Duke Energy investing in Southeast natural gas generation through 2018

Duke Energy is adding more expecting to add more than 2,900 MW of new gas-fired generating capacity to its Southeastern power fleet by the end of 2018, the company reported Nov. 5 in part of its quarterly earnings call materials.

In all, Duke Energy expects to invest in the neighborhood of $2.45 billion in natural gas-fueled generation in the region by the end of 2018, according to GenerationHub. Most of it will be self-built by Duke Energy although the North Carolina-based company also expects to purchase a gas unit from Calpine Corp. as previously announced.

A Duke Energy utility unit in Florida has already received Florida Public Service Commission approval for 1,640 MW of new combined-cycle gas generation at its Citrus County site in 2018. The Florida PSC just issued the approval in October.

The Florida PSC has also approved a 220 MW power uprate at the Hines facility, and that expansion is expected online by the end of 2017.

Duke Energy is also negotiating the acquisition of Calpine‘s Osprey combined cycle unit or the addition of new combustion turbines at Suwanee in 2017. The Osprey purchase would need approval by the Federal Energy Regulatory Commission (FERC).

In North Carolina, Duke Energy expects to bring the 750 MW Lee combined-cycle gas project online by the end of 2017. The North Carolina Utilities Commission (NCUC) has already approved a certificate for the plant and Duke is starting to order long lead-time equipment for the project.

In addition, Duke Energy expects to invest $250 million in solar power development in North and South Carolina by the end of 2015. Duke said it plans to buy and construct three projects for a total of 128 MW by the end of 2015.

This effort will help Duke Energy comply with North Carolina’s solar renewable standard. Duke Energy officials also said they expect to eventually look at potential for new solar generation in Florida.

Most of the existing Duke Energy combined-cycle gas plants in the Southeast had a capacity factor of at least 80 percent during the quarter. Meanwhile, the Duke Energy nuclear fleet recorded a capacity factor of 98 percent, during the quarter, officials said.

Duke experienced below normal temperatures its service areas for the second summer in a row. Cooling degree days were around 10 percent below normal in the Carolinas and almost 30 percent lower in the Midwest.

“We also achieved several milestones in our growth strategy as we prepare to serve the evolving needs of our customers into the future,” said Duke Energy President and CEO Lynn Good. “We’re investing in solar projects and new natural gas generation; planning a major grid modernization in Indiana; and proposing to invest in the Atlantic Coast Pipeline that will bring diverse natural gas supplies to eastern North Carolina.”

The gas pipeline, which will run through West Virginia, Virginia and North Carolina, has already received broad public support, Good said. Dominion, which will own the largest share of the pipeline, recently made a key filing with FERC.

Look for construction of the pipeline to run from 2016 through 2018, Duke said.

“Additionally, we continue to move forward with the sale of our Midwest generation business to Dynegy,” Good said. The Dynegy deal is expected to close by the end of the first quarter of 2015.

Duke Energy also expects to close its purchase of certain generating assets from the North Carolina Eastern Municipal Power Agency (NCEMPA) generating assets by the end of 2016.

Duke Energy announced third quarter 2014 adjusted diluted EPS of $1.40, compared to $1.46 for third quarter 2013, and reported diluted EPS of $1.80, compared to $1.42 for the same period last year.

Reported results for the quarter were affected by a $477 million, or $0.43 per share, pre-tax reversal of a previously recognized impairment charge related to the sale of the company’s Midwest generation business. This impairment reversal was recorded in discontinued operations and has been excluded from the company’s adjusted diluted EPS results.

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Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 22 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants.

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