On June 22, the N.C. Utilities Commission issued a long-anticipated order on Duke Energy Carolinas’ request for a hike in electricity rates. Observers have dissected the opinion and debated hot-button issues, ranging from fixed rates and coal ash expenses to costs tied to a shuttered nuclear project. One issue that rose to the top was the commission’s rejection of Duke Energy Carolinas’ 10-year, $7.8 billion grid modernization (or “grid mod”) bid, as well as a compromise deal brokered with green groups.
As the dust settles on this decision, it could be a good time to hit the “reboot” button on Duke Energy’s often discussed, but seldom understood, $13 billion Power/Forward Carolinas Initiative.
At the heart of the initiative is Duke Energy’s stated desire to upgrade the state’s grid to make it more resilient, reliable and secure, while keeping rates affordable. Regulators, business groups and consumer advocacy organizations agree that a modernized grid is important for the state to take advantage of new technology, better integrate solar, and give consumers more control over their energy use. But how much, how fast, and who should pay are key questions that have not been adequately answered. Given the scale of the investment and the long-term impact to ratepayers, now is the time for North Carolina to proactively restart the grid modernization discussion.
Many states have taken up the grid mod challenge. According to the N.C. Clean Energy Technology Center, nearly 40 states and the District of Columbia have tackled some aspect of this work—including North Carolina. States are working to upgrade electricity infrastructure and encourage business models that will deliver resilient, reliable, secure, affordable, flexible and sustainable power. From the Virginia legislature’s 2018 Grid Security and Transformation Act to public utility commission investigations like Illinois' Next Grid and Ohio's Power Forward, states are initiating collaborative processes to identify, research, and develop options for addressing grid challenges. North Carolina stakeholders have called for similar grid mod collaborations, but thus far efforts have not been comprehensive and as became clear June 22, there is a lot of additional work to be done.
Diverse stakeholder groups—including regulators, utilities and advocates—have formed to align grid mod programs with local needs and desires, and launch studies, investigations, and pilot projects to explore the possibilities for a modern grid.
States differ in their understanding of grid mod’s scope, the process for studying and implementing “next generation” grid components, the voices needed at the table, and the parties who should own and operate the new infrastructure. This diversity results in the forging of different paths, generating many case studies for North Carolina to consider.
North Carolina is at a tipping point. In the June 22 order, the commission denied grid mod cost recovery to Duke Energy but acknowledged that the issue is not dead. The need to update infrastructure and rates means grid mod will resurface in future dockets (such as Integrated Resource Planning and Smart Grid Technology Plans) and rate case proceedings. Stakeholders can scramble to respond to each docket and suggest piecemeal solutions, or work together to develop a proactive strategy for modernizing the state’s grid.
A winning grid mod strategy would require several things: the development of shared goals for grid mod investment in North Carolina; an analysis of potential solutions including the costs and benefits; a review of alternative business models that might better meet the needs of all rate-payers; and a time-line for making decisions. Moreover, to be durable, a diverse spectrum of stakeholders must have a seat at the table, including those often absent from the conversation (representatives of low-income communities, for example).
There is a small window of opportunity to establish a robust stakeholder process in advance of future proceedings. Stakeholders can seize this opportunity to find common ground to build a better, stronger, and more resilient grid that works for all.
Jen Weiss is a senior policy associate in the Climate and Energy Program at Duke University’s Nicholas Institute for Environmental Policy Solutions.