http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/energy-bill-still-stirring-debate-questions-cloud-outlook-for-alternative-sources By James Romoser Two months after the passage of a landmark state law to promote alternative energy, environmental and consumer advocates are still at odds with the state’s large power companies over how much consumers will end up paying for greener energy. The law, which has been hailed as North Carolina’s most significant change in energy policy in decades, will force power companies to begin using renewable energy sources for a portion of their electricity supply. How the law will be applied is up to the N.C. Utilities Commission, which regulates the state’s two major power companies, Duke Energy and Progress Energy. The commission must devise a set of rules that will determine how many restrictions or potential penalties are placed on power companies as the companies try to meet the law’s mandates and recoup costs from their customers. One unsettled question is the part of the law that deals with energy efficiency. The power companies are required to enact programs that encourage their customers to reduce their overall energy usage and conserve energy during times of peak energy demand. For instance, power companies may give customers coupons for energy-efficient light bulbs, dishwashers, water heaters or other appliances. Or companies may provide “assessments” of homes or businesses to recommend ways for customers to save energy. The law also allows the power companies to raise customers’ electric rates in order to pay for the cost of these programs. The amount of money that the companies can recoup depends on how much energy is saved as a direct result of the companies’ efforts. But measuring what is essentially the “non-use” of energy is difficult, and so is determining the source of that energy savings. For instance, if Duke runs a TV commercial with a message supporting energy efficiency, Duke would be allowed to build the cost of that commercial into all customers’ electric bills. The commercial may cause some customers to save energy, but many other customers who never see the commercial may decide to start saving energy for other reasons, unrelated to the company’s measures. “The question is: Is Duke going to end up taking credit for that increased efficiency?” said Shana Becker, the staff attorney for the N.C. Public Interest Research Group, a nonpartisan group that advocates for consumers’ rights, public health and good government. The amount of energy savings that gets measured also depends on the amount of future energy demand estimated by power companies. If the companies overestimate the demand, and then customers end up using much less energy than projected, the state would appear to be more energy-efficient than it actually is. The rules established by the utilities commission will determine how efficiency is measured, verified and paid for. Duke Energy estimates that its proposed energy-efficiency program, known as “Save-a-Watt,” will cause a 4 percent increase to customers’ bills within four years. If customers “take full advantage” of the energy-saving measures in the program, their bills will decrease 6 percent during that time because they will be using less electricity, said Andy Thompson, a company spokesman. Another unsettled question is what will happen to the power companies if they do not meet the law’s renewable-energy requirements. The law requires that 12.5 percent of the state’s electricity come from renewable sources or energy-efficiency measures by the year 2021. But the law does not specify penalties if a power company fails to meet that standard. Supporters of alternative energy want the utilities commission to set penalties, saying that without them, the law will lack teeth. But the power companies say that it would be unfair to punish the companies if third-party suppliers are unable to generate enough renewable energy to meet the law’s standard. The technology for renewable energy, which includes solar power, wind power and power generated from landfill gas or animal waste, is still evolving, and Duke and Progress are unlikely to build their own solar farms or wind turbines. Instead, they will buy renewable energy from other energy suppliers. “We want to make sure that all parties recognize that there are circumstances beyond the utilities’ control,” said Paige Sheehan, a spokeswoman for Duke Energy. If Duke does its best to comply with the law, but its suppliers do not deliver enough renewable energy, Duke should not be punished, Sheehan said. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/energy-bill-still-stirring-debate-questions-cloud-outlook-for-alternative-sources Mon, 10 Mar 2008 17:36:45 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/energy-bill-weak-but-a-good-start Opinion, Editor There are serious problems with the energy legislation passed this session in the North Carolina General Assembly, but the bill also marks a watershed moment for North Carolina and the Southeast -- this state is now the first in the region to mandate that a percentage of its electricity needs be met with clean energy sources. By 2021, at least 12.5 percent of the electricity sold by the utility companies will have to come from renewable sources or conservation programs. Municipal power providers and electric co-operatives will have until 2018 to meet a 10 percent standard. Those targets should have been set higher, but even opponents should recognize the significance of this legislation. Ten years ago a bill that mandated renewable energy production of any kind would have been lucky to win the support of a small handful of legislators. Over the past few years, though, the negative effects of climate change, the need for independence from foreign oil, and the health– and environmental-related damage from energy production have all been accepted as real problems that must be dealt with. By legislating at least a percentage of power production from green sources, we could see unprecedented investment in solar and wind energy, along with biofuel production and the conversion of other waste sources into energy. That is the belief of the few environmental groups who supported this bill. This may be a baby step, but it is a step in the right direction. The main problem with this legislation is that it, in many ways, sends a mixed message. While encouraging the production of renewable energy, it also encourages the building of new coal and nuclear power plants. Environmental and consumer groups were outraged that utility companies will now be able to charge customers for the cost of new power plants before those facilities are built. This would provide these companies with the ability to borrow the money for construction from otherwise reluctant Wall Street investors. The customers paying the higher rate provide the utilities with a guaranteed source of revenue to pay off the financing costs, making construction more attractive to potential investors. “Giving utilities cheap money, cheap financing, on the backs of ratepayers doesn’t guarantee customers will have lower rates in the end. To the contrary, it encourages the utilities to aggressively invest in plant construction,” Shana Becker, a lawyer with the N.C. Public Interest Research Group, told a newspaper during hearings on the bill. She’s absolutely correct. This new method for financing power plant production actually stymies the free market system. If deep-pocketed investors are reluctant to loan money for nuclear plants or coal plants, then those plants become more expensive. This would give utility companies an incentive to encourage conservation or develop new renewable sources. Now that this legislation has passed, the utility companies will have an easy method to finance new plants instead of encouraging conservation. Over the next 25 years North Carolina’s population is expected to grow from nearly 9 million residents to 12 million. It’s difficult to imagine meeting the electricity needs of these residents without increasing power production. If that’s the case, then the only way to offset the negative effects of more power production is to increase renewable energy sources. This bill is flawed, but its mandate for renewable and green energy production from the state’s utilities is a positive move. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/energy-bill-weak-but-a-good-start Mon, 10 Mar 2008 16:58:38 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/well-intentioned-bill-would-give-utilities-a-blank-check By Shana Becker, revised Before buying our first house and locking into a 30-year mortgage, my husband and I consulted every expert we could think of – real estate agents, appraisers, inspectors, surveyors, mortgage dealers and lawyers. We are first-time homebuyers, and if all goes well, we will close on our house in two weeks. While financing a house involves a lot of money, it is a cup of water compared to the ocean of costs for nuclear and coal construction. Yet, a well-settled law on utilities’ financing faces total revision without the benefit of research, the scrutiny of experts or factual basis. If the state Senate’s “Promote Renewable Energy/Baseload Generation” bill passes in the House, consumers could be forced to sign a blank check for financing nuclear and coal “construction works in progress” (CWIP). For over 20 years, the General Assembly has rejected utilities’ lobbying for CWIP. By design, CWIP raises rates and shifts risk to customers. This session, however, CWIP sailed through the Senate on the coat tails of renewable energy and efficiency. The renewable energy and efficiency part of the “Promote Renewable Energy/Baseload Generation” bill encapsulates years of research and scrutiny. It takes a pragmatic approach to diversifying North Carolina’s energy platform and it includes consumer protections. According to a 135-page technical report prepared for the Utilities Commission, North Carolina can cheaply achieve a 14 percent efficiency standard and realistically implement a 7.5 percent renewable energy requirement. The Senate’s bill adopts a conservative 5 percent efficiency standard and a 7.5 percent renewable energy requirement for public utilities. It also includes a series of cost caps to protect consumers. Economically, research indicates that this legislation will generate at least 2,700 jobs and long-term savings of at least $577 million more than the utilities standard portfolio. It will also reduce North Carolina’s dependence on imported fossil fuels, which cost customers $1.6 billion per year. Environmentally, it will reduce our carbon footprint and it will not contribute to radioactive waste. There are no studies, however, to establish the pragmatism of CWIP. There are no fiscal notes and no data to suggest it is a good idea. If research on CWIP existed, however, it would probably consider the history of nuclear and coal construction in North Carolina. Take, for example, the Shearon Harris Nuclear Plant. Progress Energy (then CP&L) originally projected a need for four new reactors that would cost $1.1 billion. Cost overruns, projection errors and delays resulted in the completion of one $3.9 billion nuclear reactor. Customers were forced to pay that bill. Regarding coal, Duke Energy’s Cliffside project could be informative. Although construction has not begun, cost estimates have increased by almost $1 billion. Given the history of nuclear and coal construction costs in North Carolina, there should be a reason for shifting more risk and expense to customers. The utilities have promised that CWIP will lower costs by providing stockholder assurances and making financing cheaper. But the utilities’ “trust me” is not good enough. Apart from administrative review, the CWIP provision includes no consumer protections for cost overruns and construction delays either — no cost caps or refunds. Utilities can repeatedly revise their costs upwards and customers would have to sign a blank check. I have more research about the financing for my first house than there is about changing financing for CWIP. My housing contract also gives me more certainty and protection from ballooning costs than the law gives ratepayers for CWIP. CWIP’s attachment to the renewable energy and efficiency bill has kept it alive. Reversing the CWIP financing law without basis and failing to include consumer protections makes no sense. While the renewable energy and efficiency standard is economically smart and environmentally necessary, the utilities’ ransom – a blank check for CWIP — is unacceptable. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/well-intentioned-bill-would-give-utilities-a-blank-check Mon, 10 Mar 2008 17:00:49 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/lawmakers-consider-renewable-energy-bill by Cullen Browder Raleigh — Power companies and environmentalists disagree on the merits of an energy bill before the state Legislature, but both sides warn that the bill could affect electric rates. The bill, entitled Promote Renewable Energy/Baseload Generation, would require North Carolina utilities to get 12.5 percent of their retail electricity from renewable energy sources, such as wind and solar power or methane gas from hog waste. Since Sen. Charlie Albertson, D-Duplin, filed the bill Jan. 24, power companies have convinced lawmakers to amend it twice. In return for utilities' commiting to energy efficiency and conversion incentives, lawmakers added negotiated rate recovery provisions, which would enable utilities to charge customers up front to help build any new nuclear or coal-fired power plants. Opponents and supporters of the bill got to voice their arguments Monday at a hearing of the House Energy and Energy Efficiency Committee. Some environmental groups claimed that the amended bill strays from its purpose of promoting renewable energy. "(The bill) is a consumer rip-off," said Rob Thompson, of the North Carolina Public Interest Research Group. "What the utilities did was, they leveraged their political power to get provisions inserted into these bills that are bad for consumers and bad for the environment." Progress Energy spokesperson Cari Boyce said that demand dictates the need for proven power generation and up-front payment by customers will produce long-term savings for them. "Focusing just on renewables, which are unproven technologies to date, would be unwise," said Boyce. "We need to ensure that if we need new plants that we build them at the lowest cost to the consumer. ... So over the life of the plant, the cost to customers is lower than it would be without these provisions," continued Boyce. The committee voted against stripping the negotiated rate-recovery provisions from the bill and passed it with only two changes. "Politics are going on here with the utilities. In order to get their agreement on the renewables, we had to give something," said Rep. Pricey Harrison, D-Guilford, committee chair. The bill must go to two more House committies before being voted on by the full House. The Senate has already passed the bill. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/lawmakers-consider-renewable-energy-bill Mon, 10 Mar 2008 17:01:28 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/green-energy-bill-aids-coal-nuclear-too By Mark Binker What happened to that renewable energy bill? For those who heard a few months ago about an effort to promote alternatives such as solar water heaters and burning poultry litter for kilowatts, that might seem like a simple question. It's not. House and Senate versions of the bill were first drafted to encourage conservation and the use of renewable energy as a means of cutting down reliance on coal and nuclear plants. The Senate version of the bill appears headed for final approval. It now contains provisions useful to companies that build new coal and nuclear plants — the very technologies renewable energy is supposed to supplant — in addition to providing incentives for conservation and alternative energy. Whether that is a broad-minded approach to meeting the state's energy needs or a train wreck that caters to industry depends on who you ask. "This bill deserves to be studied in political science classes as an example of hard political reality," said Rep. Grier Martin, a Wake County Democrat. The measure began its transformation in late January as part of what legislators call "a stakeholder process." Energy companies, environmental advocates, legislators and members of government agencies gathered in a conference room of the legislative office building to rebuild the bill. According to participants, this was done at the behest of Senate leaders — who wanted to handle several pending energy-related matters in one bill — and organized by legislative staff members. However, much of the drafting of the bill was done by lawyers who work for the utility company Progress Energy. "That's exactly right, and that's troubling," said Rep. Pricey Harrison, a Greensboro Democrat and the chairwoman of the House Energy and Energy Efficiency Committee, which is vetting the bill. Asked about their work on the bill, Progress Energy spokesman David McNeill said, "We have been involved in this collaborative effort for many months with a diverse group of constituents, including regulators, environmental groups, utilities, businesses and consumers." A Duke Energy spokeswoman said her company supports the bill as drafted by the stakeholder group. "The process of collaborating in advance and seeking consensus and delivering a comprehensive package to lawmakers actually helps speed the legislative process, and I hope informs the process in a very constructive way," said Paige Sheehan, with Duke. It is worth noting that the political action committees for Progress Energy and Duke Power were two of the top 10 donors to North Carolina legislative campaigns during the 2006 election. No environmental or consumer advocate group broaches the top 25. Several provisions were grafted onto the bill during the stakeholder process. The one that has prompted the most outcry from environmental and consumer groups would allow utilities to charge customers for the cost of financing new coal and nuclear plants before those plants come online. "Giving utilities cheap money, cheap financing, on the backs of ratepayers doesn't guarantee customers will have lower rates in the end," said Shana Becker, a lawyer with the N.C. Public Interest Research Group. "To the contrary, it encourages the utilities to aggressively invest in plan construction." Encouraging investment in coal and nuclear is at odds with the goals of encouraging energy conservation and using renewable energy, several environmental advocates said. "That view is fundamentally dead wrong," said Sen. Dan Clodfelter, a Mecklenburg Democrat who other participants in the stakeholder group said arbitrated the major differences between parties. "You can't draw a bright line and solve all your problems by just doing one thing like renewable energy," Clodfelter said. As the state grows from about 9 million residents today to about 12 million in 2030, multiple sources of energy must be tapped to meet demand. The bill as it has been reconstructed and passed by the Senate was meant to address the state's total energy needs, he said. It was meant to square with political reality as well, Clodfelter said. "I think if we were trying to run it a piece at a time, you'd see individual sections get defeated," he said. The bill, for example, requires energy companies to get 12.5 percent of their power from renewable resources or conservation. Without changes that affected other areas of energy policy, energy companies might have fought that provision, several people familiar with the bill said. On the flip side, at least two environmental groups are backing the bill despite concerns about the financing of new coal and nuclear plants. "Environmental Defense thinks it is critical that North Carolina adopt a renewable and efficiency standard," said Michael Shore, a policy analyst for the group. Although it was "uncomfortable" with the coal and nuclear sections, Shore said his group was willing to risk what it saw as potential problems in exchange for what he described as "more positive" pieces of the bill. After nearly six months of tweaking by the stakeholders, the Senate passed the bill in less than a week with only one committee hearing. It has since been more intensely scrutinized by Harrison's committee. Although she pointed to other stakeholder groups that had worked well — on clean water bills, for example — she called the vetting of this legislation "a flawed process. "I appreciate the time and work our staff put into it. But it had no input from the House and it became a utility (company)-driven process," she said. Harrison said she would rather pass a bill without the coal and nuclear financing provisions, but is under pressure to move the compromise legislation along. She expects to make some changes to the bill before it's passed on to other committees and eventually debated on the House floor. She expects to add more stringent requirements that renewable energy companies that burn wood and animal waste don't emit more pollution than coal plants. And she said the coal and nuclear financing provision could be changed to add additional safeguards for consumers. Others involved with the bill say that advocates on all sides have to take the good with the bad. "Everyone wants to go back to their respective corners and fall back on their litmus test positions," Clodfelter said. For her part, Harrison said she's learning on the fly after spending years first as an environmental advocate and then as a relatively new, self-described progressive member of the General Assembly. This was her first time as a committee chairwoman managing major, controversial legislation about which she had strong opinions. "I'm trying to learn the art of compromise," she said. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/green-energy-bill-aids-coal-nuclear-too Mon, 10 Mar 2008 17:42:22 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/google-joins-wilson-in-political-fight By Alex Keown The company that provides the world's largest Internet search engine has sided with Wilson and North Carolina's other municipalities in a political fight over a bill that would limit a municipality's ability to provide Internet and other communications services to its citizens. John Burchett, state policy counsel for Google, sent a letter to House Speaker Joe Hackney urging him to oppose the bill. In the letter, Burchett said the bill, called the Local Government Fair Competition Act, threatens to undermine the prosperity of North Carolina. The bill, which was passed by a House committee two weeks ago, would require governments to hold public hearings before establishing city-run, hi-tech communications infrastructure. Municipalities would also have to release their business plan, which would include how the city intends the venture to be profitable while not pricing the service below fair market value. The bill has been backed by telecommunications industry members, including Time Warner Cable and AT&T. Proponents of the bill say that allowing local governments to use taxes to create their own information utilities gives towns and cities an unfair advantage over private companies. The bill's opponents, which includes most of the state's municipalities and their legislative representatives, say the bill erects barriers that will prevent them from providing services that many private companies aren't offering certain areas of the state, particularly the rural areas. The city of Wilson has already made an investment of $18 million for its fiber optics network which should go online sometime in early 2008. City leaders say offering access to high-speed Internet and other communications services is the infrastructure of the future. Grant Goings, Wilson city manager, said the telecommunications companies are "concerned about their corporate profits; we are concerned about jobs, opportunities for our citizens and our city's future." Burchett said Google supports a "strong, fair and open competition to ensure users can enjoy the widest range of choice and opportunities to access content online." He said the United States is losing ground to other nations in broadband deployment. He said Google supports lowering the barriers to public broadband services rather than establishing new ones. In addition to Google, other companies have also sent letters to legislators including Intel, Alcatel-Lucent and Tropos Networks out of California. Brian Bowman, public affairs manager for the city of Wilson, said the fact that private companies such as Google are opposing the bill shows that the public and private sectors are not antagonistic toward each other. "We believe they have a vision to create partnerships between corporations and cities instead of drawing battle lines," Bowman said. "These Internet companies indicate they see a profit can be made from such partnerships." Policy groups like N.C. Public interest Research Group are also seeking to defeat the bill. Rob Thompson, spokesman for the group, said high-speed Internet access is critical for communication and developing a 21st Century economy. The bill was passed by a House public utilities committee and currently sits in the House Finance Committee. So far, no action has been taken on the bill, and Bowman says he's hoping it will die in committee. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/google-joins-wilson-in-political-fight Mon, 10 Mar 2008 17:03:56 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/states-weigh-limits-on-public-internet By Jordan Schrader WILSON, N.C. — The possibilities excited Rusty Stephens as soon as he heard about Wilson's plans to lay fiber-optic cable to every address in the city. The president of Wilson Technical Community College envisioned automotive students manipulating a virtual ignition system in their homes miles away, their hand motions read by gloves full of sensors. "As far as I'm concerned, it's the difference between a tricycle and a space shuttle," Stephens said of the broadband Internet service, which he said will be significantly faster than cable. "It's that dramatic." Dissatisfied by private Internet providers' service or speed, cities from Lancaster, Pa., to Boulder, Colo., have sought to build their own networks to provide upgraded, and in some cases, free service to residents. In turn, providers such as Time Warner and Comcast, among others, have complained to state lawmakers about unfair government competition. "It's difficult to compete with your regulator and be regulated by a competitor," Time Warner spokesman Alex Dudley said. Time Warner Cable declined Wilson's request to install a fiber-optic system, city spokesman Brian Bowman says. This year, Wyoming became one of 12 states that restricts public broadband Internet, joining Colorado, Florida, Louisiana, Nebraska, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, Washington and Wisconsin. Legislation proposing restrictions in North Carolina is in the committee phase but has inspired opposition from cities, consumer advocates such as the North Carolina Public Interest Research Group and tech companies like Google. The debate also has caught the attention of U.S. Rep. Rick Boucher, D-Va., who has drafted a bill to keep states from putting up barriers to public Internet. "Broadband is every bit as essential as electricity was when it was emerging 100 years ago," he said. One of the state legislators Boucher wants to stop, Rep. Drew Saunders, also drew a comparison to the utilities of the past. The Democratic chairman of the N.C. House Public Utilities Committee said the bill he introduced this year would apply 21st-century technology to the principle that municipalities shouldn't compete with industry. His proposal would keep North Carolina cities from subsidizing a communication service with taxes or other money and require the service to turn a profit. "We're not saying they cannot compete," Saunders said. "We're saying that if you do, you've got to do some of the same things (as) private industry." Not all states are moving in the direction of more restrictions. In Pennsylvania, Rep. Mike Sturla, a Democrat, has proposed ending a law limiting local public broadband to places where a phone company had refused to provide the requested connection speeds. Sturla said he supported the original restrictions when they passed in 2004 because the measure also required Verizon to expand its network to uncovered rural parts of the state. Verizon has subsequently dropped its objection to municipal projects. Other state officials remain concerned that cities wading into public broadband will find lower demand and higher expenses than they expect. "The states are concerned about, 'Are they going to have to bail out cities?' " said Neal Osten, federal affairs counsel for the National Conference of State Legislatures. