Duke Energy is seeking to charge North Carolina customers advance construction fees for power plants that aren’t yet built while simultaneously removing its obligation to reduce carbon emissions by 2030—a move that would allow the utility to collect billions in upfront costs while scaling back clean energy commitments. The proposed legislation, Senate Bill 266, represents a troubling shift that mirrors a South Carolina precedent where Dominion Energy and Santee Cooper left ratepayers footing a $9 billion bill for an abandoned nuclear project. This pattern shows Duke Energy positioning itself to generate revenue from future infrastructure while actively canceling or delaying its existing clean energy projects, including an offshore wind initiative that could have powered 1.5 million homes.
This arrangement raises fundamental questions about the costs consumers bear when utilities collect money before delivering services—and what protections exist when promised projects never materialize. A North Carolina court recently determined that Duke Energy already overcharged customers by approximately $1 billion for fuel costs in 2024 alone, adding urgency to the oversight conversation. The lawsuit claims highlight a broader strategy: Duke Energy is collecting consumer money for carbon reduction infrastructure while simultaneously abandoning those exact projects and extending the lifespan of coal plants.
Table of Contents
- How Does Duke Energy’s Cost Recovery Model Leave Customers at Risk?
- What Happens When Coal Plants Stay Online Longer Than Promised?
- Why Is the South Carolina Precedent So Concerning?
- What Are Customers Actually Paying For If Projects Are Cancelled?
- How Does Removing the Carbon Reduction Mandate Change the Equation?
- What Does Duke’s Overcharge Ruling Tell Us About Oversight?
- What Does Duke’s Energy Future Look Like Under This Proposal?
How Does Duke Energy’s Cost Recovery Model Leave Customers at Risk?
Advance construction fees allow utilities to collect money from ratepayers for infrastructure projects before they are operational—sometimes years in advance. For Duke Energy’s proposed arrangement in North Carolina, customers would begin paying for future power plants immediately, even though those facilities won’t produce power for years. This model places the financial risk squarely on consumers: if the project is delayed, downsized, or cancelled, customers have already paid for it. The South Carolina precedent is instructive—when the V.C.
Summer nuclear project was abandoned, Santee Cooper and dominion energy left ratepayers responsible for nearly $9 billion in sunk costs with nothing to show but shuttered facilities and rate hikes. The irony is particularly stark in Duke Energy’s case because the utility is simultaneously canceling and delaying the very projects that might justify these construction fees. The company cancelled an offshore wind project and capped solar energy benefits to customers, while seeking to extend coal plant operations. A court already found Duke overcharged customers by $1 billion in 2024 for fuel—the same year the utility was simultaneously seeking cost recovery approval for new construction. This pattern suggests consumers face a double burden: paying for infrastructure that may never arrive while subsidizing the company’s existing assets and delayed retirements.
What Happens When Coal Plants Stay Online Longer Than Promised?
Duke Energy has delayed retirement of its Gibson coal plant in Indiana from 2035 to 2038—adding three years of continued coal operations. The Carolinas Resource Plan (October 2025) shows further delays for closing coal plants in the region, including Belews Creek, Cliffside, and Marshall facilities. Each year these plants remain operational extends the company’s dependence on coal revenue, pushing the timeline for transition to cleaner energy sources further into the future. However, if customers are simultaneously paying construction fees for new power plants, they’re essentially financing the transition away from coal while the utility maintains its coal revenue streams—effectively making ratepayers subsidize Duke’s extended fossil fuel operations.
Extended coal plant timelines also lock in higher operating costs for consumers. Aging coal infrastructure becomes more expensive to maintain, and aging plants face stricter environmental compliance requirements, yet the utility continues charging current customers for these inefficiencies. Some ratepayers are already experiencing this dynamic in practice: North Carolina’s court ruling that Duke overcharged customers $1 billion for fuel in 2024 reveals the company is already passing through costs that may exceed legitimate operational expenses. The pattern suggests that customers funding Duke’s future construction are simultaneously paying for inefficient coal operations in the present.
Why Is the South Carolina Precedent So Concerning?
The Dominion Energy and Santee Cooper nuclear project in South Carolina demonstrates exactly what can go wrong when utilities collect construction fees for long-delayed or abandoned projects. Customers began paying for the V.C. Summer expansion in the early 2010s, but the project faced massive cost overruns and technical challenges. When the project was finally abandoned in 2018, more than a decade of customer payments had been collected—totaling approximately $9 billion—for infrastructure that never generated a single kilowatt of power.
South Carolina ratepayers absorbed the full loss without receiving any service in return. Duke Energy’s proposed North Carolina model is structured similarly: customers pay upfront for future construction, and the utility bears minimal financial risk. If projects are delayed or cancelled, the utility keeps the revenue it collected while customers lose both the money they paid and the promised benefits. The difference between Dominion’s nuclear project and Duke’s proposed plants becomes academic if the projects don’t materialize. What’s particularly striking about Duke’s proposal is that it comes at a moment when the utility is actively canceling clean energy projects—the offshore wind initiative and capped solar benefits suggest Duke may be retreating from the renewable infrastructure that would actually justify these construction fees.
