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Adding Efficiency to the Energy Mix

Opinion Column for the Raleigh News and Observer
August 20, 2006
By Jim Rogers, President and CEO, Duke Energy,
and Ellen Ruff, President, Duke Energy Carolinas

There's nothing quite like stifling, 100-degree heat to remind us that the electricity we count on to power our air conditioners, refrigerators and other necessities is truly a must-have commodity. Electricity is the lifeblood of the modern economy, and a reliable, low-cost supply of it is one of the reasons we enjoy the quality of life we do in the Carolinas.

The heat wave of recent weeks has taxed our well-maintained but aging power infrastructure. Despite the roughly 50,000 new customers we add each year, Duke Energy has not seen a significant source of new supply come online in two decades. To meet the needs of our growing economy in the future, we've developed a comprehensive plan to invest in our energy infrastructure by:

  1. Constructing new, cleaner, state-of-the-art power plants that will allow us to modernize our generation fleet and retire our older, less efficient plants;
  2. Adding energy efficiency infrastructure that will help reduce customers' demand for and consumption of electricity without disrupting their quality of life; and,
  3. Updating our transmission and distribution grid and enhancing the reliability of our system.

We believe this plan which includes projects with long life-spans (40 to 50 years) requiring significant capital investment balances both the economic and environmental considerations that are so important to this region.

The first part of this plan the proposal to add new generation and begin modernizing our power plant fleet has garnered a lot of attention lately, and rightfully so.

But new generation is only one part of the plan. To offset growing demand and to help control environmental impacts, Duke Energy aspires to be the leader on the implementation of cost-effective energy efficiency initiatives in North Carolina, the Southeast and, someday, the nation.

We believe that a sustainable energy efficiency and conservation effort must be part of a multi-pronged approach to meeting our growing energy needs. Robust efficiency initiatives can also serve as a powerful carrot for economic development and the creation of jobs. We see great potential to serve our customers and communities better, not only as an electricity provider but also as their primary energy efficiency supplier.

That means advancing programs that encourage saving energy. We currently promote smart energy use through various demand-side management initiatives. Much more can be done.

If we can eliminate barriers to meaningful energy efficiency efforts and provide the tools for consumers to use energy more wisely, we can smooth out periods of peak power demand and potentially reduce overall energy consumption.

It will take a collaborative commitment among utilities, regulators, environmental and consumer groups to advance energy efficiency and conservation as a "fifth fuel" to complement coal, nuclear, natural gas and renewable energy. We intend to play an active role in that discussion.

As we work to address the energy challenges we're facing, we can't let our decisions be ruled by the tyranny of either/or. Duke Energy is committed to making energy efficiency a key priority in our comprehensive energy plan, but smart energy use alone will not suffice.

Given that reality, our portfolio approach requires development of highly efficient new coal, natural gas and nuclear projects to meet demand. A modernization project earmarked for Cliffside Steam Station in Rutherford and Cleveland counties is part of our strategy to provide the energy customers need, while reducing emissions. These new units will operate with 30 percent more fuel efficiency than the 1940s vintage plants they'll replace.

Looking farther out, we're keeping our options open to build a new nuclear station in South Carolina that would provide enough electricity to power 2 million homes, while producing no greenhouse gas emissions.

And down the road, we expect alternative fuels and renewable energy will play an increasingly important role in the energy mix as technologies advance, reliability improves and costs decrease.

In the near term, we could also pursue a new combined cycle natural gas plant in the Carolinas to help meet demand while reducing environmental impacts. Importantly, this project, combined with the Cliffside modernization, could give us the flexibility to consider shutting down some or all of our more seasoned, less-efficient coal plants, reducing total fleet emissions and our carbon footprint.

Together, these projects, along with significant investment in energy efficiency, could allow Duke Energy to hold our annual coal burn at 2006 levels over the next several years until we get a better view for how our nuclear project is progressing and clarity on what reductions will be required for carbon dioxide emissions.

As we plan today to meet future needs, there is simply no silver bullet to solve our energy and environmental challenges. Instead, we will have to pursue a variety of approaches, relying on a diverse mix of generation on the production side combined with aggressive energy efficiency initiatives on the demand side. Simply put, we'll need to rely on "silver buckshot." This portfolio approach will provide us the flexibility to keep the North Carolina economy moving forward.

Jim Rogers is president and chief executive officer of Duke Energy. He is also chairman of the Edison Electric Institute and is a member of the board of advisors to Duke University's Nicholas Institute for Environmental Policy Solutions. He co-chaired the EPA- and Energy Department-sponsored effort to develop the National Action Plan for Energy Efficiency. Ellen Ruff is president of Duke Energy Carolinas. She is a member of the N.C. Economic Development Board and is on the executive committee of the N.C. Citizens for Business and Industry board of directors.