Duke Energy cashes out $129M for a wind lease it never built; ratepayers will pay the gas plants that replace it

The Wilmington Star-News reports that Duke Energy will sell its offshore wind lease back to the federal government for $129 million, ending the Carolina Long Bay project that would have powered 300,000 homes.^[1] Duke says it will reinvest the money in 'additional generating capacity, which may include advancing new nuclear and natural gas generation.'^[2]

Let's name the mechanism. Duke is a vertically integrated monopoly in the Carolinas. Every dollar it spends on new gas plants goes into rate base, earning a guaranteed return, currently around 9.5%, recovered from your bill. The $129 million is not a payment to ratepayers; it is a refund of a lease fee that Duke had already recovered from you through fuel and construction riders. The company gets to keep the cash and build more rate base. The federal government writes a check; Duke cashes it; you pay the return on the new gas plant for the next 30 years.

Independent studies have found that most proposed gas plants will be uneconomic by the mid-2030s, undercut by cheaper renewables and storage.^{[research library]} Duke's load forecasts for data centers are speculative and historically overstated. The gas plants Duke plans to build with this money are tomorrow's stranded assets, and North Carolina's 'used and useful' doctrine means you will pay for them even after they become uneconomic. The same mechanism that keeps coal plants running through self-scheduling, fuel costs passed through, capital earning a return, will apply to new gas.

The honest exit was the wind lease itself. Offshore wind has no fuel cost, no stranded-asset risk, and a fixed price. Canceling it and pivoting to gas is a transfer from ratepayers to shareholders, dressed in the language of 'reinvestment.' The filing to watch is Duke's next Integrated Resource Plan docket at the North Carolina Utilities Commission, where the company will propose the gas plants it says the $129 million will fund. That docket is where the bill gets signed.