Duke Energy wants 2 nonprofits to risk $240M to challenge it in court

What’s a reasonable cost for a nonprofit environmental organization to pay before it’s allowed to legally challenge a state power plant permit issued to the nation’s largest electric utility? Duke Energy’s suggestion: $240 million.

Two North Carolina environmental advocacy groups are challenging a rarely invoked 1965 North Carolina law that could require them to post a financial bond before they can appeal a power plant construction permit issued in March to Duke Energy Progress.

Having to pay that sum would spell financial ruin for NC WARN in Durham and The Climate Times in Boone, the two shoestring organizations that want to appeal an N.C. Utilities Commission permit allowing the Charlotte utility company to build a pair of natural gas power plants in Asheville. The advocacy groups say that natural gas, far from being a bridge fuel to a renewables future, can be more dangerous than burning coal because methane leaking into the atmosphere is a far more potent greenhouse gas than carbon dioxide.

NC WARN and Climate Times would have to pay Duke only if they lose their court appeal, not if they win. They say it’s a gambit they can ill afford to take, effectively barring their access to the judicial system.

The Utilities Commission sets the bond amount, and if the nonprofits lose in court, the commission would then determine the amount they must pay to cover costs.

“No nonprofit – or for-profit – entity would put up that kind of money in such a rigged system,” NC WARN Executive Director Jim Warren said of the Utilities Commission. “I find it hard to believe we’d gamble money in that saloon.”

State law requires the N.C. Utilities Commission to set bond payments to protect utility customers – the households and businesses whose monthly bills cover any extra costs incurred by construction delays from legal challenges that fail in appellate court. However, North Carolina’s bond provision has not been tested in anyone’s memory because it’s almost unheard of for a Utilities Commission power plant permit to be challenged in appellate court.

NC WARN has a dozen employees and a $1.2 million budget; The Climate Times has one executive director, one paid consultant, and an annual budget of about $30,000. The organizations suggested an alternative bond amount: $240. Duke Energy is urging the Utilities Commission to disregard that figure as absurd.

“It’s unfortunate that a group whose platform is based on distractions – not science – continues to routinely tie up much of the state’s resources on roadblocks instead of viable solutions to meet our customers’ real energy needs,” said Duke spokesman Tim Pettit.

Initially Duke had suggested a $50 million bond, and the Utilities Commission approved $10 million. But NC WARN and The Climate Times appealed, and the N.C. Court of Appeals agreed with them, saying the Utilities Commission had to reset the bond amount based on “competent evidence.”

So the Utilities Commission, a judicial body whose current members were appointed by Govs. Pat McCrory, Bev Perdue and Mike Easley, held a hearing June 17, and is now expected to set the bond amount in the coming weeks. At that point, NC WARN and The Climate Times would have to decide whether to appeal the bond amount again, or whether to go ahead and appeal Duke’s construction permit.

Since then, Duke raised the estimate to $240 million because it has determined it would definitely halt its October 2016 construction start date if the $1 billion Western North Carolina energy project were tied up in court appeals.

In public filings Wednesday, the power company said Duke Energy Progress customers would be on the hook for $100 million in environmental emissions upgrades at the utility’s Asheville coal-burning plant. The upgrades will not be needed if Duke is able to demolish the plant as planned before new standards go into effect.

What’s more, Duke contends, a two-year delay would mean that Duke customers would have to pay $50 million in increased construction costs, $45 million in natural gas transportation contract fees to PSNC Energy, $40 million in contract cancellation costs and $8 million in development costs.

“Jim Warren – he’s the king of the roadblocks,” Pettit said. “Isn’t it most ironic that the very group, NC WARN, so long-focused on shutting down coal plants, is the same group whose actions could result in the coal plant remaining in operation for the foreseeable future?”

Duke had initially applied for three power plants in Asheville totaling 752 megawatts. But the Utilities Commission approved two 280-megawatt plants, after considering arguments from the Sierra Club, N.C. Sustainable Energy Association and others.

In that ruling, the commissioners expressed skepticism of NC WARN, which has filed challenges and staged protests over nuclear plants and coal plants, deriding Duke as corrupt and the utilities commissioners as industry stooges. Opined the commissioners: “To the extent NC WARN purports to represent a greater segment of the public than its 1,000 members, it does so on a self-appointed basis and with guidelines only NC WARN itself imposes.”

James McLawhorn, head of the Electric Division in the Public Staff, said the Utilities Commission hasn’t asked his agency to take a position on the bond amount. The Public Staff – an independent state office of lawyers, accountants and engineers who represent the public in utility matters before the commission – supported Duke’s bid to build the natural gas plants.

McLawhorn said the Utilities Commission can’t set the bond based on Duke’s wealth and the nonprofits’ paltry budgets.

“Just because they’re a big company, I don’t think that’s really an option,” McLawhorn said. “A lot of times we hear from people that the commission should just say no, but in reality their decisions must comport with the law.”

John Murawski: 919-829-8932, @johnmurawski