Energy in the News

OBSERVER WATCHDOG

Duke, Progress use clout -- and money -- to push changes to environmental bill

By: Christopher D. Kirkpatrick

Leaving their mark on a major energy bill, North Carolina's giant power companies are on track to spend more on lobbying state legislators this year than in previous legislative sessions.

Duke and Progress had provisions inserted into an environmental bill promoting renewable energy that would make it easier to finance multibillion-dollar power plants and shift more financial risk from shareholders to ratepayers, who could end up covering costs from failed power plant projects.

Six months into the current two-year legislative term, Charlotte-based Duke Energy Corp. and Raleigh's Progress Energy together have spent more than $176,000 on lobbying legislators. That's more than three-quarters of the $235,000 they spent during the entire previous term.

Consumer and political watchdog groups say utilities have too much influence over the legislative process. They point out that significant political contributions from utility political action committees are standard in Raleigh.

"They are spreading their money out as an investment and building friendships, particularly with state senators. And it's been going on for years," said Bob Hall, research director of Democracy North Carolina, a nonprofit state politics watchdog. "They've accumulated a lot of good will, and they are also viewed as the experts."

Corporations and special interest groups hire lobbyists to talk to legislators and influence the outcome of legislation. Environmental groups and other nonprofits also lobby. The agents and their clients, including Duke and Progress, must register with the state and list their lobbying expenditures.

Other than the state budget, the environmental bill has been the major piece of legislation debated in this first year of the General Assembly's current term. This month, the Senate passed the bill, which is now being debated in the House.

Duke said Friday that it doesn't have any undue influence in the General Assembly. Duke spokesman Tim Pettit said the company is merely participating in the democratic and political process by lobbying lawmakers and giving contributions.

"It costs a lot for them to run for office," he said. "Any of our lobbying efforts are looking out for the interest of our shareholders and customers. That goes without saying."

But critics say shareholder and customer interests are not always aligned and that the environmental legislation is a prime example of how the bottom line is being served ahead of ratepayers.

Introduced in January, the bill began as a straightforward proposal to require the state's power companies to produce 10 percent of electricity from renewable energy sources, such as from the wind, sun and animal waste. Similar clean energy requirements have become increasingly popular across the country.

After a meeting in Raleigh among lawmakers, environmentalists, utility lobbyists and others, the bill was changed. Support turned tepid among some environmentalists who complained that the legislation was co-opted by utility interests and that it could have the nullifying effect of making it easier to build power plants.

The utilities say the financing provisions are necessary and offer reasonable protections for their shareholders.

The Charlotte region and the country need new electricity sources and ratepayers should share more of the risk if a plant project goes bust, the energy companies say.

Updated laws must support new power plant construction to ensure economic growth and job creation, they say.

Power and Persuasion

Critics say utilities have had too much sway in Raleigh, in particular over a bill this session. Utilities say the bill would make it easier to attract financing and in the long run save 15 percent to 20 percent on the cost of power plants.

Duke has not built a new large-scale plant in decades, and a new nuclear plant has not been licensed in the country in three decades. The Charlotte utility wants to build a $6 billion nuclear plant in Cherokee County, S.C., and estimates about 70 percent of it would be paid for by N.C. customers and 30 percent by S.C. customers. Duke chief executive Jim Rogers has said he needs a provision the legislation before he can move ahead with that project.

The Bill Would:

• Require Duke and Progress to produce 12.5 percent of power from renewable energy by 2021.

• Allow Duke and Progress to pass the cost of financing new power plants to ratepayers before a plant is up and running.

• Allow Duke and Progress to collect on some costs from power plant projects that fail.