NORTH CAROLINA — Energy consultants, attorneys, and environmentalists raised concerns Duke Energy’s carbon plan disproportionately benefits the utility’s shareholders ahead of next week’s hearings for the utility. Duke’s top shareholders are also the biggest investors in new proposed pipelines in North Carolina.
Expert witness hearings regarding Duke’s near-term and long-term energy plans begin Monday. Duke representatives, utility staff, and intervenors including the Environmental Defense Fund, the Southern Environmental Law Center, and NC WARN will testify before the Utilities Commission over the next few weeks.
H.B. 951, a 2021 state law, requires Duke to reach carbon neutrality by 2050 and reduce carbon dioxide emissions to 2005 levels by 2030. The company’s most recent plan, introduced in January, includes replacing coal with natural gas infrastructure as its largest energy source over the next decade. The NC Utilities Commission is currently reviewing the plan and expected to reject or approve it in November.
Duke’s near-term action plan includes:
- Increasing natural gas production by 8,925 MW by 2033
- Increasing solar energy by 6,460 megawatts by 2031
- Increasing battery storage by 2,700 MW by 2031
- Expanding hydroelectric storage by 1,834 MW by 2034
- Adding 600 MW of advanced nuclear power by 2035
Critics including Will Scott, the southeast climate and clean energy director of the Environmental Defense Fund, argue the plan should put greater emphasis on offshore wind, solar, and battery storage. Scott said technological improvements and federal incentives will make renewables a cleaner and more affordable long-term energy source and allow the utility to meet clean energy transition timelines put forward in H.B. 951.
However, he told PCD the regulatory structure determining Duke’s returns incentivizes large new gas infrastructure projects that benefit shareholders above ratepayers. The Utilities Commission sets a guaranteed “return on equity” during Duke’s rate increase approvals — generally around 10% — which ensures returns for capital invested in its projects.
“It’s a fair question to ask if we need to make regulatory changes to ensure shareholders are appropriately bearing the risk of investments,” he said.
Under H.B. 951, Duke is allowed to fully own any resource except utility scale solar and solar plus storage, providing an incentive to focus on projects it can charge to its rate base. Duke also lobbied for the bill to include multi-year rate-increase requests, providing greater certainty to shareholders.
Tyler Norris — the former vice president of Cypress Creek Renewables and previous expert witness in utility hearings — argues Duke put artificial caps on battery storage and solar resource interconnection despite rapid growth in the battery sector. Wilmington city councilmember Salette Andrews cited the use of solar panels and battery storage at her home to argue it should have a larger focus in Duke’s carbon plan.
“I know it’s not financially feasible for everybody,” she told PCD Wednesday. “But I know who it is feasible for and that’s Duke Energy. They have the power to go in that direction.”
Beyond Coal Campaign manager Mikaela Curry raised a similar argument. She noted last year’s 11.3% rate hike was caused by gas price fluctuations and argued renewables would provide greater long-term stability.
“Methane gas power plants and pipelines have proven to be expensive, unreliable, and pose serious risks to our communities and the climate,” she said. “These expanded fossil fuel buildouts may give shareholders a large check to cash, but this tunnel vision approach leaves ratepayers with sky-rocketing energy bills and communities suffering polluted air and water.”
In his expert witness testimony for nonprofit NC WARN, energy consultant Rao Konidena stated Duke is “most likely to propose transmission projects that greatly benefit its shareholders.”
Duke’s top shareholder is Vanguard Group Inc., which holds around 9% of its stock, followed by BlackRock Inc. at 7.3%.
Vanguard and BlackRock are also the top shareholders of companies that own pipelines Duke plans to use to fuel its proposed natural gas plants. They include the Williams Companies, the owner of Transco, as well as Equitrans Midstream Corporation and NextEra Energy, the majority owners of the Mountain Valley Pipeline joint venture.
In December 2023, Duke completed preliminary agreements to purchase gas from the proposed Mountain Valley Pipeline Southgate extension in Rockingham County to help fuel new infrastructure. Duke signed agreements to become the biggest contractor for Transco’s proposed Southeast Supply Enhancement project in February.
Duke’s May 2024 investor proxy summary noted the company engages shareholders year-round on issues including Duke’s clean energy transition strategy, regulatory and jurisdictional issues, customer affordability, and corporate governance. PCD asked Duke, Vanguard, and BlackRock about shareholder input in the proposed carbon plan but did not receive a response by press.
“In 2023, we reached out to and held meetings with holders of approximately 40% of our outstanding shares of common stock, some of which included participation by our independent lead director Ted Craver,” Duke’s filing stated.
From 2014 to 2015, Craver was chair of the Edison Electric Institute — the nation’s most prominent association for investor-owned utilities — and vice chair from 2012 to 2013. Edison Electric Institute led a campaign to lobby against rooftop solar during Craver’s tenure; one of the group’s representatives cited the challenges rooftop solar poses to earnings in a 2012 meeting with utility leaders.
Duke CEO Lynn Good was Edison Electric Institute’s chair from 2018 to 2019 and has been a member of the Business Roundtable — a prominent association of business executives — since becoming Duke’s chief executive in 2013. She’s served as the group’s Smart Regulation Committee chair since 2022 and wrote an op-ed with Bechtel CEO Brendan Bechtel to advocate permit reform for new infrastructure on the Business Roundtable’s behalf in May 2023.
A month later, Congress passed legislation to address the debt ceiling with a provision titled “Expediting Completion of the Mountain Valley Pipeline.” It requires the authorization of all federal permits for the pipeline and limited judicial review of any challenge to its approval. The Business Roundtable, Duke, Equitrans, and NextEra lobbied for the permit reform section of the bill.
Federal legislation helped the pipeline be fast-tracked in Virginia, Scott said, but its extension — which would connect to Duke’s proposed new plant in Roxboro — is still under consideration in North Carolina. Mountain Valley Pipeline has faced over $2 million in fines for water quality violations in Virginia and West Virginia and DEQ has so far denied water quality certifications for the proposed extension.
“Duke has indicated that ratepayers will be paying for the fuel-rider costs associated with the pipeline,” Scott told PCD.
Duke also lobbied in favor of Congressman David Rouzer’s (R-NC) “Nationwide Permit Improvement Act” — which passed the House in March as a package of bills to expedite infrastructure permit reviews — as well as the senate version of the bill introduced in May.
At the state level, the utility recently supported a provision introduced by Sen. Paul Newton to expedite water quality reviews for the firm’s proposed gas plants. Newton is Duke’s former president and has continued to receive an amount of deferred income over $5,000 every year since 2016, according to his financial disclosures.
[Update: This article has been updated to note Tyler Norris is the former vice president of Cypress Creek Renewables.]
Tips or comments? Email journalist Peter Castagno at peter@localdailymedia.com.
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