under construction is taking heat from opponents across the political spectrum, in part because similar schemes have left residents in neighboring states holding the bag for pricey abandoned nuclear projects.
The failed expansion of South Carolina's V.C. Summer nuclear plant is the most notable example. After nearly a decade of ballooning costs and construction delays, utilities gave up on the project in 2017, and consumers are still paying down a $9 billion price tag.
'The pay-up-front provision was a key factor leading to the catastrophe on the customer side,' South Carolina Rep. Nathan Ballentine, a Republican, wrote in a recent opinion piece for The Butner-Creedmoor News, a North Carolina outlet.
'We learned the hard way that this type of provision benefits only the utility, while the cost of its failure is borne by every hardworking family and business that pay their electric bills,' Ballentine says in the April 29 article. 'Let the experience that rocked South Carolina be a cautionary tale for North Carolina's Senate Bill 261.'
Ballentine isn't the only conservative sounding the alarm about SB 261. National nonprofit Conservatives for a Clean Energy Future released a poll last week in which 650 likely North Carolina voters were asked if they supported or opposed legislation to allow utilities to charge residents for up-front plant construction costs. More than three-fourths said they opposed, including 75% of Republicans, 79% of Democrats, and 77% of unaffiliated voters.
'North Carolina voters of every kind oppose putting consumers on the hook for risky spending on power plants that might never produce a single watt of energy,' Dee Stewart, whose political consulting firm conducted the poll, said in a news release. 'You don't buy a house until it's built, and you don't pay for a car before it's available. … Lawmakers would be wise to reject this ill-advised proposal.'
Meanwhile, clean energy advocates believe the bill would likely sweeten Duke's appetite for large new gas plants more so than nuclear ones. That could make the legislation, which also aims to erase the utility's obligation to cut carbon emissions by 2030, a double whammy for climate progress.
SB 261 has passed the Senate and is now in the House committee on rules and operations. The text of the bill was also inserted into the Senate's version of the state budget, which awaits action in the House Appropriations Committee.
How North Carolina pays for power plants today
A basic tenet of the utility regulatory compact is that shareholders bear the risk and cost of power plant construction. In exchange, these investors are guaranteed a customer base that repays them, plus profit, once facilities are producing electricity.
This dynamic has long disfavored nuclear power, with its protracted construction timelines, astronomical costs, and episodic concerns about safety. Especially since the fracking boom began some two decades ago, Wall Street has judged natural gas the better bet.
This century, only two new nuclear projects have made it across the finish line in the U.S. The most recent, Southern Co.'s Vogtle plant in Georgia, came fully online last year, with the utility finishing the second of two reactors that were about seven years behind schedule and $16 billion over budget.
Vogtle was made possible partly by policymakers who scrambled the regulatory compact, allowing investors to recoup their outlays as the plant was under construction and to shift the burden of cost overruns to consumers. Thanks to similar policies in other states, the Southeast is dotted with examples of customers still paying for nuclear forays that never came to fruition.
North Carolina already allows Duke to recoup ongoing construction costs for plants but only after regulators scrutinize those plans via a general rate case — a heavily-litigated and time-consuming process that currently occurs about every three years.
By contrast, SB 261 would allow Duke to seek rate increases as often as every 12 months to recoup outlays for building 'baseload' plants, which can provide electricity around the clock. While regulators would still have to ensure the charges were prudent, they would do so without a full picture of the utility's finances. Many experts believe such 'single-issue ratemaking' can be worse for consumers than the holistic approach.
Legislation could harm state's nuclear energy aspirations
Duke has no plans for a large, Vogtle-style nuclear reactor right now, and the earliest it envisions bringing a small modular reactor online is in 2035, according to its latest long-range plans. That's part of why Justin Somelofske, senior regulatory counsel for the North Carolina Sustainable Energy Association, said the construction-cost provision will likely benefit plans to build gas plants in the near term.
As power demand grows nationwide, Duke and other utilities are all trying to build more gas plants, Somelofske said. That 'is going to constrain the supply chain and increase the demand for these turbines and units and run up costs.'
Duke could be eager to see those costs recouped annually rather than waiting for a general rate case. The effect, said Somelofske, is that SB 261 'could pave the way for more carbon-based resources powering our grid.'
Then there is the other part of the bill, which would erase the 2030 deadline by which Duke must cut its carbon pollution 70% from 2005 levels. Regulators have already allowed the company to plan to miss the date by about five years. It must still reach carbon neutrality by 2050, but without a midway target, advocates believe Duke is likely to build gas plants to meet baseload needs.
In modeling the bill's impact, North Carolina's consumer advocacy agency, Public Staff, estimated that Duke would build half as much nuclear energy by 2035 as the utility recently projected in its long-term plan, according to Tyler Norris, a Duke University doctoral fellow who previously worked as a solar developer and as a special advisor at the U.S. Department of Energy.
'Repealing the interim standard significantly weakens the rationale for nuclear deployment in the 2030s,' Norris wrote in March in his Power & Policy newsletter.
Advocates say it also decreases the rationale for building solar, wind, and other renewables. 'What the interim target does,' said Somelofske, 'is require the utility to scrutinize all the best available technologies that can be deployed in the near term and interim term and not wait until we're past the point of no return' on climate change and meeting the 2050 deadline.
Still, arguments about the climate crisis aren't likely to carry the day in a General Assembly where Republicans are just one vote shy of a supermajority and the ability to override vetoes from Gov. Josh Stein, a Democrat. The fate of SB 261 will likely hinge on the level of support for the cost-recovery provision, and even some of the bill's backers want to see that section amended.
Kevin Martin, head of the manufacturing and industry trade group Carolina Utility Customers Association, previously told Canary Media that SB 261 needs 'more guardrails' to protect customers, although he also said his group is 'directionally supportive' of the bill.
Testifying on behalf of the conservative John Locke Foundation, lobbyist Drew Heath told the Senate Agriculture, Energy, and Environment Committee that his organization supports the bill, but it wants 'clarification' on the section allowing Duke to charge customers for the up-front cost of power plants.
'We have questions about the cost-recovery system,' Jon Sanders, director of the foundation's Center for Food, Power, and Life, told Canary Media. 'We are curious what may happen to that aspect in House debates.'