Duke wants customers in Charlotte, elsewhere to pay $636M for abandoned project

The Duke Energy Center, left, in uptown Charlotte is shown here on June 14, 2017.
The Duke Energy Center, left, in uptown Charlotte is shown here on June 14, 2017.

Duke Energy said it plans to abandon construction of a nuclear station near Gaffney, S.C., and that it wants customers to pay about $636 million for the scrapped project.

Charlotte-based Duke requested Friday that state regulators allow cancellation of its Lee nuclear station, citing in part this year’s bankruptcy filing by nuclear-reactor supplier Westinghouse, the primary contractor on the project. In its request to the North Carolina Utilities Commission, Duke said the risks and uncertainties of starting construction on the project “have become too great” and that cancellation “is the best option for customers.”

The request was submitted the same day Duke asked the commission to let it raise rates as soon as April 1 for electricity customers in a territory that includes Charlotte. Duke wants an average increase of 13.6 percent across various classes of customers, with the largest increase borne by residential customers at 16.7 percent.

If the request is approved, Duke said it will generate an additional $647 million in annual revenue for the company, including $53 million each year specifically to cover costs Duke has incurred for the discarded nuclear project.

Some environmentalists responded to the nuclear plant announcement with a mix of praise and criticism.

“We’re glad Duke has decided to abandon plans to build this plant, but it’s alarming that they want customers to not only pay hundreds of millions for this failed plant, but to also be burdened with a 17 percent monthly rate hike,” Chris Hall, chair of Sierra Club’s South Carolina chapter, said in a statement.

“Working families and people struggling to make ends meet shouldn’t be forced to pay for Duke’s bad bets on dangerous, dirty nuclear and fossil fuels,” Hall said.

The utilities commission must approve Friday’s hike request, a process that could take months. In the request, Duke is also seeking to recoup costs for modernizing power plants and cleaning up coal ash sites, among other expenses. Duke’s last rate increase affecting the Charlotte region was approved in 2013.

In an Observer interview, Duke’s North Carolina president, David Fountain, noted the $53 million will be collected from customers over 12 years in a move to lessen the impact on rates. He also said the figure represents all costs Duke has incurred on the project to date.

Fountain cited the project as an example of Duke’s attempt to continue operating a balanced portfolio of energy-generation sources, “and that has provided benefits to our customers for decades.”

Duke left open the possibility of building a nuclear project on the site in the future, saying it will maintain its license and move forward “if it is in the best interest of customers.”

Duke’s decision to abandon the Lee plant comes after two other utilities, South Carolina Electric and Gas and its partner Santee Cooper, recently halted construction on the V.C. Summer nuclear project near Columbia because of high costs, low demand for energy and Westinghouse’s bankruptcy. Westinghouse this week announced furloughs and layoffs for workers in Charlotte and South Carolina.

Deon Roberts: 704-358-5248, @DeonERoberts