Commentary

Christensen: Duke Energy has the power

rchristensen@newsobserver.comMarch 8, 2014 

I was in the Strangers’ Gallery of the British House of Commons some years ago, when Parliament was taking up the question of whether the government-owned nuclear power industry should be privatized.

Too risky, said the Labor Party ministers. Nonsense, said the Conservatives. One Thatcherite rose to note that there are plenty of examples of successfully operated private nuclear power plants. Take Duke Power in North Carolina, said one.

Duke Power, now Duke Energy, has long had a solid reputation. It is the largest electric utility in the world, topping the French company GDF Suez. It is a multinational giant that has dozens of generating plants – hydroelectric, coal, natural gas and nuclear – across the South and Midwest. It also has eight hydroelectric plants in Brazil.

The company is deeply woven into North Carolina’s business, political and cultural fiber. It traces its origins to Buck Duke, the Durham tobacco baron, from whence Duke University emerged.

It also has had a good reputation: as a well-run utility and as a good performer on Wall Street. Its North Carolina customers have some of the lowest electric rates in the South, far below the national average.

But Duke Energy is coming under more scrutiny than at any time since the 1930s and 1940s, when populists criticized the power companies for not extending their lines to the countryside.

That is what spilling 39,000 tons of coal ash into the Dan River in February will do. The third largest coal ash spill in U.S history has attracted the attention not only of environmentalists and politicians but also of federal prosecutors.

The coal ash is not only coating miles of the Dan River, but it is also coating the administration of Gov. Pat McCrory with political muck.

Some of it is inescapable for McCrory because he spent 29 years as an executive with Duke and 14 years as mayor of Charlotte, where Duke is headquartered. He has hired a number of his former Duke colleagues in administration posts.

Political contributions

The coal-ash spill could have occurred during any administration, but it is particularly bad timing for McCrory. The governor and his people have talked about changing the culture of state government to make it more business-friendly. One regulator even had a bull’s eye on his window facing the state’s environmental agency when he was a legislator. So McCrory gets little benefit of the doubt, even as he now pledges to force Duke Energy to fix the problem.

During McCrory’s two runs for governor, in 2008 and 2012, he benefited from $1.1 million in political spending by Duke Energy and its employees, according to analysis by Democracy North Carolina, a group that monitors campaign spending.

But that is hardly unusual. Duke Energy did the same thing when the Democrats were in power. Duke Energy and Progress Energy – with which it has since merged – spent $4 million between 2003 and 2010 on either political contributions or lobbying in state government and politics, according to Democracy North Carolina.

Duke Energy was the deep pockets for the Democratic National Convention held in Charlotte in 2012, extending and then writing off a $10 million loan to the Democrats. Then-Duke CEO Jim Rogers headed the fundraising committee.

When Democratic Gov. Bev Perdue hosted fundraisers in Cary and Charlotte for the Democratic Governors Association, Duke Energy plunked $100,000 each time, according to records.

While Duke Energy was spending a lot of money to influence the government, it wasn’t spending a lot to finance the government – at least the federal government.

It was recently disclosed that Duke paid no federal income taxes in the years between 2008 and 2012, at the same time it was reporting earnings of $9.02 billion. During that period, it received $299 million in tax rebates. The company said it benefited from accelerated depreciation on billions of dollars on capital investments.

Calls for a breakup

Such power has led to calls for breakups. Some even suggested “Break up the Yankees!” when the baseball team seemed to have an iron grip on Major League Baseball.

People have a choice on cable television but little choice when it comes to who provides their electricity.

The lack of competitiveness is an issue that brought the political right and the political left together in Raleigh recently for a forum sponsored by NC WARN and The John Locke Foundation.

Speakers highlighted the problems of a monopolistic system.

There were arguments that the current lack of choice disproportionally hurts the poor, that the state regulatory system is a dinosaur left over from the 1930s; that regulators are totally outgunned by companies with their battalions of lawyers; and that if Duke goes ahead with plans to build a new nuclear plant, it would leave little room for expanding alternative energy sources.

But it seems doubtful that any effort to break up Duke Energy will get very far. After all, they’ve got the power.

Christensen: 919-829-4532 or rchristensen@newsobserver.com

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