Published: Jul 25, 2012 10:06 AM
Modified: Jul 25, 2012 10:07 AM
The Duke-Progress scandal is fascinating for many reasons. But that cover story – corporate culture and personalities – distracted from several more important stories flowing during three days of N.C. Utilities Commission hearings, ones the commissioners declined to address.
First, Duke Energy plans to charge customers nearly $2 billion to improve Progress nuclear plants in the Carolinas over the next two years, as reported by the Triangle Business Journal.. That’s nearly three times more than the purported “savings to the public” the utilities and Commission claim the merger provides during that time frame ($650 million over 6.5 years).
Because net public benefit is the essential legal standard by which the merger must stand or fall, it is astonishing that throughout the hearings – as those nuclear fleet problems repeatedly were cited as a key reason Duke fired Bill Johnson – the Commission chose not to ask any of five witnesses about the nature of the plant problems, the costs, or impacts on customers. Not even once.
Nor did commissioners ask why Duke didn’t disclose those plans prior to merger approval, even though CEO Jim Rogers testified he plans to “pour money” into remediating the Progress nuclear fleet and bring it “to excellence.”
The same gap in Commission questioning occurred regarding the broken Crystal River plant, a multi-billion dollar mistake that impacts customer rates in the Carolinas in at least two indirect but significant ways: Duke’s borrowing power and the pooling of holding company profits between states.
Although Duke and Progress witnesses discussed the fleet problems and Crystal River with Commissioners at least 20 times, each time the audience leaned forward in our seats for the key questions – how much and who pays? – the interrogating commissioner changed the subject.
The Commission never asked about the third containment crack that Progress found in July 2011 but disclosed to Florida regulators only three months later. Nor did the Commission ask why repair efforts had failed, nor why Johnson ignored the warnings that led to the Crystal River cracking in the first place. They never asked for even a summary of findings of Duke’s own once-secret study of Crystal River – which NC WARN told the Commission about in mid-June – even though it fit the time-frame of the Duke board deciding to oust Johnson.
Another key aspect of the cover story is the utility talking point that the merger is sound and it benefits customers. Commissioners have endorsed this so vigorously, we wonder if their minds might be closed to the findings of their own investigation.
Of the $650 million in claimed fuel savings, about half would pass to customers anyway, without the merger, because of the decline in natural gas prices. NC WARN is also concerned that most of the savings could be directed toward Duke’s large customers. Even if not, the saving per family is minuscule.
We are quite concerned that commissioners might have agreed before-and that the CEO drama would be the focus of discussion, and not to address the net public benefit question, their primary responsibility.
Certainly the cover story is an enthralling look at the underbelly of corporate America. But the story of the merger’s legitimacy – on actionable issues of public benefit – must now be fully explored by regulators, the news media, and Attorney General Cooper, whose investigation reportedly is centered on consumer protection, and properly so.
Jim Warren, is the executive director of NC WARN (Waste Awareness & Reduction Network) in Durham.