Duke Energy is the second biggest energy producer in the world, and by far the biggest in the United States. But more importantly for citizens of North Carolina, it's now not only the biggest but the only large-scale energy producer with a sizable presence in the state.
Following last year's merger between Duke and Progress, small-scale energy installations like standalone wind turbines and household solar panels are some of the only things standing between Duke and 100 percent control of energy in the state.
Does this mean anything for consumers? The N.C. Utilities Commission approves electricity rates before they're applied, and thereby ostensibly saves us from the coordinated price gouging of traditional monopolies. Another idea key in approving the merger was that it would save retail customers $650 million over 6.5 years.
But some say rate hikes are not just likely but inevitable, and many agree that Duke's new stature might give it unprecedented influence in politics and the development of renewable energy in the state.
Environmental advocacy group NC WARN has released statements saying the merger and the utility's powerful influence on North Carolina politics allow Duke to pass off the costs of its various projects and risks to the consumer, resulting in massive rate hikes.
And now the time has come for the utilities to propose rates for the next year, and it is not looking good for consumers. So far Duke has asked for a 9.7 percent rate increase, and Progress, its counterpart, has asked for an 11 percent overall rate increase, which is the utility's first rate increase in 25 years. Duke raised its rates 7.2 percent last year, which then was its largest increase in more than 20 years.
Spokespeople for the utilities have attributed the increases mostly to upgrades and renovations for nuclear plants and natural gas plants, as well as a few new facilities. Press releases from NC WARN in the last year have pointed to these plants and many other Duke projects as factors that went unconsidered by the commission in the merger process.
But these rate increases are just the beginning, say Consumers Against Rate Hikes, a coalition of North Carolina organizations allied to combat Duke's price increases. Rates could be doubled by 2019, with an additional 50 percent increase in the following decade, if Duke proceeds in its business plan to build several new nuclear reactors over the next decade, said the coalition's spokesperson in a press release.
The plan essentially makes North Carolina consumers pay for a loan to build the plants, said Max Chang, author of a recent economic study examining Duke's plan. The study was performed by Synapse Energy Economics, Inc. and funded by Consumers Against Rate Hikes.
Duke's long-term plan will come before the commission on Feb. 11, and then the rates for the year will be approved or denied.
Pete MacDowell, program director of NC WARN, said a lot depends on the commission and its devotion to the public interest. "Is it going to stand up to Duke, or is it going to roll over for it?" he said. "It really needs to be much more aggressive and independent in regulating the utilities."
In the commission's mission statement, one of their primary goals is to "provide fair regulation of public utilities in the interest of the public."
But MacDowell and others say they have reasons to believe Duke's political influence may also play a part. "Duke has no competition," MacDowell said. "And if you have no competition, all you have to do is have the regulators see your way.
"And the regulators are political appointees," MacDowell said. "And when you have unlimited funds, [and] as many lobbyists as you need, you can have a lot of influence on the regulators."
Reviews of Duke's political activity suggest that these fears may be justified. According to analysis by nonpartisan watchdog group Democracy N.C., last year's merger in all likelihood produced "the most politically influential corporation in North Carolina." Each has long sponsored some of the biggest PACs in North Carolina, and together they "surpass Bank of America to form the largest corporate PAC in North Carolina."
There is also cause to worry about Gov. Pat McCrory's influence, said MacDowell. McCrory, who worked at Duke for 28 years before becoming governor, has given top staff positions in the state government to at least three former coworkers at Duke already, according to Julie Rose, reporter for radio station WFAE in Charlotte.
In 2013, McCrory will also have the opportunity to appoint three new commissioners and name the chair for the commission, which as a total of seven commissioners.
In order to circumvent this perceived conflict of interest, NC WARN and the AARP sent McCrory a letter Jan. 4 urging him to recuse himself from making the appointments for these commissioners.
NC WARN and the AARP in the letter appealed to the public interest, and offered their assistance in establishing a more transparent, ethical process to make the choices for the commission. "These are crucial positions for North Carolina's energy, economic and environmental future, with billions of dollars at stake as the commission reviews utility companies' requests for rate hikes and, in our view, unnecessary power plants."
The sympathies of the commission are important, NC WARN representatives say, not just because of the immediate financial burden that could be put on North Carolina's consumers, but because Duke, as the dominant energy producer in North Carolina, has full control over what kind of energy technology is developed. If Duke doesn't see alternative energy sources like wind or solar energy as worthy endeavors, then they won't be developed.
MacDowell said Duke and Progress have given sustainable energy like solar and wind only marginal importance in their long-term plans, and the merger has only made this worse. "The merger was not in the public interest," he said.
"What we're contending ... is that the kind of of 'no energy efficiency,' 'no real wind and solar' energy plan that Duke and Progress are putting forward is really totally irresponsible to the economy, the climate [and] people's health issues," MacDowell said. "And there is a clear and cheaper way to do it."
North Carolina is at a fork in the road with its energy policy, MacDowell said. And with Duke's costly plans for nuclear plants in 2024 and the apparent sidelining of renewable energy, the future beyond this fork is uncertain.
http://www.scribd.com/doc/126230224/UNC-Campus-BluePrint-February-2013
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