What Are Customers Actually Paying For If Projects Are Cancelled?
When ratepayers fund construction fees for projects that never arrive, they’ve essentially transferred their money to the utility with no contractual obligation that those projects must be completed. In Duke Energy’s model, customers pay now while Duke maintains the discretion to delay, downsize, or cancel projects later—with no mechanism to reclaim the construction fees already collected. This differs fundamentally from purchasing electricity, where the exchange is immediate and verifiable: customers pay for power they use. Construction fees represent a speculative investment in the utility’s future, with asymmetrical risk.
Some states have implemented oversight mechanisms to mitigate this risk, including requirements that utilities maintain construction project timelines, return overpayments if projects are cancelled, or establish securitization to separate customer funds from general utility operations. North Carolina’s regulatory framework currently lacks these protections. The $1 billion fuel overcharge that Duke was already caught collecting in 2024 reveals how permissive the current system has become. Ratepayers have no independent mechanism to verify whether Duke’s construction fee requests are reasonable or whether the company is using customer payments for corporate purposes beyond the stated projects.
How Does Removing the Carbon Reduction Mandate Change the Equation?
Senate Bill 266 does something unprecedented: it allows Duke Energy to collect advance construction fees while simultaneously removing the company’s obligation to reduce carbon emissions by 2030. This decoupling means customers would pay for future infrastructure without any guarantee that this infrastructure will shift Duke’s energy mix toward renewables or reduce climate impact. The utility gets the revenue now, and the climate commitments disappear. For context, this follows Duke’s cancellation of an offshore wind project that could have supplied power to 1.5 million homes and the company’s arbitrary caps on solar energy benefits—suggesting a pattern of retreating from climate commitments while seeking revenue increases.
The practical effect is that North Carolina ratepayers would fund Duke’s flexibility to maintain coal operations indefinitely while paying construction fees for new capacity that might never materialize or might consist of natural gas facilities that perpetuate fossil fuel dependence. A limitation here is important: natural gas plants can fill the generation gap if coal is retired, and such plants produce fewer emissions than coal. However, the company’s track record—canceling offshore wind and capping solar—suggests Duke prioritizes maximizing revenue from existing asset bases over transitioning to lower-carbon infrastructure. Customers funding these construction fees have reason to believe their money will support extended coal operations rather than genuine climate solutions.
What Does Duke’s Overcharge Ruling Tell Us About Oversight?
A North Carolina court determined that Duke Energy overcharged customers approximately $1 billion for fuel costs in 2024—a single-year adjustment that reveals significant pricing in Duke’s favor under current regulatory oversight. This ruling is particularly relevant to the construction fee proposal because it shows that existing Duke recovery mechanisms already operate with considerable latitude. The company collects fuel cost adjustments with minimal regulatory scrutiny, and when those adjustments exceed reasonable costs, customers bear the burden of correction after the fact. If construction fees are approved with similar oversight frameworks, customers could face similar overcharges years later, with limited recourse.
The $1 billion fuel overcharge also provides a concrete measure of the financial impact of inadequate regulatory oversight. Customers paid an extra $1 billion for fuel in a single year under Duke’s current recovery mechanisms—a reminder that “authorization to collect from customers” translates directly into rate increases. A construction fee authorization for multi-year projects could accumulate similar overcharges across multiple years before audits identify the discrepancy. For ratepayers in North Carolina, the fuel overcharge serves as a cautionary tale about the risks of permissive cost recovery mechanisms.
What Does Duke’s Energy Future Look Like Under This Proposal?
If Duke Energy secures construction fee authorization while removing the carbon reduction mandate, the utility’s strategic direction becomes clear: maintain coal operations through the 2030s and beyond, collect customer payments for future infrastructure whose timeline remains flexible, and preserve operational control over whether those projects actually materialize. The delayed coal plant retirements—Gibson pushed from 2035 to 2038, with further delays for Belews Creek, Cliffside, and Marshall—suggest Duke intends to extract maximum value from existing coal assets. Construction fees provide the revenue stream to fund this extended fossil fuel operation without requiring the company to make immediate capital investments in alternatives.
This trajectory diverges sharply from the clean energy transition that North Carolina ratepayers expect their construction fees to fund. Duke cancelled the offshore wind project and capped solar benefits, leaving customers to finance coal operations through construction fees that may never deliver the renewable capacity promised. The regulatory challenge ahead is determining whether North Carolina will permit this model or implement oversight mechanisms similar to other states—including requirements for project completion timelines, customer refunds if projects are cancelled, and genuine carbon reduction accountability tied to cost recovery authorization.