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/states-weigh-limits-on-public-internet Mon, 10 Mar 2008 17:04:25 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/utilities-ransom Letter to the Editor (revised) Rick Martinez's July 4 article "Sticking it to rate-payers" is on the money, literally. If the Promote Renewable Energy/Baseload Generation bill passes the House, consumers could be forced to sign a blank check for financing nuclear and coal Construction Works in progress. The CWIP part of the bill lacks research, fiscal notes or any analysis at all. If it existed, a study might include the history of nuclear and coal construction in North Carolina, like of the Shearon Harris Nuclear Plant. Progress Energy (then CP&L) projected a need for four reactors at $1.1 billion. Cost overruns, projection errors and delays resulted in a single $3.9 billion reactor, for which customers were forced to pay. Notably, the CWIP part of the bill includes no cost caps to protect consumers. Utilities can repeatedly revise their costs upward, like they did with Shearon Harris, and customers would have to pay. While the renewable energy and efficiency standard is economically smart and environmentally necessary, the utilities ransom -- a blank check for CWIP -- is unacceptable. Shana Becker Staff Attorney, N.C. Public Interest Research Group Raleigh http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/utilities-ransom Mon, 10 Mar 2008 17:04:53 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/mr_-watchdog-10-needed-changes-to-rules-and-fees by Andrew Shain Verizon Wireless' decision last month to curb fees when customers end contracts early was hailed as an end to one of the more anticompetitive and anticonsumer fees out there. So what would consumer advocates like to see changed next and who could make them happen? Congress is debating a few consumer issues, notably on cable television and the Web. But just as with Verizon, when a business ends an unpopular policy to win customers, change often comes at unpredictable times. The key, advocates insist, is consumers fighting back -- writing e-mails, making calls and voting with their wallets. Here are 10 fees and rules consumer advocates said they'd like to see improved or changed: • Cell-phone trial periods: Lengthen the amount of time to test new cell-phone service from the typical 14-15 days to an entire billing cycle so customers can examine their first bill and learn better about where the phones work, said Rob Thompson, consumer advocate for the N.C. Public Interest Research Group. Cingular, one of the Charlotte region's dominant carriers, already offers a 30-day trial. • Cable channel choice: Let viewers choose their own channels to watch, rather than paying for large bundles of channels cable operators sell. "Many of these channels are making money, so why do I have to pay to have them on my TV?" asked Linda Sherry of Consumer Action. • Internet network neutrality: What if Internet providers allowed some favored Web sites to load on your computer much faster than others? It's being discussed since Web services could charge for this privilege. Fears are that only bigger Web sites will pay, leaving behind smaller and newer competitors, said Mark Cooper, research director for the Consumer Federation of America: "This closes off the Internet." The Senate could debate the issue this month. • Paperwork charges on car sales and leases: Called document fees or dealer conveyance on a sale, some dealers charge up to $400. Philip Reed, consumer advice editor for car advice site Edmunds.com, said $100 is reasonable. On auto leases, these are acquisition and lease-end fees, costing about $300 each. Ask to have them waived. "When you go to the store, do they charge you for making out a receipt?" Reed asked. Some states cap these fees, but not the Carolinas. • Credit card interest rates: Banks can boost interest rates for almost any reason (late payments, changes in credit scores) with 15 days' notice -- even for customers with fixed-rate deals, Thompson said. The reasons and amount can vary. Standardize when and how much rates can change as well as the time between receipt and payment of bills, he said. In addition, banks need to curb when they can send interest rates directly to the maximum allowed, usually around 25 percent. This instant hike should be used for habitual late-payers, not for customers late a couple of times or whose credit rating dropped slightly, said Greg McBride of Bankrate.com. • Over-credit-limit fees: Don't charge a $30-$50 fee for going over credit card limits. Instead reject purchases that put customers over, advocates suggest. • Late credit card payment fees: They average more than $35, but advocates believe they should reflect the true cost for banks -- somewhere under $15. • ATM fees: Banks are charging $1.50 to $2 to use a machine from a competitor -- and the competitor adds a fee for noncustomers to use the ATM. Getting $20 ends up costing $24. Consumer advocates say those fees should be capped at 50 cents. • Mail-in rebates: Ban -- or at least standardize rules for -- mail-in rebates. "Why not just sell the product at the price after the rebate? Don't advertise a cell phone for $25 when it costs $125 but has a $100 rebate -- just sell the thing for $25," Thompson said. "At the least, the information and time needed to redeem a rebate should be standardized." Best Buy and OfficeMax have announced plans to curb or end mail-in rebates. • Gift cards: No fees or declining balances if cards go unused. In fact, balances should rise: "They're getting to use your money," said Tom Bartholomy, president of the Charlotte-area Better Business Bureau. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/mr_-watchdog-10-needed-changes-to-rules-and-fees Mon, 10 Mar 2008 17:05:24 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/internet-bill-worries-greensboro By Mark Binker RALEIGH — A bill utility companies say would protect them from unfair competition has raised the ire of city leaders and public interest advocates, who complain it will stifle competition. The measure would require cities and counties to clear a series of hurdles before offering services such as cable television, phone and broadband Internet. Bill opponents are most concerned about the ability to offer Internet access, which is increasingly seen as a necessity for businesses and education. They say the proposed restrictions could hurt municipal efforts to recruit businesses or help bring affordable broadband Internet to lower-income areas. "Broadband is just that important. It's just like bringing in electricity or water or gasoline, it's that much of a need," said ToNola Brown-Bland, an assistant city attorney for Greensboro. Businesses say the measure merely ensures governments won't use their powers to undercut prices offered by private companies. Under the proposed requirements, governments would have to hold hearings and referenda before getting into a communications business. Also, the bill places restrictions on how a government could subsidize its efforts and would require that the government-run system pay for itself in four years. The city doesn't have any plans to get into the cable business, Brown-Bland, said, but it could have unintended consequences later. Utility company officials say the measure is simply a matter of fairness. "What we're talking about here is municipal entities that are entering into direct competition with services provided by companies in the communications business," said Randy Fraser, a vice president for government affairs with Time Warner. Governments, he said, should not be allowed to subsidize their communication businesses with tax revenues or fees collected for other services. AT&T spokesman Clifton Metcalf said the referendum requirement is reasonable because it forces government leaders to justify their actions to taxpayers, similar to how a business justifies its work to stockholders. "So in this case, a government would approach its stockholder, its citizens, and present its business case," he said. Public interest advocates, including the AARP and N.C. Public Interest Research Group, have lined up against the bill. "It appears to be an anti-consumer, anti-competition bill," Rep. Pricey Harrison said. Legislation that passed last year allowed communication companies to not serve an area if it wasn't economically feasible. This bill, she said, would keep government from stepping into the gaps in service as a result of that law. Rep. Hugh Holliman, a Davidson County Democrat and one of the measure's sponsors, said he agreed the original version leaned too far toward business. When the House Public Utilities Committee hears the measure today, Holliman said its language should be softened, perhaps taking out the requirement for a referendum. Rep. Nelson Cole, a Rockingham County Democrat and co-sponsor of the measure, said he was concerned for cities and counties that are already offering some form of Internet service. Reidsville, for example, offers free wireless Internet access in its downtown area, Cole said. Bill sponsors and utility companies say the measure would not affect such free wireless offerings. Municipal leaders are less sure. "The bill says you can't offer the service for less than the cost of providing it, and free is less," Brown-Bland said. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/internet-bill-worries-greensboro Mon, 10 Mar 2008 17:05:51 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/need-to-know-bill-could-cut-free-municipal-wi-fi By Mark Schreiner A state House committee will consider a bill Wednesday that could make it harder for local governments to provide free Internet service, such as Wilmington's City Port Wi-Fi. The Public Utilities Committee is set to vote on House Bill 1587, also called the Local Government Fair Competition Act, which would bar cities, towns and counties from subsidizing communication services they provide to the public. The Wilmington city government provides free wireless Internet access along the Riverwalk and nearby downtown commercial blocks. One opponent said the bill would particularly hurt small and underserved communities. "High-speed Internet access is fast becoming a basic public necessity - just like water, gas or electricity," said Rob Thompson, a policy advocate for the watchdog group NCPIRG. Proponents of the bill are expected to argue that such programs unfairly compete with private companies that sell similar service. The bill's sponsor, state Rep. Drew Saunders, D-Mecklenburg, did not immediately return messages left at his home and Raleigh office seeking comment. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/need-to-know-bill-could-cut-free-municipal-wi-fi Mon, 10 Mar 2008 17:06:17 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/anti-muni-broadband-bill-moves-forward By Fiona Morgan Opposition is rising against a bill that would severely restrict cities from providing Internet and other communications services. The bill passed the House Public Utilities Committee last week. House Bill 1587, "The Local Government Fair Competition Act," would create requirements and restrictions for any city or local government in North Carolina seeking to provide broadband Internet or other telecommunications service to its residents. The bill's backers are telecommunications and cable companies who say local governments have an unfair advantage because they are not required to pay taxes, and that the bill is necessary to level the playing field. But a growing number of cities and consumer advocates say private industry is not required to meet the stringent requirements it wants imposed on local governments. Leaders in many rural communities say they have been unable to convince companies like Time Warner and AT&T to provide broadband Internet services because low density makes those services less lucrative, and that local governments deserve the opportunity to serve their own citizens. Under the proposal, a city must: hold at least two public hearings and a special election before issuing bonds to pay for the service; refrain from using money from other parts of its budget to launch or subsidize the service; and calculate the cost of taxes and fees a city is not required to pay into the fee it charges citizens for the service. Another controversial requirement—that the business must be profitable within four years—was rephrased in a new version presented last week to say "within a specified period of time after the communications service is first provided, such time to be consistent with commercial practices for similar projects." Legislative staff attorneys did not explain what that "specified period" would be, or how it would be determined. Rep. Drew Saunders (D-Mecklenburg), the primary sponsor, is also chairman of the House Public Utilities Committee. He ceded control of the June 6 meeting to Vice Chairman Rep. Harold Brubaker (R-Randolph), also a sponsor. Saunders accepted $7,000 in industry campaign contributions last year; Brubaker, $5,900. Brubaker did not allow public comment, though city officials had traveled from across the state to attend. Many were wearing stickers that said, "Don't shut the G.A.T.E. Greater Access to Technology for Everyone." Wade Hargrove, a Raleigh attorney, was allowed to speak on behalf of the telecommunications industry. He talked about "the disaster of municipal communications networks" and lambasted critics of the bill who spoke at a previous meeting. "Our whole system of government, our whole economy, is premised upon the free enterprise system. Frankly, if you had closed your eyes at last week's meeting and did not know where you were, you might have thought you were in Moscow," Hargrove said. "It was as if only government could get this done." Wilson Mayor Bruce Rose countered by framing the struggle as one between citizens and a powerful industry. "We all know who wrote this bill and who benefits from it," he said. He explained why his city launched its own fiber-optic broadband network last year. Internet service is an essential part of the infrastructure, like water, sewer and electricity, he said, and the city's customers include its biggest employers. Wilson has financed $18 million in debt to launch it. He demonstrated how much faster download and upload speeds for this technology are compared to DSL and cable modem service. He also noted that cities are subject to public disclosure laws that allow private