Regulators Side With Duke On Power Purchases From Yadkin River Dams

Jul 19, 2018

State regulators have ruled against the owner of hydroelectric dams on the Yadkin River, in a dispute over how it sells electricity to Duke Energy.

The company, Cube Hydro of Maryland, bought the four dams last year from Alcoa, which once used them to power its aluminum smelters. The smelters closed years ago and more recently Alcoa had been selling electricity on the open market, to commercial customers and utilities including Duke.

Cube has been doing the same. But the company's success depends on getting the highest price it can for electricity. So when Cube couldn't negotiate a deal with Duke, it turned to the North Carolina Utilities Commission. Cube asked regulators to require Duke to buy power from three of the four dams at higher prices under a 10-year contract - something it argued is required by a 1978 federal law called the Public Utility Regulatory Policies Act. (The fourth dam did not qualify.)

Among other things, PURPA encourages the use of hydroelectric power and enables small power producers to sell to large utilities.

In its response to Cube, Duke argued it's under no obligation, in part because Cube missed a key paperwork deadline in 2016. This week, regulators agreed and dismissed Cube's complaint.  

That was a blow to Cube, but welcomed by Duke.

"Cube Hydro wanted a long-term contract with Duke Energy, but wanted it under terms that really were not in play today," Duke spokesman Randy Wheeless said. "So, we rejected what they wanted. They filed a complaint with the commission. We felt the rules were clear, that what they were asking for was not in line today. And the commission saw it our way and dismissed the complaint."

Wheeless said Duke does not make a profit on energy it buys from third parties - those costs are just passed on to customers. If it pays too much, he says, customers pay too much. He said Duke would be willing to negotiate a five-year contract, but not at the prices Cube was seeking. 

A spokeswoman for Cube declined to comment on the case or whether the company might appeal.

The commission voted 5-2 in favor of Duke. The two who voted "no" issued their own dissenting opinions. Commissioner ToNola D. Brown said the commission has the leeway to make an exception to the technicality to encourage small power production in the spirit of the federal law.