Expert Witness Support for Duke Energy Kentucky Rate Case

Sierra Club
Project completed

Synapse provided expert witness support to the Sierra Club in Duke Energy Kentucky’s 2023 rate case. Our testimony and analysis focused on reviewing the Company’s proposal to update East Bend Generating Station’s depreciation schedule. We evaluated the economics of East Bend, and examined its recent historical performance and assessed how the plant is likely to perform going forward. We based our assessment on both the company’s own analysis, as well as our review of the risks of continued reliance on coal resources. Additionally, we reviewed the Company’s proposed rate increases and evaluated their potential impact on EV adoption in Kentucky.

We found that in recent years, East Bend incurred costs in excess of its market energy revenue and capacity value. These excess costs have been passed on to DEK ratepayers. We also found that DEK has not demonstrated the prudence of continuing to invest in and operate East Bend through to its current retirement date of 2035. Our analysis shows that East Bend is not expected to be economic going forward, under reasonable assumptions about the future, and that ratepayers would likely be better off retiring the plant by 2030. Lastly, we found that the proposed changes to Rider LM and Rate DT will result in EV customers paying more than their fair share of costs for off-peak charging and will reduce incentives to shift load to off-peak hours, resulting in less efficient use of the grid.

We recommended that Duke Energy should commit to retiring East Bend by 2030 in order to reduce costs for its ratepayers and avoid the risks associated with relying heavily on coal. We also recommended that the Commission order the Company, as part of its next Integrated Resource Plan, to evaluate the economics of retiring the plant early, and to conduct more appropriate and accurate electricity modeling and forecasting of East Bend’s economic and operational performance. To encourage transportation electrification and maximize its benefits for all customers, we also recommended that the Commission should require that Duke maintain the use of time-varying volumetric rates for the recovery of distribution costs for Rate DT, and reject the changes to Rider LM and only apply demand charges to on-peak hours.