Duke Energy's Unintentional Assist to Clean Energy Policymaking

(MoneyWatch)  Permitting and building new power plants is never an easy process. But Duke Energy is getting an early peek into the bureaucratic nightmares of the future, which most large power companies will someday have to face.

Duke Energy Carolinas, one of the mother company's many subsidiaries, first saw its planned $100 million program to place solar panel on roofs in North Carolina cut in half, to $50 million and 10 megawatts. Then, when the coast looked clear, the company was told by regulators that its plan to pass the costs on to ratepayers would not fly.

The regulators are working out their own kinks, of course. North Carolina has a renewable energy standard requiring state utilities to generate 12.5 percent of their electricity from sources other than fossil fuels by 2021. The "kink" in that requirement is that nobody is quite sure how it will be achieved. Duke guessed that solar would be a good option; the state disagreed, saying the planned solar is too expensive, and that the amount of electricity it will generate was more than necessary.

Other states are likely to use such decisions to help guide their own choices. But another Duke operating unit, this time in Indiana, has just gotten a somewhat conflicting message. In that state, a utility commission on Wednesday approved an additional 2 percent rate hike for customers to help pay for a coal gasification plant.

Duke likes to claim that the new plant will be the cleanest coal-burning facility in the world -- in effect making it part of the drive toward clean energy, though calling coal "clean" typically makes environmentalists begin frothing. But without the claim of being clean, the plant likely wouldn't have had as easy a time getting the bureaucratic hand wave.

It's notable that where North Carolina shied from $50 million of extra solar, Indiana dutifully accepted an extra $365 million charge for a coal plant that already cost almost $2 billion. That's business as usual, in a world full of coal plants. But at some point, states will have to begin grappling with the question of how to pay for true renewables -- a category coal can't fit into. When that happens, it may be the utilities who have to come up with the answers.