competitors to access their business plans and rate models. "It has been interesting to watch this debate evolve," Rose said. "At first, the industry was suggesting that we didn't know what we were doing, that we could not possibly run a successful system, and that we would likely go bankrupt and be a burden on our citizens. Then, last week, in this room, I heard the industry that represents some of the largest corporations in our country say that they couldn't compete because we had an unfair advantage. This isn't just David versus Goliath; this is David versus Goliath and all of his cousins." Rose was permitted to speak on behalf of the N.C. League of Municipalities, which opposes the bill along with groups such as the N.C. Justice Center and the N.C. Public Interest Research Group and several cities, including Durham, Chapel Hill, Cary, Greensboro. There are still many questions about the bill's impact. According to legislative staff, it would not affect free Wi-Fi service, as it only applies to services provided for a fee. But it could affect public-private partnerships, or any service that "provides a financial benefit" to a local government. Yet, questions such as these were not explored in the committee meeting, even after a request from Rep. Angela Bryant (D-Halifax, Nash). Committee members also rejected an amendment proposed by Rep. Pricey Harrison (D-Guilford) that would have exempted communities not currently served by a private company. Harrison's request to count the votes was denied. The bill passed on a voice vote. But while its sponsors were eager to push the bill through, Rep. Paul Luebke, executive chairman of the House Finance Committee, said he does not anticipate it will be heard anytime soon. When it is, Luebke expects the climate might be different. "This bill seems to have had a lot of support initially from proponents, but at this point, the cities seem to be organizing strongly against it," says Luebke, who accepted no contributions from the telecommunications industry last year. "So it may well be that there will be more of an even battle when the bill comes before House Finance." http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/anti-muni-broadband-bill-moves-forward Mon, 10 Mar 2008 17:07:46 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/bill-would-let-utilities-get-an-earlier-return-on-plant-costs By John Downey, Senior Staff Writer Environmental groups and consumer advocates oppose the provision, contending ratepayers could end up paying for plants that are never finished. And they say the proposal would shift the financial risk of plant construction to customers -- and away from utility shareowners. But the measure remains in the version of the bill discussed this week by a 70-member working group the N.C. Senate established to find common ground on state energy legislation. The bill was designed to require utilities to use renewable energy sources and expand conservation efforts. But Senate leaders have broadened the scope of the legislation to address several additional energy issues. The state's utilities recently dropped their efforts to include a provision that would've let them collect financing costs for power-plant construction before a plant is built. But the bill still would allow utilities to file with the N.C. Utilities Commission for a return on their construction costs. "It has nothing to do with renewables," says Shana Becker, a lobbyist with the N.C. Public Interest Research Group and a member of the working group that's crafting the energy bill. At present, utilities are allowed to make a return on their construction costs before a plant is completed only if they can demonstrate financial distress. The proposal under consideration would remove the financial-distress requirement, says George Everett, Duke Energy Carolinas' chief lobbyist at the legislature. The change would put North Carolina on the same legal footing as South Carolina, he says. Plus, the proposal is designed to reassure investors and the public markets that utilities will be able to make a return on major coal- and nuclear-plant projects that have high costs and take years to build. But Becker views the proposal as one of several that would benefit utilities but hurt ratepayers. Her organization has also argued against a provision allowing utilities to pass on the costs for environmental regulation to ratepayers as part of annual fuel adjustments. Those adjustments are essentially automatic pass-throughs on the utilities' fuel costs. But Elizabeth Ouzts, state director of Environment North Carolina, says the legislation would allow utilities to include the cost of pollution allowances in the fuel adjustments. That, she contends, would make it easier for utilities to pass on to ratepayers the cost of buying allowances that enable them to put more pollution in the air. No timetable has been set for the working group to finish its efforts to reach a consensus on the bill, Becker says. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/bill-would-let-utilities-get-an-earlier-return-on-plant-costs Mon, 10 Mar 2008 17:08:14 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/progress-energy-pushes-conservation By Brian DeRoy RALEIGH, N.C. -- Progress Energy is trying to avoid expanding the Shearon Harris nuclear power plant, by raising rates and making a big push to get its customers to save energy. "We want to double the amount of energy efficiency we currently are able to use," said Progress Energy spokesman Mike Hughes. "If we can achieve that through efficiency, we can delay the need to build new power plants." The company has said it does not plan to build any new nuclear plants until at least 2018. Nuclear plant opponents are cheering the decision to delay a new reactor at the Shearon Harris plant. They want other energy options explored. "There are ample wind resources in North Carolina that are untapped, and we also have hydro resources," said Shana Becker, a member of the N.C. Public Interest Research Group. "Nuclear energy and the toxic byproducts are dangerous, expensive.” Progress Energy wants to raise its rates, and use the extra revenue to develop energy efficiency programs and offer rebates for customers who use energy-efficient appliances. Kip Guyon is the head of Anderson Homes. The company is one of just a handful of local builders constructing Energy Star rated homes. "When you compare our houses with homes built prior to 1996, they're at least 30-percent more energy efficient," said Guyon. That could amount to around $900 a year depending on one’s energy use. With people continually moving to the Triangle, all sides agree a new energy source is needed. Hughes said, "In 10 years we expect our system to grow by the equivalent of Wake County." http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/progress-energy-pushes-conservation Mon, 10 Mar 2008 17:25:51 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/att-let-us-price-freely By John Murawski AT&T, the state's largest telephone company, is renewing a controversial bid to raise prices without regulatory approval. Consumer advocates worry that giving the company unrestricted freedom to raise rates could hurt lower-income residents who depend on basic phone service. The company formerly known as BellSouth, with 1.7 million customer lines in the state, currently can increase rates by about 10 percent without seeking state approval. AT&T contends that governmental price controls of phone services are obsolete and unfair in an era of intensifying competition and ample choice. AT&T's many competitors -- whether land line, wireless or Internet-based -- are not subject to price controls. "We want to be on the same footing as our competitors," said AT&T spokesman Clifton Metcalf. "Regulation was a surrogate for competition in a monopoly market. As competition grows, there is less need for that pervasive type of regulation." The state's consumer advocacy agency, known as the Public Staff, is likely to fight AT&T's new request. The N.C. Utilities Commission often adopts the Public Staff's position. Public Staff's director, Robert Gruber, said AT&T is the phone provider of last resort in much of the state. Other local phone companies in the state -- Verizon and Embarq -- require state approval to change rates. Gruber is concerned that once freed from government controls, AT&T could force customers to subscribe to more expensive services just to keep a dial tone. "We're pretty skeptical," Gruber said. "They have a lot of freedom to raise rates under the current price plan and we don't understand why they need total unrestricted freedom." The state utilities commission has said in previous cases that it is obligated to relax its control over phone companies if they can demonstrate there is enough competition to justify it. BellSouth last year had asked the commission to stop regulating the company's rates. The request was suspended while BellSouth was being acquired by AT&T. AT&T submitted a new request last month and is asking for expedited approval as soon as August. The company already has the right to set prices in North Carolina as it pleases for most business phone services and residential service packages that include features such as wireless and Internet accounts. Prices for AT&T's other offerings in wireless, long distance and Internet services are not regulated in any state. Now AT&T is asking to end price controls for residential and business individual telephone line service, a move that would further dismantle the state's regulatory approach to telephone service. AT&T's basic home service in Raleigh costs $16.75 a month, not including fees and charges, and is set to increase to $18.75 Sunday under the existing pricing plan. AT&T notified customers of the change in April bills, as required by the utilities commission. The company also is requesting total control over setting prices for calling features, such as call waiting or three-way calling. Currently the company can increase prices by 20 percent on these services that now cost $5.88 a month for call waiting and $5.95 a month for three-way calling. Still, AT&T's request is not as sweeping as BellSouth's was last year. AT&T is asking for pricing autonomy only in metropolitan regions with the most intense telecom competition and the greatest consumer options, which would exempt rural areas. BellSouth had asked last year to be free of state oversight on service quality and customer complaints. But AT&T's request would preserve the utilities commission's role in monitoring the company's quality of service. The company says it's losing thousands of customers to competing landline providers as well as wireless and Internet phone companies. In the past seven years, the company's customers have decreased 32 percent from a high of 2.5 million access lines. Some of AT&T's fiercest phone competition is coming from cable television companies. Time Warner Cable, for example, offers a "digital phone" service that's promoted with Internet and TV services on a single bill. In a bid to keep up, AT&T has countered with an Internet-based TV service in 18 cities. The so-called U-verse programming isn't offered yet in North Carolina, but officials have said they want to begin selling it here this year. Some of AT&T's competition is coming from AT&T itself. When it acquired BellSouth, AT&T also gained full control of Cingular Wireless. That means BellSouth customers who dropped their home phone service to rely on their Cingular cell phone are now AT&T customers. For that reason, consumer advocates say that AT&T's growing size and influence could impede competition and limit options. "The fear is that AT&T would use market power and name recognition to raise prices," said Rob Thompson, policy advocate with N.C. Public Interest Research Group. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/att-let-us-price-freely Mon, 10 Mar 2008 17:26:21 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/n_c_-group-corporate-gas-tax-rate-would-mean-paying-less-at-pumps Reporter: Cullen Browder RALEIGH, N.C. -- As consumers grit their teeth with every trip to the pump, the high prices are even harder to swallow when oil companies report record profits. But a proposal by one North Carolina advocacy group could have oil companies covering part of the cost of their record-setting success at the gas pumps. "There's a clear correlation between those profits and prices that consumers are paying at the pump," said Rob Thompson, who leads North Carolina Public Interest Research Group. Thompson's plan would force oil companies to pay for that profit. The corporate tax rate would climb for gas producers right along with the price. Money raised would go toward tax credits for people who buy energy-efficient vehicles. The obvious question about the proposal: "What will stop oil companies from passing along that tax to consumers?'" "The tax increases accelerate the higher the gas prices get," Thompson said. "So, we think that's a strong disincentive for them to pass on, raise prices." So far, no state lawmakers have come forward to sponsor the proposed legislation. "I would be very doubtful that this type proposal would go anywhere," said Rep. Nelson Dollar, R-Wake. "North Carolina needs to be lowering its marginal tax rates and needs to be lowering it's corporate tax rates." Critics also worry that a windfall tax would be too complicated to enforce if oil company profits fluctuate at a different pace than gas prices. Gov. Mike Easley is talking about freezing the state's gas tax as a way to help consumers with rising prices. In North Carolina, motorists pay about a 30-cent gas tax. The federal tax stands at 18 cents a gallon. