Power play

North Carolina electric customers shouldn't have to bear the risks of companies that want to build new nuclear plants

Duke Energy Co. wants to sell its North Carolina rate payers a car, but it's not built yet. It may never be built, and indeed, the company may never get permission to build the car at all. Even if the car is delivered, North Carolinians will have to share it with their neighbors to the south. Don't like that arrangement? Duke is prepared to ask the Better Business Bureau to force you to make the payments.

That's just an analogy, but it suggests the troubling true story. Duke, the Charlotte-based electric utility that serves Durham, Chapel Hill and large portions of Piedmont and western North Carolina, wants to build two new nuclear power plants to serve its North and South Carolina customers. It has asked the N.C. Utilities Commission to approve a rate increase -- in short, asked to charge its North Carolina customers more -- to recoup $125 million in development and licensing costs for the new plants through 2007.

There's no assurance that the new reactors will be licensed, of course. That's what the licensing process is meant to determine.

Duke wants the costs covered even if the plants are denied licenses, a nice deal if you can get it. What company wouldn't want its financial risks covered? North Carolina law permits utilities to tap customers for development and construction costs if a plant is actually built. That's reasonable, for the companies as well as for consumers who benefit when power actually is generated. But Duke says it will ask the General Assembly to change the law to permit rate increases before plants are granted their necessary permits. It should be a no-brainer for lawmakers to side with consumers if a bill reaches Jones Street.

Duke would co-own the plants with Georgia-based Southern Co. Yet it's not clear whether Southern would be asked to share the development costs, says the Utilities Commission's Public Staff, which advocates for rate payers in North Carolina. And actually, Duke's plants wouldn't be built here. They are planned to be located across the border in South Carolina. That would spare Duke from having to explain at a public hearing here why there's even a need for additional nuclear power capacity.

The Public Staff, state Attorney General Roy Cooper and a host of concerned environmental groups oppose this questionable deal and by extension an identical request that Progress Energy will make. Progress, which serves the eastern half of North Carolina and a few areas out west, hopes to expand its Shearon Harris plant in southwestern Wake County. Like Duke, it is also in the forefront of a national drive to build new-generation nuclear plants.

The Public Staff correctly points out that Duke was allowed to recover nearly $225 million of about $600 million in costs for plants (in South Carolina) that it abandoned in the 1980s. There may be room to negotiate a partial cost recovery for nuclear plants that aren't built, depending on the circumstances, but that should take place after the fact. There should be no up-front subsidies from the rate payers.

Duke and Progress are publicly traded companies. Stockholders traditionally and properly bear the cost of development risks. North Carolina customers, on the other hand, should simply pay for the power that arrives at their meters, which is also traditional and proper.