The proposed merger between Duke Energy and Progress Energy would shift benefits to Wall Street at the expense of the environment and the state's poor, an environmental representative warned utilities regulators today.
Utility lawyer suggests environmental groups use double standard
Submitted by johnmurawski on 09/22/2011 - 15:12
Analyst Richard Hahn told the N.C. Utilities Commission that the the electric companies should be required to offset the economic damage they will cause when they eliminate 2,000 jobs as part of their consolidation.
But the utilities suggested Hahn and his clients are guilty of bad faith in their concern for jobs and the economy. Hahn is representing the Sierra Club, Environmental Defense Fund and Southern Alliance for Clean Energy, among other groups.
"Would it surprise you to know that Progress Energy is going through a coal-to-gas conversion and the natural gas power plants will require fewer employees to run?" asked utility lawyer Len Anthony. "The environmental community didn't object when we were reducing jobs to reduce emissions."
Progress will eliminate about 200 positions as it shuts down 11 older, coal-burning units in this state and builds three plants (one was completed this year) that burn natural gas in the coming years. Natural gas is the cleanest burning fossil fuel, reducing greenhouse gas emissions by half and virtually eliminating mercury, a potent neurotoxin.
The conflict between job losses -- which will keep down power costs but potentially harm the state's economy -- is at the heart of the $26 billion merger the N.C. Utilities Commission is reviewing on what is likely the last day of public hearings in Raleigh.
The commission's standard for approving utility mergers is that the public benefits should outweigh risks and costs. The Duke-Progress merger is one of the most important cases the commission has considered in decades.
"The merger should be expressly conditioned to avoid creating winners and losers," Hahn told the seven commissioners, who are appointed by the governor. "It's not clear that North Carolina will enjoy benefits commensurate with the expected costs. North Carolina would be particularly hard hit by merger-related job losses."
Charlotte-based Duke and Raleigh-based Progress are planning to create the nation's biggest utility that would span six states, with unregulated operations in the Midwest, Southwest and Latin America.
The companies expect to pay out several hundred million dollars in severance costs to laid off workers and those who take buyouts. That's a cause of some controversy because the companies plan to ask the utilities commission at a later date that those costs be paid by customers in their monthly bills.
The utilities have previously signed agreements with municipal power agencies and rural electric cooperatives, guaranteeing that those organizations will not have to pay any merger-related costs.
Critics of the merger say the companies should compensate for its costs by requiring a greater emphasis on green energy programs. They say such programs would lead to job creation and cleaner air.
But those programs could also increase customers rates, erasing some of the benefits of the merger that will come from reduced corporate overhead when the two companies consolidate.
Duke and Progress executives have said that corporate efficiencies achieved by the merger will help hold down rate increases in the future.
Anthony, the utility lawyer, hammered away at the jobs issue, suggesting that the environmental concerns are a mere pretense.
"In deciding what [renewable] resources to use, should job losses be considered?" Anthony asked Hahn. "You do know that solar power has zero O&M [operations and maintenance] costs."
Hahn replied: "I assure you that they're not zero. But I accept your premise."
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About the bloggerJohn Murawski has been a full-time newspaper reporter since 1991, with stints at Legal Times and The Chronicle of Philanthropy (both in Washington, DC), The Philadelphia Inquirer and The Palm Beach Post (in South Florida) before arriving at the N&O in December 2004. At the N&O he covers energy (nuclear, coal, renewable, efficiency), hydralic fracturing (or "fracking"), public utilities (both electric and natural gas) and health care. His beat includes Progress Energy, PSNC Energy, Piedmont Natural Gas, PowerSecure International, GlaxoSmithKline, Merck, Novo Nordisk, Pfizer, Biogen Idec and others. You can reach him at 919-829-8932 or e-mail him.