NC pork lobby objects to Duke Energy swine waste proposal

Duke Energy’s proposal to use Midwestern pig manure toward the power company’s renewable goals in North Carolina is raising a stink from the state’s powerful pork lobby.

The Charlotte utility’s novel proposal, explained in filings Thursday, tests the limits of the state’s 2007 energy policy law in ways its authors in the legislature could not have foreseen. The complex law requires electric utilities to derive some of their electricity from renewable fuels, including solar energy and energy-rich agricultural waste.

Duke’s claim is simple enough: A pair of power plants that burn natural gas in Salisbury and Rockingham counties should get credit for burning “biogas” from swine waste generated in Missouri and Oklahoma. Swine waste is swine waste, no matter where it comes from, Duke argues.

The N.C. Pork Council worries that if Duke’s argument prevails, North Carolina’s utilities could theoretically meet all their requirements to use hog manure as a renewable fuel without the contribution of a single hog in North Carolina.

“This does nothing to benefit the North Carolina swine industry or utilize an abundant resource we have here,” said Angie Maier, director of policy development at the N.C. Pork Council. “We believe the intent of the law was to encourage progress and innovation in North Carolina.”

Duke’s interpretation is based on the way the law is written, even if it appears counter-intuitive, said James McLawhorn, director of the Electric Division in the Public Staff, the state agency that represents the public before the N.C. Utilities Commission.

North Carolina law essentially says the renewable credits can be claimed in North Carolina as long as the electricity generated from the renewable fuel is used here. Duke would achieve that outcome through sophisticated accounting.

First, Duke would pay to have anaerobic digesters extract biogas from swine waste in the Midwest. The biogas, which would be indistinguishable from natural gas, would be injected into pipelines hundreds of miles from here. Duke would then claim renewable credits for an equivalent amount of natural gas taken from pipelines here to generate electricity for North Carolina households and businesses.

The Public Staff hasn’t decided whose side it’ll take, but McLawhorn characterized the legal dispute as “an interesting question.”

The state’s energy policy allows utilities to get up to 25 percent of their renewable credits out of state. And the N.C. Pork Council wouldn’t object if Duke claimed the Midwestern swine waste projects toward the company’s out-of-state allowance, Maier said. The problem for the pork industry is that Duke wants to enter Midwestern swine manure in the in-state column.

The 25 percent clause was written into the law to help utilities meet their renewables goals if North Carolina couldn’t meet demand quickly enough, which has turned out to be the case for wind farms and animal waste. Utilities here are relying heavily on Midwestern wind farms for renewable credit by paying subsidies to out-of-state wind farm developers, but those projects typically don’t deliver electricity to North Carolina.

The requirement to use swine waste as a fuel, known as the swine “set-aside,” has been postponed three years now and utilities are expected to request another one-year delay.

So far, the state is meeting less than half the swine waste set-aside, and most of it is already coming from other states. To date, 3.9 megawatts of swine waste biogas is registered in North Carolina and nearly 4.6 megawatts is registered in other states.

Wheeless, the Duke spokesman, said the company is forced to seek swine waste-to-energy projects elsewhere because they’ve been slow to develop here.

“Obviously from our standpoint we want to meet the set-asides,” Wheeless said. “By doing this it could spur some additional development in North Carolina.”

This story was originally published July 9, 2015 at 5:48 PM with the headline "NC pork lobby objects to Duke Energy swine waste proposal."