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Backroom Dealing Taints Yet Another Duke Energy Case — News Release from NC WARN

NC regulators endorse $6 billion Duke-PNG merger prior to hearing while telling other parties’ witnesses “don’t bother”

For at least the fifth straight time in a major Duke Energy case, state regulators have undermined any semblance of fair process – this time by cutting a backroom deal with the utility in a $6 billion merger with Piedmont Natural Gas even before receiving input from either the public or formal parties to the case. The NC Utilities Commission took the extra step this time of granting Duke’s request to disallow testimonies by two natural gas experts fielded by NC WARN and allies.

Once again, the regulators (the commission and its so-called Public Staff) have turned a complex, multi-billion dollar case into a rubber-stamp proceeding where Duke Energy avoids scrutiny as it plows forward with a major expansion of high-risk, climate-busting fracked gas.

Housed just down the hall, the Public Staff is supposed to be independent of the commission and its legal staff. Instead, they play virtually the same game each time Duke wants to raise rates, build a power plant or acquire a smaller corporation:

1) The commission leadership relies on PS leadership to work secretly with Duke to reach backroom settlements that include the PS formally endorsing the Duke project, with only modest changes.

2) Duke always starts with a high ask, settles a little lower, then joins the regulators in proudly touting their ability to negotiate.

3) The commission thus avoids the bother of a full-blown, sometimes complicated judicial proceeding. It still goes through the motions of conducting a hearing, but one that’s dominated by the backroom deal, with other concerns ignored if not formally excluded. Duke Energy lawyers sometimes get to totally avoid having to address experts brought by other parties to the case.

4) At least in some cases, the PS begins working with Duke before the utility even files its case.

5) The early deal heavily predetermines the case so that its outcome will fall very close, if not entirely upon, the backroom deal. Meanwhile, other parties that have invested time and financial resources to secure expert witnesses and prepare their cases learn their efforts are being ignored, and they are left with insufficient time or resources to redirect efforts toward examining the backroom deal.

This pattern has played out during the past two rate cases and the Duke-Progress merger. A modified version happened in the currently contested approval of a fracked gas-fired power plant Duke wants to build in Asheville. And the backroom dealing continues despite several past exhortations by NC WARN and others that the Public Staff not gut our chances to have meaningful input in an open proceeding by cutting an early deal with Duke Energy.

Sometimes Duke Energy also cuts private settlements with other parties to gain their support for the merger without bothering to hear all sides of the debate. In the present case, Duke did so with an industrial customers’ association and the Environmental Defense Fund.

By excluding our witnesses (and disallowing other parties altogether), the regulators did Duke’s job by silencing anyone actively critiquing the merger.

It’s ironic that the regulatory leaders act as if they have exclusive expertise to examine Duke’s projects, thus they don’t need to consider other parties’ experts and opinions. Although the regulators have talented staff, the leaders tend to rely on data and opinions provided by Duke Energy. One ongoing mistake by the regulators is their reliance on the gas industry’s line that natural gas prices will remain low for the next decade, without considering more reliable, independent expertise.

In fact, the regulators’ leadership seems not to care how future supply or price of natural gas will affect Duke’s customers. Our two witnesses that Duke directed the commission to exclude in the merger case include:

  1. A shale gas expert with 32 years of experience at the Canadian Geological Survey, who warns that the natural gas industry is highly unstable, and that US shale gas reserves are badly overstated – making future natural gas fuel shortages and price spikes very possible.
  2. A 25-year gas industry engineer and expert on methane emissions, whose testimony involves the increasing data about severe climate impacts of methane leaking and venting throughout the US natural gas infrastructure. And that Duke Energy’s overall move toward a fracking gas future puts customers at risk for the likely costs of new regulations of methane emissions.

At the hearing beginning July 18 at 2pm, the public will be allowed to make statements first. Next, NC WARN and allies will still cross-examine Duke and Public Staff witnesses to the extent that commission chairman Finley will allow it.

NC WARN is considering our legal options for loosening Duke Energy’s grip over this captive regulatory system. The People of North Carolina pay the regulators’ salaries, and they need to put our interests above those of Duke Energy executives.

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