What are the members of the N.C. Utilities Commission thinking? The six of them—there's one vacancy—looked somewhere between distracted and disengaged at a packed public hearing Monday night as citizens implored them to do their job and drag Duke Energy into the 21st-century world of clean, renewable power generation.
The commissioners were likely preoccupied with Senate Bill 10, the latest Republican outrage. SB 10 would kick the six of them to the curb, abrogating their remaining statutory terms to let Gov. Pat McCrory pick a new commission. That's right, the Pat McCrory who was on Duke Energy's payroll while he ostensibly functioned as a full-time mayor of Charlotte would immediately choose all of Duke Energy's regulators.
State energy policy in the McCrory administration would thus be officially outsourced to the giant Duke utility, which thanks to the "merger" approved last year by an already compliant commission, now owns the Raleigh operation formerly known as Progress Energy. The Duke/Progress combo controls 95 percent of electric generation in North Carolina.
Duke Energy has applied to the commission to jack up electric rates for residential customers by as much as 14 percent. As the usually restrained N.C. League of Conservation Voters noted acidly: "[The] Duke rate hike request can be decided by the new Utilities Commission entirely appointed by Duke's career employee, Gov. Pat McCrory."
I suspect McCrory will not think me his best source of political advice. Nonetheless, here goes: Governor, do you really want to own the rate hikes that Duke and its Progress subsidiary have in store for their captive customers?
The state director of AARP, Douglas Dickerson, spoke Monday and reminded everyone that his organization has 1.1 million members in North Carolina, "ages 50 to 100." Republican and Democratic members alike, Dickerson said, fear the "increasing squeeze" from rising utility rates, health care costs and food prices. As Dickerson noted politely, they're asking AARP to take a stand on utility costs.
Governor, you and your fellow Republicans may get away with shifting taxes to low-income people and gypping the working poor out of Medicaid.
But lose the seniors' vote over utility costs, and you'll be done.
The hearing Monday wasn't directly about utility rates. Rather, it was about Duke Energy's long-range plan for North Carolina, a 20-year vision the company is required to update every other year. Commission members are supposed to determine if the utility will deliver power using "the least-cost mix of generation and demand-reduction measures which is achievable."
In other words, will Duke Energy's programs help customers use less electricity, reducing bills and avoiding the need to build costly new generating plants—nuclear facilities, for example?
And does Duke intend to supply electricity in the cheapest way, even though the utility could turn bigger profits by, say, building expensive nuclear plants and charging customers for their construction?
If the answer to either question is no, the commission is supposed to reject the plan. Because, remember, Duke Energy is a public utility with monopoly control in most of the state. And as a monopoly, it's guaranteed an adequate return on its investments—but not maximum returns.
So, for argument's sake, let's assume that the Republicans come to their senses and SB 10, which whipped through the Senate last week, is quietly shelved. That would leave McCrory with one vacant commissioners' seat to fill and two other members' terms expiring in 2013. Duke Energy could have three of seven seats. But at least for a year, it wouldn't have every seat.
And in that year, the commission could step up to its responsibilities.
Again, we don't know what the commissioners are thinking. Bryan Beatty, who chaired Monday's hearing, explained that they function like judges and don't take questions from the public—or ask the public anything either, apparently. Beatty's bland welcome—"We appreciate all the interest"—was the commission's sole interaction with a crowd of 150, virtually all critics of Duke Energy, who filled the hearing room and two overflow rooms.
The critics, I'd say, made a compelling argument that Duke Energy, because it's a monopoly with a too-compliant commission, is fixing to saddle North Carolina with the most expensive forms of power generation. Meanwhile, Duke's plan gives short shrift to renewable alternatives that the rest of world is embracing, including wind, solar and CHP (combined heat and power systems). This is despite the fact that in other states where Duke isn't a monopoly and has to compete for business, it too is deploying solar and wind.
But in North Carolina, said John Runkle, the attorney for a coalition of groups including NC Waste Awareness and Reduction Network and Greenpeace, Duke's guaranteed monetary return "incentivizes them to spend more money on power plants, the more expensive the better."
Avram Friedman, executive director of the Canary Coalition, blasted Duke's refusal to embrace conservation and to rely instead on natural gas and coal-fired plants, despite their methane and carbon dioxide emissions—both major contributors to greenhouse gases. "C'mon, ladies and gentlemen," Friedman said to the commissioners. "Haven't you heard about climate change?"
Throughout, a lone lawyer representing Duke Energy listened but said little. Duke is not required to defend its plan, unless the commission insists on it. Which is exactly what should happen. Billions of customer dollars are at stake—more than $100 billion over 20 years, according to a Greenpeace-financed analysis.
Before these commissioners are relieved of their duties and go down in history as the hapless bunch that let Duke become a statewide monopoly, they should call for evidentiary hearings on the utility's plan. They should take expert testimony from all sides. Let the public hear Duke's defense.
The commissioners have that power. But do they have the guts?
This article appeared in print with the headline "Under McCrory's thumb."