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/n_c_-group-corporate-gas-tax-rate-would-mean-paying-less-at-pumps Mon, 10 Mar 2008 17:26:57 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/just-another-scheme Letter to the Editor Regarding PSNC's latest proposal featured in the April 21 article "PSNC drops usage minimum," three words: Don't be fooled. It will not save residents money. PSNC plans to make residents pay, and pay with interest. True, PSNC asked to end its use-less, pay-more rate structure and to bill all residents at the lower rate. But there is one big caveat: PSNC intends to recover for what it thinks it would have collected under the use-less-pay-more rate scheme, plus interest. In its submission to the Utilities Commission, PSNC proposes to accrue interest on the amounts deferred and to seek rate recovery with interest from its residential customer class. No matter how PSNC frames it, PSNC still would be charging residents more for using less, now with interest. Thanks, but no thanks. Last October, the use-less-pay-more rate schedule passed through the Utilities Commission like a Halloween trick. Let us hope when it reviews PSNC's latest proposal, the Utilities Commission will not make us April fools. Eliminate the conservation penalty. Do not penalize residents for PSNC's mistake. Shana Becker Staff attorney, NCPIRG Raleigh http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/just-another-scheme Mon, 10 Mar 2008 17:28:14 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/fcc-chairman-visits-unc By Ashley Smith CHAPEL HILL, N.C. -- The chairman of the Federal Communications Commission was back at his alma mater Monday. Chairman Kevin Martin was a guest speaker at UNC-Chapel Hill to honor a new program being offered on campus. With the creation of the new Media Law and Policy program at UNC, the university invited one of its most influential alum. Martin spoke about the current goals of the FCC, acknowledging that one of the biggest issues it's facing is media consolidation. "I think that that issue still resonates today as being one of the challenging and most controversial issues that the commission ends up dealing with," Martin said. It's a controversial issue largely in part because, consumer groups like NC PIRG, feel media consolidation can limit the number of local news sources offered to people. “We're getting fewer perspectives on issues that are facing people out there," said NC PIRG public interest advocate Rob Thompson. "And really we need more perspectives as life gets more complicated, as the world we're living in gets more complex, we need as many perspectives as possible out there reaching the public to inform them of what's going on." Another contentious issue is network neutrality or regulation of broadband, but advocates call it internet freedom. Martin says the commission has adopted several guidelines in that area but there is much work to be done. "We've got to find an appropriate balance to make sure that people who are investing in the underlying infrastructure are still able to re-coop that investment,” Martin continued. “And the people that are investing and trying to innovate on the information side are able to make sure the consumers get access to the information.” Martin says he plans to make progress on both of the issues by soliciting feedback and conducting studies and eventually hopes to find that balance he’s looking for. After receiving his bachelor’s degree in Political Science at UNC, Chairman Martin attended Duke University and received his masters in Public Policy. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/fcc-chairman-visits-unc Mon, 10 Mar 2008 17:28:50 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/sparks-fly-at-utilitys-save-a-watt-proposal By Mark Binker RALEIGH — Could Duke Power customers end up paying for power they don’t use by making their homes and businesses more energy efficient? What may seem like a crazy question is how consumer and environment advocates are summing up Duke Energy’s Save-A-Watt program. The proposal was first filed in 2007 and is the subject of voluminous filings to the Public Utilities Commission, North Carolina’s utility regulator. Commission members began hearings Monday on what the company characterizes as a way to make it profitable to get into the energy conservation business. Testifying before the commission, Duke Energy Carolinas President Ellen Ruff said the plan treated conservation measures as a “fifth fuel,” describing it as an untapped reserve that can help the state meet its growing power needs. Under the program, “we have an opportunity but not a guarantee of recovering our program costs,” Ruff said. The calculations are complex and some of the evidence offered in the case is sealed from public view. But in simplest terms, Duke would recoup the cost of programs that help consumers save energy by recouping 90 percent of what it would cost to build a power plant to meet the energy needs offset by the conservation effort. “We will only be paid based on how successful we are in terms of how many kilowatts we save,” Ruff told the commission. But using that kind of calculation would let Duke reap big revenues while providing only modest power savings, say consumer advocates and environmental groups. “It costs way too much and it does way too little,” said Shana Becker, a staff attorney for the North Carolina Public Interest Research Group. During a news conference held before Monday’s hearing, Becker and other advocates argued that the Public Utilities Commission should reject Duke’s proposal. Their position is backed by the commission’s public staff, a group of state employees whose job it is to advocate for rate-payers and the public at large. In one oft-cited analysis, the public staff wrote in a briefing to the commission that consumers could end up paying more than $18 for a compact fluorescent bulb available for less than $2 at many stores — once costs associated with the program are factored in. “Regular rate payers can’t look at the program and figure out what the heck they’re paying for and what the heck they’re getting; the model is very confusing,” Becker said. All Duke’s residential customers would pay toward the program. Duke would give price breaks to those who take energy-saving steps. That aspect has prompted some consumer groups to complain the benefits would go to higher-income consumers who could afford the costs associated with those extra steps, beyond the weatherization efforts that have become common. Testimony in the case is expected to take place all this week and part of next. Then, there’s a two-week break and a final few days of testimony already scheduled for mid-August. The case puts consumer advocates and environmentalists in the curious position of opposing an energy efficiency initiative put forth by one of the state’s two largest power providers. “I want to be real clear: The people on this side of the table aren’t opposed to energy efficiency,” said John Runkle, a lawyer for the environmental group NC WARN and one of at least a half-dozen lawyers representing interests opposed to Duke’s proposal at Monday’s hearing. Rather it is Duke’s version of an energy efficiency program they oppose, Runkle said. Of course, there seems to be some division among the advocates themselves. Some say Duke should be ordered to redraw its program so that it offers lower costs and bigger savings. Others suggest that the Public Utilities Commission should create or help create a private nonprofit that would focus on energy-saving steps. But those testifying on behalf of Duke say their program is integral to the company’s future. Duke Energy CEO Jim Rogers is expected to testify in person later this month. In written testimony on file with the commission, he noted that under traditional regulation schemes, energy conservation would simply be lost revenue for a power company. “In contrast,” he wrote, “I believe our save-a-watt approach can attract the necessary capital and ingenuity to place us on a path toward a more sustainable and secure energy future.” Contact Mark Binker at (919) 832-5549 or mark.binker@news-record.com http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/sparks-fly-at-utilitys-save-a-watt-proposal Thu, 31 Jul 2008 14:45:23 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/progress-energy-grid-upgrade-to-cost-260-million By Frank Vinluan. RALEIGH - Progress Energy is preparing to spend $260 million to upgrade its more than 60,000 miles of distribution lines in the Carolinas with new equipment that would better manage the grid on the hottest August days and the coldest February nights - times of peak power demand. The utility says making the power grid more efficient could cut the amount of electricity required at peak times by 250 megawatts, which is equivalent to the amount produced by two large peak-power generating units. "We're looking to reduce the need, reduce the peak, which delays the need to build new peaking plants," Progress spokesman Mike Hughes says. The North Carolina Utilities Commission is reviewing the proposal, as well as the utility's plan to recover from rate payers the cost of the five-year project. If the plan is approved, Progress expects to start the work later this year. How the project will be paid for has become a bone of contention. Progress is asking that the grid upgrade be considered an energy efficiency investment. Under legislation passed last year, energy efficiency investments can be recovered as an additional charge on customer bills without requiring what's known as a rate case, or rate hearing, before the utilities commission. Consumer groups, though, say the work is, in reality, an upgrade of old infrastructure - essentially a capital investment. The distinction is important because the costs of capital investments are typically reviewed in a rate case, which is a lengthy process that considers a utility's expenses and investments in setting new customer rates. Shana Becker, attorney for NC PIRG, a consumer advocacy group, says energy efficiency reduces the amount of power used. She says Progress' plan just shifts demand. Jim Warren, executive director of NC WARN, an environmental group critical of plans to build new plants, says that if Progress were truly pursuing energy efficiency, the utility would not need $260 million for the network. If regulators deem Progress' plan an energy efficiency investment, most rate payers would see a charge on their bills to pay for it. Last year's energy legislation also says that large, commercial customers that pursue their own energy efficiency programs don't have to chip in to pay for the energy efficiency programs of the utilities. Becker says this opt-out provision could leave small businesses stuck with paying the bill. "Ma and Pa businesses that are too small, they don't meet the kilowatt threshold, they can't opt out," Becker says. Hughes says the new equipment would give the utility better control of the grid. Similar equipment already has been installed on transmission lines, the lines that deliver power long distances from power plants. The new investment would be for distribution lines - those that deliver the power to homes and businesses. Hughes says Progress expects that the investments would help the utility meet the first benchmark of the state's renewable energy requirements. State law requires that 3 percent of utilities' power generation come from renewable sources by 2012. Of that 3 percent, 25 percent can come from energy efficiency. The commission's Public Staff, which advocates on behalf of consumers, has not yet filed formal comments. The Attorney General's Office likewise has yet to formally comment on Progress' plans. The utilities commission is accepting comments until June 30. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/progress-energy-grid-upgrade-to-cost-260-million Wed, 09 Jul 2008 16:06:57 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/only-dim-bulbs-like-save-a-watt-plan By Shana Becker. Duke Energy’s Save-a-Watt program poses as a hybrid, charges for a Lamborghini and runs like a Pinto. The author of the July 31 editorial has been misled. Save-a-Watt is a bad deal. Energy efficiency technology is the cheapest, cleanest and quickest way to meet new energy demand. Duke’s energy efficiency proposal, however, is a lemon. It ties the price for energy efficiency to the cost of expensive coal and nuclear plants. Duke is going to charge customers for saved energy at the rate of 90 percent of the “avoided cost” of not having to build a power plant. Say what? Duke is going to charge customers for the money it doesn’t have to spend to generate new power because of customers’ energy efficiency. Save-a-Watt doesn’t make sense. The analogy in the editorial to solar energy is misplaced. Solar technology is priced at the market value of solar technology, not the price of multibillion-dollar coal and nuclear plants that Duke Energy doesn’t build because it builds solar plants instead. Energy efficiency is cheap, not expensive. But for an energy efficient light bulb that retails for $1.65, Duke would reap $18.23 under Save-a-Watt’s compensation scheme. It is of no moment that Duke is paid only for verified efficiency gains. At its proposed rates, it needs very little achievement to make Save-a-Watt profitable. And very little energy efficiency appears to be the goal. Top-performing energy efficiency programs save an average of 1 percent of energy per year. Duke aims for 0.23 percent for its first programs. The bottom line on Save-a-Watt is this: It grossly overcharges for the woeful energy efficiency gains it proposes. The writer is the staff attorney for the N.C. Public Interest Research Group. