ANDERSON – In nearly a year at the helm of Duke Energy South Carolina, Catherine Heigel has been especially busy in the wake of the announcement of a merger that will make Duke the largest investor-owned utility in the nation.
Duke Energy, based in Charlotte, N.C., is working toward a merger with Progress Energy that would create a company with combined assets of $90 billion.
Duke Energy has also recently applied for permission to spend up to $460 million in project development costs for a new nuclear plant in Cherokee County — the first for Duke in 26 years. In Anderson County, Heigel is also keeping an eye on engineering studies that will determine whether the utility’s Lee Steam Station can be converted from coal to cleaner-burning natural gas over the next few years.
Heigel spoke Friday at the annual meeting of the Anderson Area Chamber of Commerce. She told those gathered at the meeting that she could use the support of the business community as her utility contends with continuing and expensive environmental controls.
Duke next faces a challenge to its water-intake systems at nuclear power plants. Proposed regulations, intended to protect aquatic organisms, would be a “significant cost” for Duke at the Oconee Nuclear Station alone, she said.
“It’s been a big year for Duke,” Heigel said. “The merger with Progress consumes about 30 percent of my time, and I was already at capacity.”
The power industry as a whole is contending with aging infrastructure and updates rendered more expensive with amendments to the Clean Air Act in 1990. About 60 percent of the nation’s 700 power-generating plants are 30 years old or older, she said.
“Our system is no different,” she said.
Duke, she said, has shown its commitment to economic development in the area with educational partnerships at Anderson University, Clemson and Tri-County Tech and helping recruit tissue-maker First Quality to Anderson County, among others.
“It’s been a long, rich history, and we’re just beginning,” Heigel said of the company’s presence in South Carolina.
Duke Energy owns and operates power plants in the Carolinas, Ohio, Indiana and Kentucky, with the bulk of its nuclear capacity in the western half of South Carolina. The utility has five nuclear reactors in the state as well as the one coal-fired power in Anderson County, two natural gas plants and six small hydroelectric plants — a couple of which date back more than 100 years.
John Suttles, a senior attorney with the Southern Environmental Law Center, said he has fought Duke many times in court over its resistance to environmental regulations. The true costs of energy production, both direct and indirect in terms of its damage to human and environmental health, have just recently been fully understood.
Under new state and federal laws, Duke’s old Cliffside coal-fired plant in Rutherford County, N.C., will have to be retrofitted with pollution controls such as sulfur dioxide scrubbers and catalytic systems that capture nitrogen oxide, he said.
But these systems run about $500 million to install on a single power unit. Duke has opted to upgrade its newest unit of the five at Cliffside, build a new one with all the latest controls, and shut down its oldest four.
“If you’re going to burn coal, there’s no way to do so in a way that doesn’t pose a risk to the environment,” Suttles said. “But these systems would go a long way toward reducing those risks.”
Heigel said the choice Duke faces at Lee Steam Station is to convert the 60-year-old coal plant to natural gas — which has far fewer air pollutants and no toxic ash to contend with — or close it.
“After we close Cliffside units one through four, Lee Steam will be the last remaining unscrubbed plant,” Heigel said.
Meanwhile, Heigel said, project development costs for Duke’s proposed nuclear power plant outside Gaffney have so far reached more than $200 million, with at least as much more to go before construction begins.
“That’s just paper to say we can build,” she said.
A combined Duke and Progress utility, she said, would be in a much stronger position financially to cover the $11 billion cost of completing the nuclear station there. Heigel said Duke’s merger with Progress, which could happen by the end of 2011, would also give Duke more leverage with policymakers in Washington, D.C.
The merger with Progress, Heigel said, would have no immediate effect on power bills, except to keep them from rising faster as environmental regulation grows stricter. The merger would save money as the utility runs those plants whose fuel is cheapest at any given moment.
The merger would increase Duke’s energy-generation capacity by 60 percent, to 57.2 gigawatts. Various anti-trust, energy and nuclear regulatory commissions must review the proposal.
“I wish I could say the rates would be coming down,” Heigel said. “No, but the rates would be lower than they otherwise would have been.”
Members of NuStart Energy consortium are:
DTE Energy, Detroit, MI, Duke Energy, Charlotte, NC, EDF International North America, Washington, D.C., Entergy Nuclear, Jackson, MS, Exelon Generation, Philadelphia, PA, Florida Power & Light Company, Juno Beach, FL, Progress Energy, Raleigh, NC, South Carolina Electric & Gas, Columbia, SC, Southern Company, Atlanta, GA, Tennessee Valley Authority, Knoxville, TN, GE-Hitachi Nuclear Energy, Wilmington, NC, Westinghouse Electric Co., Pittsburgh, PA