Environmental groups settle with Duke, Progress; won't fight merger

Environmental advocacy organizations that were among the staunchest critics of the corporate merger between Duke Energy and Progress Energy have agreed not to fight the $26 billion deal in exchange for sweeteners that could be worth millions in electricity savings.

The agreement will require greater commitments to energy efficiency, pushing North Carolina's conservation goals to higher levels. The state's current green energy mandate -- which requires that of 12.5 percent electricity sales be met through a combination of renewables and efficiency programs by 2021 -- would likely be exceeded under today's agreement.

The last-minute agreement was announced this afternoon, the same day public hearings on the merger got under way before the S.C. Public Service Commission.

Under the settlement, Charlotte-based Duke and Raleigh-based Progress will introduce energy efficiency programs aimed to reduce retail electricity use by 7 percent in the Carolinas.

The companies would have to offer their customers additional financial incentives to buy high-efficiency appliances and to encourage customers to participate in other conservation programs.

Any such programs offered would have to be approved by the N.C. Utilities Commission.

While it would boost this state's green credentials, it wouldn't push North Carolina to the forefront of the conservation movement. California requires a 33 percent green offset by 2020 through efficiency programs and renewables, and Colorado requires 30 percent by the same year.

Under the settlement Duke and Progress will also contribute $2 million to promote South Carolina's renewable resources, such as solar, wind and biomass as an alternative to conventional power plants.

The non-profit groups had previously opposed the merger on the grounds that the companies had no plan to offset the social costs of eliminating 1,860 jobs.

The groups include the state's biggest environmental organizations: Environmental Defense Fund, Coastal Conservation League and Southern Alliance for Clean Energy. They are represented by a Chapel Hill legal advocacy group, the Southern Environmental Law Center.

Duke and Progress will be able to recover their efficiency program costs through rate increases. The costs -- which can easily amount to millions of dollars -- include such expenses as administrative and overhead costs, as well as the lucrative financial incentives paid to customers to buy energy-efficient appliances.

Despite the rate increases that will be needed to pay for the programs, the overall costs to customers will be lower than the costs would have been to supply an equivalent amount of electicity through building new power plants, said John Wilson, research director at the Southern Alliance for Clean Energy.

However, the actual savings achieved will depend on customers' willingness to participate. The availability of incentives doesn't guarantee that customers are convinced to buy high-efficiency appliance.

In addition to proceedings in South Carolina, the merger also awaits approval from the N.C. Utilities Commission and the Federal Energy Regulatory Commission.