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/only-dim-bulbs-like-save-a-watt-plan Thu, 07 Aug 2008 14:34:01 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/critics-say-duke-energys-save-a-watt-wont-save-a-lot By Bob Geary Duke Energy Corp., while pushing ahead with plans for a new coal-burning power plant in Cliffside, west of Charlotte, and perhaps additional nuclear reactors to supply its electricity customers, insists it's committed to energy conservation as a "virtual" fuel source for the future. Several public interest advocacy groups, however, say it isn't. The two sides squared off this week in Raleigh for the start of hearings before the N.C. Utilities Commission on Duke's proposed Save-A-Watt program, which it calls "a new paradigm" for conservation efforts in the state. Critics say the program, if approved, wouldn't save much energy at all—and Duke would overcharge for it. Under the plan, residential customers could choose whether or not to buy energy-saving devices, but whether they did or not, they'd all pay a monthly surcharge—according to testimony, about $1 a month per household. Because Duke is a monopoly supplier of electricity for 1.4 million customers in North Carolina, it is regulated by the seven-member commission, which has broad authority to approve, reject or modify Duke's plans. The commission's regulatory control of conservation programs was strengthened by the General Assembly last year in Senate Bill 3, which directed the electric utilities serving the state—primarily Duke Energy and Progress Energy—to start shifting away from expensive (and polluting) fuel sources like oil and coal toward cheaper, cleaner sources like solar, wind and conservation. SB-3 essentially left it to the commission to decide how conservation programs, in particular, should be organized and how much energy they should be expected to save. Duke's Save-A-Watt plan is the utility corporations' first shot at taking control of such programs, which might otherwise be run—and which most of the groups arrayed against Duke think should be run—by an independent public benefits fund, as is done in some other states. Progress Energy's conservation plan, filed recently, will be considered by the commission after it decides Duke's case. Duke Energy proposes to sell conservation products and services to its customers (including efficient light bulbs, thermostats and insulation) while surcharging each of them at a rate equal to 90 percent of its "avoided cost," meaning the value of the energy savings it achieves. That's better for customers than charging them 100 percent of the cost of generating the "avoided" power, the company contends. Duke's lead-off witness, Duke Energy Carolinas President Ellen Ruff, argued this approach would "put the risk on us," since marketing the program would be costly and customers might not buy much of it, in which case the surcharge would amount to 90 percent of very little. On the other hand, answering critics who say the program isn't ambitious enough, Ruff said Duke intends to make money on it. "We don't know how successful we will be," she said, "[but] we need to be successful." Exactly how the "avoided costs" will be calculated, and Duke's anticipated costs and profits, aren't entirely clear in the commission's proceedings, since the company has shrouded its financial submissions in confidentiality claims. Ruff testified that her company is required to spend 1 percent of its revenues on conservation as a condition of the utility commission's approval of the Cliffside plant, an amount equal to upward of $35 million a year in North Carolina. Before she would discuss specific program numbers, however, the commission cleared the room of everyone who hadn't signed a pledge to keep those numbers a secret. In general terms, however, Duke Energy's critics said the company could earn a rate of return of 50 percent or higher on the money it spends, given how much it intends to charge for its products. Exhibit A, in this regard, is Duke's intended price for a compact fluorescent light bulb, which at $18.23 would be as much as 10 times the retail cost. Whatever the profits, said Shana Becker, staff attorney for the N.C. Public Interest Research Group (PIRG), the bottom line is that Duke projects total energy savings over four years of just 1 percent, a pitiful number compared to the best energy-conservation programs around the country, which save up to 17 times that much. Becker cited federal energy data (also included in the staff's filing) showing that the top 20 energy-conservation programs average 11.9 percent savings; they range from a high of 17.7 percent (city of Burlington, Vermont) to a low of 9.2 percent (Wisconsin Power & Light). Becker said North Carolina's utilities are in the energy-selling business, not the conservation business, and depending on them to do the latter well is like going "to Krispy Kreme for a healthy diet plan." In addition to N.C. PIRG, Duke's opponents include AARP North Carolina, Clean Water for N.C., NC WARN, the N.C. Council of Churches, the N.C. Justice Center, the Southern Environmental Law Center and Environment North Carolina. The city of Durham, whose residents are Duke Energy customers, also opposed the company's plan. Senior Assistant City Attorney Sherri Zahn Rosenthal's brief argues Duke's profit model "bears no relation to the actual costs of achieving energy efficiency and energy reduction, which are low compared to generating electricity." Consequently, Rosenthal maintained, Duke's costs to its customers per kilowatt hour saved would be "among the highest, if not the highest, in the country," minimizing how much energy would be saved but maximizing the company's profits. Rosenthal said a public benefits fund, operated with funds from a utility surcharge, might do better, or Duke itself could do better if ordered to do so—with appropriate rules—by the utilities commission. She noted California's commission has ordered its utilities to achieve 8.5 percent energy savings by 2013, compared to Duke's goal of 1 percent savings. The hearings continue this week, then break until Aug. 18, when Duke Energy CEO Jim Rogers is due to testify. N.C. Policy Watch hosts a discussion on the program July 31 at noon at the Marbles Kids Museum. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/critics-say-duke-energys-save-a-watt-wont-save-a-lot Thu, 31 Jul 2008 14:43:32 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/opposition-to-duke-energy-plan-heated By Jessica Cervantez. RALEIGH – Duke Energy's plan to save its customers energy and money is facing some heated opposition this week as the company makes its case for government approval. The North Carolina Utilities Commission began hearings Monday on the program, called Save-A-Watt. The company said Save-A-Watt is designed to meet energy demand, is environmentally sound and is cost effective. "We would work with vendors and other partners to offer home energy audits to customers, to give you coupons to go buy [compact fluorescent] light bulbs in an inexpensive way," Duke Energy Spokesperson Paige Sheehan said. "All kinds of really neat incentives to help you save power." Energy woes News 14 Carolina's Jessica Cervantez has more on the state utilities commission hearing of Duke Energy's Save-A-Watt program. The company hopes the $200 million program will lead to a decreased need for power plants. All Duke Energy customers would have to pay a monthly $1 fee for the Save-A-Watt program, even if they don't enroll in it. Those who enroll and follow the energy saving tips could save $5 a month on their energy bills. But conservation groups, Wal-Mart and even the City of Durham oppose the program, saying it costs too much and produces little results. And the North Carolina Public Interest Research Group agrees. "As far as producing energy efficiency, Save-A-Watt doesn't produce very much," Shana Becker, of NCPIRG, said. "Leading programs have an accumulative production of over 11 percent energy efficiency. Save A Watt aims for 1 percent." She said it's a bad decision to go to Duke for energy-saving tips. "It makes no sense to ask a business who is in the business of selling energy to not sell energy and then make us pay for them not selling energy," Becker said. Officials from Duke Energy said that if the program doesn't succeed, the company will reimburse customers. The hearings are set to continue the rest of the week. The company serves customers mainly in the Piedmont, just west of Raleigh. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/opposition-to-duke-energy-plan-heated Tue, 29 Jul 2008 15:51:05 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/protesters-say-utility-will-gouge-customers By John Murawski (Raleigh) News & Observer Sparks fly as N.C. hearings about Duke Energy's save-a-watt plan get under way. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/protesters-say-utility-will-gouge-customers Wed, 30 Jul 2008 07:51:55 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/as-critics-scowl-duke-praises-save-a-watt2 By John Murawski, Staff Writer RALEIGH - Placards and denunciations kicked off what's expected to be a contentious week of regulatory hearings on Duke Energy's proposal for energy efficiency, Save-a-Watt. The Charlotte utility on Monday began defending Save-a-Watt against charges that it would gouge Duke Energy customers and benefit the company's shareholders. Duke Energy touts Save-a-Watt as a national model for energy efficiency that would provide power companies a generous financial incentive to promote energy conservation. The company is seeking approval from the N.C. Utilities Commission to offer the program to its customers in the state and charge extra to administer it. Extra chairs were brought in to accommodate about 75 people who packed the normally sparsely attended commission hearing. "Our proposal will allow us to be more successful in pushing energy efficiency to our customers," Ellen Ruff, president of Duke Energy Carolinas, told the utilities commission. For much of the afternoon, Ruff fended off technical questions from the state Attorney General's Office and other lawyers representing the public. Before the hearings began in Raleigh, about a dozen people staged a rally featuring speakers from N.C. Public Interest Research Group, Clean Water for North Carolina and the N.C. Public Service Workers' Union. Critics say Save-a-Watt is thin on efficiency and fat on corporate profits. According to an analysis by the Public Staff, the state's consumer advocacy arm, Duke is seeking a 61 percent margin on Save-a-Watt. Instead, the company should be allowed a margin of about 6.8 percent, the Public Staff recommends. Later this week, the Public Staff plans to have three experts testify against Save-a-Watt. More than a dozen organizations -- church groups, consumer advocates, environmentalists, businesses and the city of Durham -- oppose Duke's proposal. On Monday, they urged regulators to reject the plan. "They're trying to take advantage of people's good will for energy efficiency," said Shana Becker, staff attorney for NC PIRG, after the public rally. "They're trying to make the most money that they can without affecting their business model, which is to try to generate energy." Duke Energy, with 1.8 million customers in the state, has lined up a dozen experts and executives to defend Save-a-Watt. What's at stake Duke proposes to install new technologies, such as remote-controlled thermostats, and offer discounts and rebates to customers who invest in energy efficiency appliances and other upgrades for the home and office. All customers would pay for the efficiency program through their monthly bills. The dispute is over how much is a reasonable amount for a company to be paid for running an efficiency program. Duke officials say that efficiency must come with financial rewards to motivate a corporation to choose conservation over building power plants. Otherwise, efficiency will always remain the last option, not the first. What makes Duke's proposal different from other energy efficiency plans is that the company would not be paid for the actual cost of running Save-a-Watt. Instead, Duke says it should be paid 90 percent of the cost of building new power plants. Duke officials describe Save-a-Watt as a 10 percent savings for customers on the cost of new power plants that would otherwise have to be constructed to meet energy demand. "Under the company's ... plan, energy efficiency is treated as a virtual power plant," Ruff said. "However, instead of iron in the ground, the company is proposing ... saving watts instead of generating watts." Critics say the company proposes generating profit. The Public Staff estimates that under Save-a-Watt, Duke customers would end up paying $18.23 for a compact fluorescent light bulb that can be bought at Wal-Mart for $1.65. john.murawski@newsobserver.com or (919) 829-8932 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/as-critics-scowl-duke-praises-save-a-watt2 Thu, 31 Jul 2008 15:41:53 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/protesters-urge-regulators-to-block-duke-energy-plan By John Murawski RALEIGH - A public protest kicked off a week of hearings today on Duke Energy's controversial energy efficiency proposal called Save-a-Watt. The Charlotte-based utility describes Save-a-Watt as the nation's first energy efficiency plan that gives power companies a meaningful financial incentive to promote energy conservation. The company requires approval from the N.C. Utilities Commission to offer the program to its customers in the state and charge extra to administer it. Critics say Save-a-Watt is thin on efficiency and fat on corporate profits. Before the public hearings began in Raleigh this afternoon, about a dozen people staged a downtown rally featuring speakers from N.C. Public Interest Research Group, Clean Water for North Carolina and the N.C. Public Service Workers' Union. In all, more than a dozen organizations -- church groups, consumer advocates, environmentalists, businesses and the city of Durham -- have come out against Save-a-Watt. Duke Energy is "trying to take advantage of people's good will for energy efficiency," said Shana Becker, staff attorney for NC PIRG. "They're trying to make the most money that they can without effecting their business model, which is to try to generate energy." Duke Energy, with 1.8 million customers in the state, has lined up a dozen experts and executives to defend Save-a-Watt. The star witness will be CEO James Rogers, an outspoken advocate for conservation, renewable resources and alternative energy. Rogers, scheduled to testify Aug. 18, refers to energy efficiency as a "fifth fuel" that will offset the need to build power plants by driving down power consumption. Environmentalists say that Duke could cut customer electricity use by about 1 percent a year for two decades, resulting in a 20 percent reduction. Duke proposes to install new technologies, such as remote-controlled thermostats, and offer discounts and rebates to customers who buy energy efficiency appliances and upgrades for the home and office. Customers would pay for the efficiency program through their monthly bills. Duke is seeking to recover its investment and overhead, recover its lost revenue from the energy savings, as well as a profit. The amount of the profit is the subject of contention. The Public Staff, the state's consumer advocacy arm, says Duke is seeking a 61 percent margin on Save-a-Watt. Instead, the company should be allowed a margin of about 6.8 percent, the Public Staff recommends. Duke officials say that efficiency must be linked to more generous financial rewards to motivate a corporation to choose conservation over building new power plants. Otherwise, efficiency will always remain the last option, not the first. The Utilities Commission hearing this afternoon will run until about 5 p.m. in the Dobb Building, Commission Hearing Room 2115, at 430 N. Salisbury Street in Raleigh. The hearings will resume tomorrow at 9 a.m. