JEFF WILLHELM - jwillhelm@charlotteobserver.com
Environmental groups want the combined Duke Energy to increase its use of clean energy, like the solar energy project being installed at an airport in Ellenboro earlier this summer.
Critics of the proposed merger between Duke Energy and Progress Energy warned state regulators Thursday that the $26 billion deal would wreak environmental and economic harm, and should not be allowed unless the two power companies compensate for the merger's downsides.
The challenges by environmental organizations set the stage for a public N.C. Utilities Commission hearing in Raleigh in two weeks. A number of groups submitted their objections with the commission only minutes before a 5 p.m. deadline.
The merger, announced in January, would create the nation's largest electric utility with 7.1 million customers in six states. But the critics say Charlotte-based Duke and Raleigh-based Progress have glossed over the merger's negative consequences. Among them: the increase in air pollution, and the gaping economic hole in Raleigh when Progress eliminates hundreds of jobs.
The nonprofits looking to squeeze concessions from the merger include politically influential environmental groups that were successful in fashioning the 2002 Clean Smokestacks Law. The landmark legislation created stricter air pollution standards in this state than required by the federal Clean Air Act.
For added firepower, the Sierra Club, Environmental Defense Fund, Southern Environmental Law Center and others hired La Capra Associates as a star witness and expert analyst. The N.C. Utilities Commission hired the same Boston energy consulting firm to conduct a green energy analysis that led to a 2007 state energy law. That law requires electric utilities to increase their use of energy-efficiency programs and renewables, such as solar energy and wind power.
"It is not clear that North Carolina would enjoy benefits commensurate with the expected costs," La Capra consultant Richard Hahn wrote in the group's filing. "In particular, the adverse impact of job losses would hit North Carolina particularly hard, with no explicit mitigation strategy proposed."
700 to 1,000 jobs
Progress plans to eliminate 700 to 1,000 jobs in Raleigh - up to half its downtown workforce. The merging companies hope to finalize the union this year, with the combined Duke Energy to be based in Charlotte.
The La Capra analysis says that one of the biggest savings from the merger will come from cuts in operations, yet the financial amount of those benefits is not spelled out in public filings for the commission to weigh.
The companies have agreed to pass on $650 million in fuel and related savings to customers over five years. But that would come at a cost of dirtier air as the companies rely more heavily on coal-burning power plants, the La Capra study says.
One solution to these negatives, the groups say, would be to require the utilities to commit to more clean energy and conservation programs. Such measures would offset the pollution increases and would also provide an economic remedy by creating green jobs.
The power companies' initial response to the groups' proposals was skeptical. Any concessions imposed on the merger would shift financial benefits from the shareholders, and potentially from customers.
"We're being aggressive in promoting and pursuing efficiency and renewables, and we must also be responsible," Progress spokesman Mike Hughes said. "The policy of North Carolina for the last 40 years has been for utilities to provide reliable service at the lowest cost. ... So our decision to invest in any resource ... is based on the state's policy and our obligation to maintain the least-cost mix of resources available to meet our customers' needs."
'Winners and losers'
Other organizations also filed objections.
The N.C. Sustainable Energy Association, a Raleigh trade group that represents solar and other renewable developers, wants the commission to require the power companies to pay $75 million for home weatherization and other programs. The utilities have committed to contributing $15 million, one-fifth that amount.
N.C. Waste Awareness and Reduction Network , a Durham advocacy group, asked that Duke be required to donate $27 million to the N.C. Housing Finance Agency for low-income weatherization programs.
In the past week, Duke and Progress won support for their merger from two formidable opponents: the state consumer advocates in North and South Carolina. Those deals will require the combined Duke Energy to pass on to customers in both states at least $650 million in savings from fuel contracts, rail contracts and power plant operations.
The organizations expressed their displeasure Thursday, saying the deal with the consumer advocates doesn't go far enough.
"Even when a merger generates benefits, there are still winners and losers," Hahn said. "Regardless of whether the workforce reductions are voluntary or involuntary, the loss of jobs will have adverse impacts on North Carolina. Even when a position is eliminated through normal retirement or attrition, its loss still affects job seekers who would have filled the open position."
