Energy overhaul nearly a reality

To environmentalists' dismay, the legislature is poised to ease the building of plants

Despite protests from environmental groups, North Carolina lawmakers made it clear Monday evening they will approve the most significant overhaul of the state's energy policies in more than 20 years.

A lopsided vote of 102-11 in the state House erased any doubts about final approval of the bill, which will make North Carolina the first state in the Southeast to require a significant amount of electricity be generated by renewable energy such as solar and wind -- at the same that it makes it easier to finance coal and nuclear plants.

The changes are expected to increase residential electricity rates $10 a year in 2008 and $34 a year by 2015.

The House and the Senate, where a similar version of the bill was approved in June, must still vote one more time before the legislation is sent to Gov. Mike Easley. Opponents, however, conceded the obvious Monday.

"It's going to pass, so we are focused on trying to make a few changes along the way," said Elizabeth Ouzts, director of Environment North Carolina. "We consider it a dark cloud with a silver lining."

Even though environmentalists have pushed for renewable energy for years, their opposition to the current bill grew as lobbyists for the utility companies became more deeply involved and the bill started addressing issues such as new construction costs and tax breaks.

Those goals were starkly different from earlier proposals that simply required utilities to increase their use of renewable energy. One proposal suggested 20 percent of the state's power be generated from such alternative sources.

The bill does require a sharp increase in renewable energy sources, mandating that 12.5 percent of the state's electricity come from alternative energy sources and better operating efficiencies by 2021. In addition to solar and wind, wood and even swine waste can be used to produce electricity.

Less than 2 percent of the state's electricity comes from renewables and efficiency programs today. Consumers will share the cost of making the switch by paying higher utility bills starting next year.

But renewable energy isn't likely to keep up with a booming population and growing demands for electricity. That means more coal and nuclear plants will be needed.

To help utilities pay the costs, the bill lets power companies charge consumers for the construction of new plants before they produce electricity. Utilities lost that right more than 20 years ago after ratepayers were told to shoulder the costs of abandoned projects in the 1970s and 1980s.

Supporters of the current bill say it isn't likely that power companies will make that mistake again, but the bill does allow utilities to charge consumers even if a plant never operates. That change helped turn Duke Energy and Progress Energy -- the state's two largest generators of electricity -- into big supporters of the bill.

"In my decade in this position, I have never seen the utilities as eager to have a bill passed as this one," said Molly Diggins, director of the North Carolina Sierra Club.

For some environmental groups and consumer advocates, the changes took a good idea that was focused on renewable energy and turned it into a bad deal for ratepayers.

"The process they have used is as rotten as the bill itself," said Jim Warren, director of the Waste Awareness and Reduction Network of North Carolina.

In voting against the bill, Durham Democrat Paul Luebke applauded the work of utility lobbyists but questioned the value for ratepayers.

"The bill is a loser if you are a ratepayer," he said. "It's a stockholder-protection measure."

The backing of the utilities coupled with tepid support by some environmental groups effectively guaranteed its passage.

For groups such as North Carolina Environmental Defense and the North Carolina Sustainable Energy Association, the bill is better than nothing.

"It's not politically feasible to stop the construction of every new plant," said Ivan Urlaub of the Sustainable Energy Association. "This at least gets us started in the use of renewable resources and better efficiencies."

Green incentives seen

Lawmakers supporting the bill said the compromise also provides incentives for more plants and greener power at a time when it makes sense to increase the state's capacity to generate electricity.

"If we don't do the things in this bill now, we won't be able to to do them when we have to," said Anson County Democrat Pryor Gibson.

Even lawmakers who were initially skeptical of the compromise said Monday it was better to approve it for now.

"It's a good first step, and we can always come back and adjust it," said Guilford County Democrat Pricey Harrison.

Diggins, director of the Sierra Club, said her organization isn't waiting until the bill is approved to lobby for changes.

The Sierra Club has stopped short of opposing the bill throughout the debate, saying instead it would rather work to improve it.

"It's been improved some just in the past few days," Diggins said. "Regardless, it marks a dramatic overhaul. It's not really possible for anyone to know what the long-term effects will be."