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/protesters-urge-regulators-to-block-duke-energy-plan Mon, 28 Jul 2008 17:37:20 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/nc-regulators-consider-duke-energy-program By Gary D. Robertson, Associated Press Writer. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/nc-regulators-consider-duke-energy-program Mon, 28 Jul 2008 17:59:41 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/opponents-duke-energys-save-a-watt-program-no-bright-idea Charlotte, N.C. — The head of Duke Energy says changing how it encourages customers to use less power will help appropriately compensate the company. Ellen Ruff, Duke Energy Carolinas president, testified Monday before the state Utilities Commission. The panel is being asked to approve Duke's energy efficiency plan. Save-a-Watt would let the utility add an average of 98 cents per month to the bills of its 1.8 million customers in North Carolina in 2009. The rate could go up or down in following years to help recover much of the cost of building new power plants or buying electricity, along with a profit for the company. The commission regulates the utility's profits. "We have an opportunity – not a guarantee – of recovering our program costs and achievable earnings comparable to supply-side resources on our energy-efficient investments," Ruff told the commission. Ruff said customers wouldn't have to pay for more expensive power on the open market if they hold down demand. “If we're not much more aggressive about energy efficiency, we have to build power plants," added Paige Sheehan, a spokesperson for Duke Energy. But attorneys and advocates representing the state, utility consumers and environmentalists say Duke's Save-a-Watt plan is too expensive and doesn't save enough energy – only about a 1 percent reduction by 2015. "We agree with the company that we need to give utilities proper incentives to maximize efficiency and energy conservation in particular," said Gudrun Thompson with the Southern Environmental Law Center. "This proposal is just not going to get the job done." “We are supportive of cost efficiency for North Carolina and expanding the programs we have," said James McLawhorn, director of the Public Staff's electric division, the state agency that represents utility customers. However, when asked if he is opposed to Duke's Save-a-Watt program, McLawhorn replied, "Yes." McLawhorn is proposing a traditional plan in which Duke would recoup its out-of-pocket expenses and lost revenues for three years and would be eligible for a bonus incentive. “We don't think we can achieve the kind of energy-efficiency savings that we need based on the old models and old approaches,” Sheehan argued. Duke Energy Carolinas presented the program in May 2007. It is designed in part to meet a state law that required electric utilities to generate 12.5 percent of their power from alternative energy sources or through energy savings by 2021. The company wants to raise rates to an amount equal to 90 percent of what it would cost to generate the electricity that would have been produced had it not been for the energy-savings plan. If Save-a-Watt doesn't produce energy savings, Duke says it will return what it has charged on a prorated basis. "The company will take the risk that its programs will perform and that customers only pay for actual results," Duke lawyer Lara Simmons Nichols said. Duke would create financial incentives and rebates to encourage customers to save electricity by sealing windows and doors, buying fluorescent light bulbs or purchasing energy-efficient appliances. Duke can do much better than its projected energy savings, according to environmental groups that staged a small protest outside the hearing. They said Duke could reduce energy use by 1 percent annually. "That's not an energy-efficient program. That's a small drop in the bucket of the world of possibility," said Shana Becker with the North Carolina Public Interest Research Group, one of about a dozen groups that want Duke Energy to withdraw the Save-a-Watt proposal. Duke Energy plans to call several executives as witnesses this week. The panel also will meet Aug. 18 to hear from Duke Energy chief executive Jim Rogers. It's unclear when the committee would rule. Progress Energy is proposing an energy-efficiency program that does not include additional fees. The plan would be to split any savings 50-50 between the company and its customers. A hearing on Progress Energy's program is scheduled for September. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/opponents-duke-energys-save-a-watt-program-no-bright-idea Thu, 31 Jul 2008 16:28:31 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/save-a-watt-costly-saves-little3 By Lisa Zerkle Energy efficiency is widely recognized as the cheapest, easiest way to gain energy. Better than solar, wind, nuclear and coal, “The cheapest power plant,” Duke Energy's Jim Rogers has said, ”is the one you don't build.” Despite the benefits of efficiency, it is rarely pursued as the first goal of utilities for a simple reason: Less energy use means less profit. Utilities make money by selling power and building new power plants; any program that pushes efficiency reduces those profit centers. In many communities the way around this is straightforward. Utilities encourage efficiency with programs that, for example, hand out free compact fluorescent light bulbs or provide rebates on Energy Star-rated appliances. They are reimbursed for the cost of developing and implementing those programs, sales lost due to efficiency, and given incentives for proven efficiency gains. The ratepayers pay for these programs. Duke Energy has proposed a new version of such an “energy-efficiency” program. The proposal, called Save-A-Watt, would be wildly expensive but provide little energy savings. Not only would Duke be paid for the cost of the program, but also for 90 percent of the cost of power plants it doesn't have to build. The consequences to ratepayers would be staggering. Say I decide to replace my light bulbs with compact fluorescents. The costs are entirely mine. The energy savings are not. I would have to pay 90 percent of “avoided electricity” to Duke. Take the calculation made by Public Staff, North Carolina's consumer advocacy agency. Under normal circumstances, a compact fluorescent light bulb would cost $1.65 at Wal-Mart. Because that bulb will save $3.60/year in electricity, you recoup your investment in just under six months. Under Save-A-Watt, that same compact fluorescent light bulb would cost $18.23. Because you pay for the program, efficiency savings, and 90 percent of the power plant that didn't get built, paying off the cost of the bulb would now take five years. To upgrade the 69 light sockets in my house, a reasonable investment of $113.85 would balloon to $1,257.87 under Save-A-Watt. ‘Clearly a very bad deal' Duke's usual profit margin is 7.5 percent, but it stands to rake in 60 percent profits, even after paying operation costs of Save-A-Watt – margins one expert rightly called “exorbitant.” The Carolina Industrial Group for Fair Utilities noted, “By year four, Duke would get $135.3 million in revenue on programs that cost it $5.6 million to administer.” With such astonishing revenues, one would think Duke will provide North Carolina with stellar efficiency rates, perhaps the best in the nation. Sadly, this is where Save-A-Watt fails to live up to its name. An August 2007 study by Forefront Economics, commissioned by Duke, showed potential energy savings of 19 percent available for less than 6 cents per kilowatt hour. The top 20 energy efficiency programs save 1 percent of total kilowatt hours every year, according to testimony by Richard F. Spellman, president of GDS Associates. Under Save-A-Watt, Duke projects a pitiful 0.15 percent rate of efficiency for its North Carolina service area. Spellman says Save-A-Watt is “clearly a very bad deal for ratepayers and the State of North Carolina.” Feeling the love? “Save-a-Watt is a radical departure from past programs, and may not be embraced by all parties,” says Duke spokesman Andy Thompson. Parties “not embracing” Save-A-Watt include AARP, Wal-Mart, North Carolina Council of Churches, Legal Aid of N.C., N.C. Justice Center, N.C. PIRG, National Resources Defense Council, Southern Environmental Law Center and Southern Alliance for Clean Energy, among others. It's not surprising a power company would concoct an “energy-efficiency” plan that so lavishly pads its bottom line. Remember Duke's twin motives of power- and profit-generation. Jim Rogers, Duke's CEO, is paid solely based on stock awards. In a recent New York Times Magazine article, Rogers lambasted protesting environmentalists as “an ‘eco elite' who don't understand the need working-class people have for affordable energy.” The devastating effect Save-A-Watt would have on low-income families is partly the reason social justice groups oppose the plan. The groups contend the rate increase caused by Save-A-Watt would function as a subsidy by those who could not afford efficiency improvements to those who could. We wouldn't go to Krispy Kreme for a healthy diet plan or Exxon for fuel-savings tips. Why should we expect energy efficiency from Duke? Many states have independent energy-efficiency agencies whose sole purpose is to design and implement efficiency programs. Instead of profit, they must prove energy savings. At the very least, Save-A-Watt should be brought in line with proven lower cost/higher efficiency models. Let Duke focus on power and leave efficiency to the appropriate experts. On Monday, July 28, the North Carolina Utilities Commission holds a public hearing regarding Save-A-Watt. Part of its mission is to “provide fair regulation of public utilities in the interest of the public.” Be sure to let Chairman Ed Finley know what you think of those $18 light bulbs. You can contact him at finley@ncuc.net or 919-733-6067. Observer community columnist Lisa Zerkle is a poet and the editor of “Kakalak: Anthology of Carolina Poets.” Write her at LZerkle@gmail.com. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/save-a-watt-costly-saves-little3 Wed, 23 Jul 2008 12:30:18 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/progress-asks-42m-a-year-to-cover-energy-saving-plan By Frank Vinluan. RALEIGH - It's a conundrum for a new day: To implement programs that reduce electricity usage, Progress Energy would charge customers for the energy they don't use. The Raleigh utility now awaits regulatory approval of a slate of efficiency programs, all aimed at reducing the amount of energy the utility must produce to meet demand. The programs range from cycling air conditioner use at homes to promoting construction that meets federal Energy Star standards. But when customers use less, utilities make less. Progress proposes a charge that would recover the lost revenue from the electricity the utility won't make and won't sell. Most customers would end up paying for it as an extra charge on their monthly bills. Progress is asking for permission to recover $42 million annually to cover the cost of the energy-efficiency programs. The programs were mandated by a wide-ranging energy bill that passed the General Assembly last year. The North Carolina Utilities Commission is taking comments on Progress' plans through August. But questions are already emerging. The commission's Public Staff, which represents ratepayers in utilities matters, takes issue with amount of incentives that Progress proposes it receive for creating the programs. In a filing with the commission, Public Staff attorney Robert Gillam calls the incentives proposed by Progress "excessive," adding that they will "result in a windfall for stockholders." Progress argues that the proposal benefits ratepayers as well. "To the extent that the incentives are 'a windfall for stockholders,' as the Public Staff alleges, it must also then be an equal windfall for (Progress') customers," attorney Len Anthony says in a filing. Utilities observers are aware of Progress' proposal, but opposition is muted so far. John Runkle, attorney for NC WARN, says his group will look at Progress's plans, but for now he's been focusing on Duke Energy's proposed energy efficiency program. The Save-A-Watt program is opposed by a number of groups that say it costs too much and saves too little energy. The Public Staff says Duke will make too much money off Save-A-Watt. John Wilson, research director for the Southern Alliance for Clean Energy, acknowledges that utilities that have invested in infrastructure still have to recover the cost of that investment. "They lose money for not using that infrastructure," he says. When energy efficiency programs are approved, they typically come with a plan to spread that cost as a charge among customers. Wilson says his group is withholding a formal position on the Progress plan, saying the alliance has asked questions of the utility and is now waiting for answers. "We're not likely to oppose a utility for putting forth a program that could be designed better. We're just going to encourage them to improve it," he says. Shana Becker, attorney for consumer advocacy group NC PIRG, has concerns about the Progress proposal. She says that although Progress is entitled to recover its costs, she thinks the company could be seeking to recover too much for the energy efficiency gains it will achieve. Becker is also concerned that the cost of Progress' energy efficiency programs will be borne by small residential and business users. The additional charge won't apply to commercial customers who use more than 1 million kilowatt hours per year or to industrial customers, who can pursue their own energy efficiency programs. The Public Staff has not said outright that it opposes Progress' energy efficiency plans, as it has with Duke's program. But the staff did ask Progress to address issues raised about the allocation of the program's costs and the incentives that the utility would receive. Anthony says Progress intends to discuss with Public Staff its concerns. