Estimated cost of one Duke coal generator at Cliffside is $1.53B

 
By IEVA M. AUGSTUMS
AP Business Writer
Wednesday, March 21, 2007

 
CHARLOTTE, N.C. - Duke Energy Corp. estimated it would cost $1.53 billion to build a single coal-fired power unit at its Cliffside power plant in western North Carolina, the state Public Utilities Commission disclosed Wednesday.

Duke provided the estimate when seeking permission from the commission to build a pair of generators, estimated at $3 billion, at its Cliffside Steam Station. In a brief ruling issued in February, the commission said it would allow the Charlotte-based utility to build only one of the 800-megawatt coal-fired generators.

The commission included the cost estimate of building a single plant in its complete order, issued Wednesday.

Duke has until May 31 to file any special reports with the commission detailing any revisions to the cost estimate for the single unit. The company has said it didn't plan to decide whether to proceed with a smaller Cliffside project until it sees final cost estimates, which should be complete soon after the end of the first quarter.

"We put forward what we thought was the best proposal for our customers. Building two units at Cliffside brings economies of scale, which lowers the price, and helps meet demand by 2011 and after," company spokeswoman Paige Sheehan said. "The commission, however, felt that we met the standard for 800 megawatts, or only one unit."

In a confidential portion of a Jan. 19 hearing, Janice Hager, vice president of rates and regulatory affairs for Duke Energy Carolinas, testified the cost of building a single unit is $1.53 billion, plus $400 million in financing costs.

Duke Energy, with 2.2 million customers in the Carolinas, first sought a permit for two new Cliffside generators in May 2005, saying they would be the most reliable way of meeting increasing customer demand for electricity.

In North Carolina alone, Duke expects a 50 percent increase in demand from 2000 to 2030 due to new homes, new businesses and what the company's CEO Jim Rogers has called a "love affair with anything electronic."

Opponents argued _ and the company acknowledged _ the proposed project would lead to more carbon dioxide emissions, and complained that Duke Energy didn't fully consider adding capacity through conservation or renewable fuels, such as solar or wind.

In the final order, the commission said Duke has "many options" besides building a second Cliffside unit to achieve its desired energy capacity.

Duke's case for both plants was weakened further when the company said at the January hearing it might sell up to half the plant to a partner and create a regional energy plant. Hager denied that consideration of such a sale indicated a lack of need for both generators.

She testified, "it's just a matter of which units get dispatched when and at what rate," according to the utilities commission order.

The permission to build the single unit at the Cliffside Steam Station in Rutherford County is conditional on Duke retiring four of its existing five units there, as the new generator becomes operational.

One of the six commissioners, Robert V. Owen Jr., dissented and voted to reject the entire request.

"I do not dispute Duke's need for 800 megawatts of new generating capacity and I applaud the majority's decision to cut the 1600 megawatt request in half," Owen said. "But replacing, megawatt for megawatt, coal-fired generation with coal-fired generation, no matter how much cleaner the new generation, continues to contribute to the problem."

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On the Net:

N.C. Utilities Commission: http://www.ncuc.commerce.state.nc.us/index.htm

Duke Energy Corp.: http://www.duke-energy.com/

 

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