|
July 26, 2007
Speaker Joe Hackney
North Carolina House of Representatives
Raleigh, North Carolina
Subject: More problems in energy bill S 3 with
serious ramifications for the public
Dear Speaker Hackney,
As various public interest attorneys and others
continue analyzing Senate Bill 3 and amendments, we are finding additional
serious problems and language, at least one contained within amendments
passed earlier this week. Described below are four examples that have not
been included in the debate thus far, but which must be addressed.
Many other concerns are already on record with you and others in the
legislature.
Very few of the problems raised by ourselves and
dozens of other organizations have been discussed with any detail during
House committee meetings thus far. Meanwhile, many House members have
noted the complexity of the 27-page bill. Today, Utilities
Commissioner Jim Kerr opened his 13-minute description to the House Finance
Committee with the admission, “It’s a complicated bill.” It also
represents the most important potential energy policy change in North
Carolina in decades and our state’s first real response to the damage being
caused by global warming.
We remain concerned that this highly complex
legislation is being rushed toward approval before legislators and others
can understand its ramifications for North Carolina. Several
legislative promoters of the bill continue to falsely claim that
negotiations this spring among a group of “stakeholders” yielded consensus,
thereby smoothing the way for legislative approval. Obviously,
such a process should not substitute for careful deliberation in the
General Assembly. Yet that is what is happening.
In the House Energy Committee on Monday, a
substantially revised version of S 3 was distributed to members 10 minutes
after the meeting began. Although there had been a number of presenters to
the committee, very little discussion occurred between members. Fifty
minutes later, the bill passed on a voice vote. Yesterday, the Public
Utilities Committee heard an introduction of the bill by legislative
counsel, brief input from Duke Energy and two bill critics including
myself, then passed the complex bill 20 minutes later.
Some lawmakers have publicly complained of pressure
from leadership to speed the bill, along with a lack of clarity involving
grossly conflicting interpretations of key financial and environmental
measures.
We want to particularly bring to your attention the
following problems that have only recently come to our attention:
1. FEDERAL REPS. Section 1 (§62-133.7(h)(2)&(3))
eliminates the consumer protection caps on the cost of the REPS in the
event of a federal REPS. It obligates customers to pay for all of
the costs of complying with a federal REPS, including avoided costs, with
no caps to protect consumers. Avoided costs, as set forth by Duke
Energy in matters pending before the Utilities Commission, represent the
cost of fictional energy plants that utilities would not have to build
because customers saved energy. Duke is attempting to charge
customers these avoided costs for saving energy. The provision in S 3
strips the Utilities Commission of discretion in calculating and
apportioning costs attributable to a federal REPS, and forces it to use
avoided costs as a measure.
2. PAYING FOR SAVING. Section 4(a)
(§62-133.8(d)) authorizes the Utilities Commission to impose an annual
rider on customers which would be based on all actual costs of energy
efficiency programs plus any incentives the Commission considers
“appropriate.” This provision lacks a cap to protect consumers.
Section 62-133.8(d)(2) b specifically authorizes “capitalization of a
percentage of avoided costs.” In Duke’s Save-a-Watt docket now
pending before the Utilities Commission, Duke has asked for 90% of avoided
costs. Adding the actual costs and avoided costs authorized by
Senate Bill 3, customers could pay MORE for not using electricity than for
using it. (Again, the statute doesn’t guarantee payment of
avoided costs for costs saved by the NC REPS, but it specifically
authorizes the Utilities Commission to grant them, an authority now
lacking).
3. COSTS TO TAXPAYERS: How much will the
provisions below cost residential ratepayers – and taxpayers who must make
up lost tax revenues?
- Allowing industries (but not low-income families)
to opt out of efficiency programs (Section 4.(a);§62-133.8(f)).
- Reductions and exemptions for businesses and
industries on privilege taxes and sales and use taxes on electricity and
natural gas (Sections 10.(a) through 11.(e))
4. PLANT CANCELLATION COSTS: Last Monday’s
amendment regarding Section 6. §62-110.1(f2) deals with reimbursement to
ratepayers, in the event of plant cancellation, of profits already paid to
the utility prior to a plant becoming operational. (NOTE: A separate
contentious aspect of cancellation allows a utility to recover from
ratepayers the construction and financing costs for the utility’s failed
project, with potentially hundreds of millions of dollars in financing
costs charged to ratepayers in the years PRIOR to plant operation).
The language in part (f2) should explicitly direct that ALL profits charged
to ratepayers must be returned to ratepayers. I am told that this is what
is intended; it should be explicit, and not left as yet another
discretionary item for the Commission.
According to press reports, Progress Energy lawyers
drafted much of the bill, and it shows. Continued scrutiny increases
our concern about dozens of passages so extremely vague, if not outright
slanted in favor of the utilities, that there is a great risk of legal
actions stemming from a variety of parties. Even more likely, the
power companies will use their legal teams and influence over the
Commission to exploit the many vagaries in language.
I urge you to ensure that this extraordinarily
important shift in state policy not proceed without a full and careful
review in the House. The bill is badly flawed, and the problems
raised by various parties need resolution. Please do not allow a
situation where more “skeletons” are found only after the bill is law, and
thus to haunt the North Carolina public for generations.
If this bill cannot be substantially amended to
resolve these problems before the House adjourns this summer, the downside
of holding it for further consideration next year is nothing compared to
the downside of passing a new energy policy for this state that is
contradictory, vague, full of pitfalls, and an invitation to many years of
unproductive legal wrangling.
Sincerely,
Jim Warren
Executive Director
cc. Governor Mike Easley
Sen. Marc Basnight
Rep. Paul Luebke
|
