NC Needs Clean, Economical Energy –
Not a Consumer & Public Health Rip-off
Energy bill has fatal flaws: Fix it or nix it
Despite the efforts of many dedicated people to address concerns with Senate Bill 3, more problems have emerged after continuing scrutiny.
The electric utilities have laden this bill with multiple examples of gross over-reaching which, if approved, would threaten the economic well-being of customers and the State as a whole, along with our health and climate. The bill could also entrench utility control over state energy policies for years to come and, paradoxically, could cause our growing, job-intensive renewable energy sector to fail.
Assertions by members of the Senate that broad support exists within the environmental and public interest community are flat wrong; there is far more opposition than support for S 3 as written.
NC WARN calls on all parties to join us in insisting that the NC House must conduct a thorough review of this bill in order to correct the following serious problems. This is especially important for two reasons: 1) the Senate allowed only cursory input dominated by a limited number of special interests, and 2) because we have many reports that legislators correctly feel the bill is extraordinarily complex.
If these problems cannot be corrected in the House, this bill should not be passed.
1) Hog waste loophole: A major reversal in State policy sought vigorously by hog corporations would undermine years of work toward converting waste “lagoons” to cleaner technologies. The loophole in S 3 allows them a cheaper way out: capturing methane directly from the cesspools, selling it for energy, while leaving the polluting lagoons and sprayfields in place. This loophole should be easy to remove from the REPS bill unless the hog industry also intends to reverse State policy in the hog bills.
2) Risk transfer, promotion of big power plants: The bill transfers the financial risk for new multi-billion dollar nuclear and coal-fired plants back onto the ratepayers. Duke Energy and Progress Energy could bill customers in advance for costs – plus profit – of new plants, even if they’re never completed. Construction Work in Progress (CWIP) was banned in the 1980s when those utilities cancelled nine reactors underway, wasting over $1 billion of public money. With no cap on annual expenditures, S 3 would encourage the “cost-plus” mindset that led to massive cost overruns of the 1980s that caused 60 U.S. nuclear plants to fail during construction. The power companies are demanding this risk transfer due to the very real chance that new projects could fail.
3) Nuclear development costs: The bill allows a blanket repayment of the development costs for nuclear plants prior to any review of whether they meet the current “public convenience and necessity” standard. Ratepayers should not bear the financial risk even before such review.
4) Unprecedented and exorbitant cost recovery for efficiency: While the public interest community has long offered to fairly incentivize the
utilities for energy efficiency and renewables, the bill appears to codify grossly excessive returns. These returns include not only the actual costs of programs and lost revenue, but recovery from ratepayers of up to 90% of the cost of power plants the utilities avoid building. Ratepayers should not pay for plants that are not built.
5) Promotion of Duke, Progress efficiency plans: In addition to the cost recovery mechanisms noted above, the bill would entrench utilities’ control over efficiency and clean-energy programs rather than having an independent third party administrator that would act in the public interest. Utility-run programs would be largely pre-approved by the legislature without detailed debate, and would cost ratepayers 3-4 times more than necessary for energy efficiency. Low income customers would be left behind, left with high power bills, and left vulnerable to extreme heat and cold. Issues affecting the lives of our most vulnerable residents should be thoroughly negotiated by all interested parties at the Utilities Commission, not locked in place by the legislature.
6) Clean energy and efficiency could be eliminated later: Conversely, the rulemaking section gives too much discretion to the Commission and would allow it to “modify or delay” clean energy provisions “if the Commission determines that it is in the public interest to do so.” Because the baseload provisions motivate the utilities to overbuild expensive power plants, they could then argue that capacity is being met, and that efficiency programs and renewable capacity aren’t needed. Senate Bill 3 would lead to the construction of more power plants and higher bills, instead of clean generation and energy security.
7) Poultry waste incineration: The bill’s 150 MW set-aside would virtually ensure that this untested technology would gain a foothold in the state without careful scrutiny. Valid concerns have been aired that such incineration could release emissions of greenhouse gases and other pollutants that are even higher than emissions from coal-fired plants. Overall, the amount of energy generated by the bill’s animal waste provisions far exceeds the amount that would be produced by truly clean technologies.
For NC WARN:
Jim Warren
Pete MacDowell
Margie Ellison
John Runkle
July 13, 2007
