POWER January 2015 - 21

2015 INDUSTRY FORECAST
By next year, our solar photovoltaic
facilities will be capable
of being ramped down
and participating in California's
day-ahead and real-time
markets, and our hydro systems,
despite their already
high degree of flexibility, will be looking to
further expand their capabilities.
-Randal S. Livingston, Pacific Gas & Electric
and smart grid implementation all have important
implications from distributed generation.
Electrical storage, customer demand response,
and electric vehicle charging are important options
to consider in either shifting demand to
the periods of high solar generation or shifting
generation to the peak periods.
Pfeuffer: We haven't seen a significant
impact on our demand trends. On the policy
side of this discussion, we fully support customers'
right to own and operate renewable
distributed generation to serve their energy
needs, but not cross-subsidies in our rates
that allow DG-owning customers to avoid
paying their fair share of fixed costs. We
believe there are several modifications to
net metering policies that could help correct
the inherent unfairness and ensure that net
metered DG customers pay fairly for utility
services and energy and are compensated
accurately for the value of the generation
they produce.
Gillespie: Renewable generation at the
residential and commercial level is still small
for Duke Energy. It's only 4% of our total
solar portfolio. We are finding greater success
with large-scale solar and feel it's the
most cost-effective way to integrate renewable
energy onto the grid. We will soon begin
construction of three of the largest solar
facilities on the East Coast. However, one of
the issues we are starting to address is how
much we pay for excess distributed generation
like rooftop solar coming into our grid.
Paying full retail price does not account for
the costs associated with transmitting and
distributing the power and having backup
generation available. We are working with
our regulators to reach a stable and equitable
approach.
Your companies all own at least some
nuclear capacity. Recently, five U.S. units
have been slated for retirement or shut
down, mostly for unexpected reasons.
How important will nuclear be to your
January 2015 | POWER
company's portfolio in the next 5, 10, 20
years?
Green: We anticipate that nuclear will
continue to be an important part of our fuel
diversification strategy. Nuclear has been,
and is expected to remain, a low-cost, zerocarbon
baseload option.
Livingston: Our nuclear facility has been
an important part of our customers' energy
supply for decades, and runs superbly. We
expect it to be an important part of our supply
in the foreseeable future. That said, we continue
to evaluate all of our assets to ensure
they best meet our customers' needs.
Pfeuffer: We own a single nuclear unit.
Fermi is very important to our future capacity
and generation. With all of the environmental
regulation impacting coal, and the unpredictable
nature of renewables, we are investing in
that site to ensure its continued reliability as a
key part of our generating fleet.
Gillespie: Nuclear generation will remain
a key component of our energy portfolio over
the next 20-year horizon and beyond. Nuclear
power is a success story for Duke Energy-
our 10,600 MW of nuclear generation have
provided reliable, economical, emissionsfree
generation in our service areas for more
than four decades. With the prospect of regulations
restricting greenhouse gas emissions,
the only way our country is going to meet
these lower emission goals is to maintain and
possibly expand nuclear generation.
We have two proposed new nuclear power
plants (two units each) in the licensing pipeline.
All of our operating plants are running
well and have obtained renewed licenses, and
we are evaluating the possibility of operating
our nuclear units through an additional
renewal period (to an 80-year life).
What recent or anticipated federal
regulations do you expect will have the
greatest effect on the fleet you're responsible
for in the coming year?
Green: Obviously, the Clean Power Plan
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is high on our list of regulations to monitor.
We have aggressively participated in the comment
period and engaged others in developing
an appropriate response to the proposed
rule. We are encouraged by the final form of
316(b) and believe that, working with our
state regulators, we will be able to develop an
effective compliance plan. The effluent regulations
appear to have the most potential to
significantly increase power cost due to the
high cost of compliance.
Livingston: For us it's 111(d) and National
Oceanic and Atmospheric Administration fisheries
implementation of salmon and steelhead
recovery under the Endangered Species Act.
Pfeuffer: In the coming year, it will be
MATS compliance-getting our DSI and ACI
systems installed and operational. Our plants
have the extended deadline of April 2016.
Gillespie: The Nuclear Regulatory
Commission's post-Fukushima requirements
will have the greatest impact on
Duke's nuclear fleet.
In addition, Duke expects to spend $5 billion
to $6 billion over the next 10 years on
environmental regulations issued by the Environmental
Protection Agency (EPA). Significant
regulations include EPA's recently
finalized Section 316(b) rule that regulates
cooling water intake structures. This rule will
affect all of our thermal power plants, particularly
those without cooling towers. Intake
modifications are expected at 15 of our 32
stations that are affected by the rule. EPA's
proposed rules regulating Coal Combustion
Residuals as well as Steam Electric Effluent
Guidelines will also be significant for Duke's
fleet. Those rules are expected to be finalized
in 2014 and 2015 respectively.
We're also actively participating in the rulemaking
process for EPA's proposed regulation
for greenhouse gases from existing plants.
That rule is expected to be finalized in June of
2015 and is not included in the cost estimate
above.
If the Clean Power Plan is finalized in
2015 and contains most of the same details
as the proposed plan, how do you
anticipate it will affect your assets?
Green: Implementation of the Clean
Power Plan in its current state would lead
to a reduction in coal generation and a corresponding
shift to more natural gas generation.
It also will lead to an increased
emphasis on maximizing the benefit of
renewables. The current asset make-up for
CPS Energy, with more than 70% of our
capacity from nuclear, gas, and renewables,
provides us with some options to begin addressing
the compliance requirements.
Livingston: PG&E already operates one
of the cleanest generation portfolios of owned
and contracted resources in the country. Over
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POWER January 2015

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