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/progress-asks-42m-a-year-to-cover-energy-saving-plan Mon, 14 Jul 2008 14:14:27 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/a-green-coal-baron The environmental record of Duke Energy's Jim Rogers. By Karen Shugart. Some readers of a recent New York Times Magazine profile of Duke Energy CEO Jim Rogers were no doubt surprised by the piece. If its title, "A Green Coal Baron?" flummoxed some readers, the article's general thrust likely have frustrated others. The casting of the utility behemoth's president and chief executive officer as a visionary energy executive-cum-environmentalist was hardly new, however. He's been gaining attention for years as an environmentally proactive business leader. In the midst of continuing debate over the expansion of Cliffside, the coal-fired power plant about 60 miles from Charlotte, it's worth looking at the rhetoric versus the reality. What is Rogers' record, really? Is he a hybrid of environmental advocate and energy mogul? A Green pragmatist? Or is he trying to board the pollution-control train before it runs him -- and his company -- over? While it may be impossible to know a person's true intent, one can look at the record on a few recent key controversies. 1. Cliffside Environmentalists have overwhelmingly lined up against coal-fired power plants. Coal is a leading cause of smog, acid rain and global warming. Duke Energy has acknowledged the need to move away from coal, but on March 25, Duke Energy broke ground and began construction on the 800-megawatt coal-fired power unit at Cliffside, a facility that straddles Rutherford and Cleveland counties. Area elected officials and residents of the bucolic area are hopeful it spurs economic development, but critics, ranging from environmental activists to the National Park Service, are protesting the project. The National Park Service warned the project would harm air quality and visibility at the Great Smoky Mountains National Park. Rogers originally wanted to build two units, but state regulators approved only one unit. Environmental groups are continuing to fight Cliffside. "He's basically locked the electric consumer in North Carolina to 40- to 50 years of coal-fired generation, with no plans to the [carbon dioxide] emissions," said Stephen Smith, executive director of the Southern Alliance for Clean Energy. 2. Carbon reduction legislation "I am unwavering in my support for mandatory federal action on climate change," Rogers has said. And Duke Energy has been on record as favoring carbon cap-and-trade programs. Yet he opposed a bill sponsored by Sens. Joe Lieberman, a Connecticut independent, and John Warner, a Virginia Republican, that would regulate carbon dioxide. The legislation would have spawned a federal cap-and-trade program in which companies must purchase pollution credits. In effect, the system would reward companies who become more efficient because they would spend less on pollution credits. While Lieberman-Warner awarded Duke credits, the utility didn't think it would be given enough. Smith and many environmentalists believe such cap-and-trade programs would work better if pollution credits were auctioned off -- a competitive atmosphere in which environmental groups could buy up credits and refuse to sell them, reducing the overall carbon that's allowed to be released in the air. "We do not need people like Jim Rogers trying to get free pollution credits," Smith said. "Polluters need to be paying." Based on its analysis of the Lieberman-Warner proposal and potential allowance prices at $30 and $45 a ton, Duke Energy estimated its customers' power bills could increase by up to 53 percent when the legislation became effective in 2012. Power bills would continue to escalate in subsequent years as allocations decreased and more allowances had to be purchased through auction. The power companies weren't the only factions lining up against the bill -- interests as disparate as the AFL-CIO and the U.S. Chamber of Commerce were among opponents. 3. Save-a-Watt Utility companies make more money when they sell more energy. Under Save-a-Watt, Duke Energy would charge customers an extra fee if they agreed to have meters installed that would turn off appliances during periods of peak power use. In essence, the utility's customers would pay Duke Energy not to produce energy. Duke Energy said that instead of paying what they normally would for electricity and for new power plants, consumers would pay 90 percent of that amount. It also would bring the company cash. A Duke Energy official at a Wall Street Analyst Forum conference said, "Our energy-efficiency model will generate enough revenue to recover all program costs and would produce earnings comparable to building new generation." Some environmentalists say Save-a-Watt would be a cash cow for Duke Energy that actually makes energy efficiency look less attractive for consumers. "He's playing on all the right notes, saying all the right things, but he's basically pick-pocketing consumers to the company's advantage," Smith said. Opposition to the program has come from environmental groups as well as the public staff of the N.C. Utilities Commission. In a rare meeting of the minds, staff from the libertarian John Locke Foundation and the progressive N.C. Public Interest Research Group have written an op-ed, published in Raleigh's News & Observer, criticizing the measure. Avram Friedman, executive director of the Canary Coalition, believes energy efficiency programs shouldn't be, in effect, in charge of reducing energy consumption, and that such a position would be a classic example of a conflict of interest. "We feel that a more effective program would incentivize the consumer rather than the power producer," Friedman said. "It's a backwards way of doing it." Rogers first attracted attention for his environmental leanings when, as head of Cinergy, he acknowledged a global warming threat. Many environmentalists believe this acknowledgement was played up, while the policies of the companies Rogers helmed were downplayed. "Even some people in the environmental community ... basically held Jim Rogers up on some sort of pedestal," Smith said. Pete MacDowell, program director of N.C. WARN (Waste Awareness and Reduction Network), said Rogers and Duke Energy have perpetuated a "green scam" on consumers. "It's as if he's saying, 'I am a sinner ... help me Lord,' and then not doing anything about it," said MacDowell. "He's just confessing." http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/a-green-coal-baron Thu, 17 Jul 2008 08:34:37 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/n_c_-public-staff-challenges-progress-energy-bid-for-flight-rate By Frank Vinluan RALEIGH - Under Progress Energy's plans to recover from ratepayers its costs for investing in renewable energy, a studio apartment resident would pay the same as the resident of a palatial home whose monthly electricity usage reaches 40,000 kilowat hours. A backyard wood shop operating as a business and using 1,000 kwh a month would pay the same as a steel mill or aluminum smelter using 20 million kwh a month. "Indeed, under (Progress') proposal, the backyard wood turner will pay 20,000 times as much as the steel or aluminum company for every kilowatt hour of renewable energy he consumes," Robert Gillam, an attorney for the Public Staff of the North Carolina Utilities Commission, writes in comments filed with the commission. The Public Staff is charged with representing consumers before the NCUC. Progress Energy's plans to bring more renewable energy onto the electric grid come with a price that consumer advocates say would be disproportionately borne by the state's smallest business and residential users. Utilities typically recover charges on a per-kilowatt-hour basis, so that customers who use more pay more. But Progress proposes a flat fee, which the utility says would be administratively easier and would best assure that the utility could recover all of its expenses. The charge would be 45 cents a month for residential users, $2.26 for businesses and $22.62 for industrial customers. The Public Staff filed a motion June 25 opposing Progress' flat-fee charge. The commission is accepting comments on the matter until July 9, and oral arguments will be heard July 14. Duke Energy has yet to make a filing on how it would seek to recover similar charges. The charge itself is not what's in dispute. State law allows utilities to recover from ratepayers expenses that companies incur. For example, Progress is seeking to add charges for its fuel costs, mainly due to rising coal prices. The utility also is seeking to recover money for planned improvements to the infrastructure of the electric grid. Those charges would appear on customer bills as a per-kilowatt-hour charge. What's in dispute is the manner Progress proposes to recover costs it will incur for complying with a state requirement that a percentage of utilities' electric generation come from renewable energy. Progress intends to enter into contracts to buy power from producers generating power from sources such as wind, solar and biomass. Progress wants to recover the cost from a fixed monthly charge added to the bill for each class of customer. Jeff Brooks, a Progress spokesman, says collecting the charge on a per-kilowatt-hour basis leaves open the possibility that the utility won't collect enough money to recover what it's spent on renewable energy because the amount the utilities can collect is capped. Brooks says residential usage might not reach the cap. Large consumers could reach the cap, but that level alone won't be enough to pay for all of Progress' costs. Brooks says undercollection could have the unintended consequence of diminishing utility spending on renewable energy. "If we can't recover the cost we've incurred in renewables, it can affect what we can forecast for investment in future years," he says. Shana Becker, staff attorney for consumer group NC PIRG, calls Progress' proposal regressive. She says a flat fee favors the largest energy users, such as industrial customers. Toni Wike, the Public Staff's chief counsel, says flat fees are typically used for basic charges that do not vary, such as a charge for reading a meter. She acknowledges that a flat rate would give Progress more assurance that it would recover its expenses. But she says the Public Staff wanted to point out that per-kilowatt-hour charges would be fairer. She says if Progress does not collect enough in one year, the utility could recover the expenses the following year. http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/n_c_-public-staff-challenges-progress-energy-bid-for-flight-rate Wed, 09 Jul 2008 15:35:38 -0500 http://www.ncpirg.org/in-the-news/utilities-watchdog-project/utilities-watchdog-project/heating-bills-could-go-up-psnc-seeks-rate-increase-as-households-conserve By David Ranii, Staff Writer PSNC Energy is seeking a 3 percent rate increase that would raise the natural gas bill for the average residential customer by $3 a month, or $36 a year. The Gastonia-based company says higher rates are justified by higher costs and because the average household is using less gas. PSNC also is asking state regulators to revamp how its prices are controlled to give it more freedom to adjust rates based on customer consumption. Utilities rarely succeed in getting approval for the full amount of the rate increases they seek from state regulators and typically settle for a lesser amount. PSNC serves 460,000 customers across the state, including 280,000 in the Triangle. PSNC last sought a rate increase -- other than adjustments linked to the price of gas -- in 2006. Since then, the utility asserts that it has spent more than $188 million expanding and improving its distribution system, including adding 900 miles of transmission pipe. In the past two years, the company has added nearly 32,000 customers. But Rusty Harris, president and chief operating officer of the utility, said the average household's natural gas consumption has declined about 2 percent a year over the past five years, after excluding the impact of weather. "Declining usage has been problematic," Harris told editors and reporters at The News & Observer on Monday afternoon. "Our profits come from the volume of gas our customers consume." More efficient appliances and houses have enabled people to conserve, while higher gas prices and "a growing awareness of conservation" have encouraged them to do so, Harris said. The rate request the company filed with the state Utilities Commission on Monday also contains several conservation proposals, including: * Home energy audits, which the utility would perform for $25. * Rebates for customers who replace their current gas appliance with more energy-efficient models. * Discount rates for homes and businesses that meet energy-efficiency standards. * A promotional program that includes teaching the benefits of conservation in schools. PSNC also is asking regulators to allow it to recover the costs of these conservation initiatives. Harris acknowledged that the utility hasn't aggressively promoted conservation up to now because it is counterproductive from a revenue standpoint. To address that problem, PSNC is asking the Utilities Commission to break the link between the company's revenue and the amount of gas it sells by allowing it to change rates every six months based on consumption. That's known in the industry as a "decoupling mechanism." In any six-month period, the biggest driver in consumption rates will be the weather, Harris said. People use more gas to heat their homes when the weather is colder than normal and less gas when it's unseasonably warm. Such a system can have merit, but only if utilities such as PSNC demonstrate that their efforts to promote conservation are reducing consumption, said Shana Becker, a consumer advocate at the nonprofit N.C. Public Interest Research Group. "It has to come with accountability," Becker said. "If it doesn't, we're just giving the utility money for global warming or warm weather patterns." In 2005, Piedmont Natural Gas won approval for a decoupling mechanism as part of an overall settlement that included a lower rate increase than the utility requested, said Jan Larsen, utilities engineer for the natural gas division of the Public Staff, the consumer-protection arm of the utilities commission. Larsen said the commission will examine PSNC's decoupling request "in the context of the overall case and see if it is reasonable." Piedmont's decoupling mechanism was approved on a three-year experimental basis, Larsen said. On Monday, Piedmont asked to extend it as part of its request for a rate increase that would amount to $4 per month, or $48 per year, for the average residential customer. Piedmont serves more than 1 million customers in North Carolina, South Carolina and Tennessee. The rate increase requests come when the esse