Duke Energy and Progress Energy agreed to increase their energy conservation goals in the Carolinas in a settlement announced Monday with environmental advocacy groups that had raised concerns about the public consequences of their corporate merger.
The agreement means that the state's current green energy mandate - set by state law in 2007 and viewed by skeptics as unattainable - will likely be exceeded.
The last-minute deal was announced Monday in Columbia, S.C., as that state's regulators began a public hearing on the Duke-Progress combination. The merger, which would form the nation's biggest electric utility, also requires approval from the N.C. Utilities Commission and the Federal Energy Regulatory Commission.
The settlement fits a pattern in which Charlotte-based Duke and Raleigh-based Progress have systematically eliminated opposition to the merger through private agreements, offering sweeteners to potential critics. They hope to get the merger approved this year.
Under Monday's settlement, the utilities will introduce energy-efficiency programs aimed to reduce retail electricity use by 7 percent throughout the Carolinas by 2018. The savings, significant in their own right, could come on top of the state's legal requirement to meet 12.5 percent of the state's electricity demand through green options, such as efficiency programs, solar energy and wind power.
"We think they have every intention of succeeding," said Gudrun Thompson, an environmental advocacy lawyer who helped negotiate the deal.
To achieve the additional savings, Duke and Progress would offer their customers financial incentives to buy high-efficiency appliances and to encourage customers to participate in other conservation programs. Any such programs would have to be approved by the N.C. Utilities Commission, which is not guaranteed.
The nonprofit environmental groups had previously opposed the merger on the grounds that the companies had no strategy 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 who buy energy-efficient appliances.
But the costs to customers will be lower than the cost of building new power plants to generate the equivalent amount of electricity, said John Wilson, research director at the Southern Alliance for Clean Energy.
