North Carolina Lawmakers Make Rare Call for Delay in Coal Plant Permitting Process

A group of North Carolina lawmakers called on the North Carolina Utilities Commission to enact a 90-day suspension of the permitting process for Duke Energy’s proposed 1,600 Megawatt expansion of it’s Cliffside Power Plant near Charlotte. Critics contend that the plant will not only create a significant increase in global warming pollution (the proposed plant will use conventional pulverized coal burning technology), but imposes huge financial risks on ratepayers, who will foot the bill for what may well be a $4 billion investment in new technology.

With 61% of North Carolina’s electricity already supplied by coal, the project will also do nothing to diversify the state’s energy base.

According to the Raleigh News and Observer:

The utilities commission was expected to rule this month on Duke Energy’s application, but the legislators say they want the Charlotte-based utility to open its books and provide more information on the cost estimates for the project.

The lawmakers, including Rep Paul Luebke, a Democrat from Durham, also want state regulators to give greater weight to energy alternatives — such as renewables and efficiency programs — as they consider Duke Energy’s application amid increasing concerns about global warming.

At a press conference in Raleigh, the legislators announced a bi-partisan sign-on letter to the utilities Commission that they expect a dozen or more legislators to sign requesting the 90 day delay and a more transparent process. In particular, legislators cited the increasing costs of coal, and Duke Energy’s refusal to disclose the details of how they are accounting for future coal costs to the ratepayers who will foot the bill, as causes for significant concern.

Speaking at the press conference were Representatives Paul Luebke (D-Durham), Susan Fisher (D- Buncombe), Jennifer Weiss (D-Wake). Senator Stan Bingham (R-Davidson) was one of the lawmakers who called the press conference, but was unable to attend due to an extended committee meeting. Also speaking and fielding questions was Appalachian Voices’ field organizer Austin Hall. Appalachian Voices has been working with the group of legislators to draft and gather signatories on the letter.

The announcement was also covered in the Charlotte Observer.

The complete text of the letter that lawmakers are sending to the Utilities Commission follows:

February 22, 2007

Renne C. Vance, Chief Clerk
NC Utilities Commission
4323 Mail Service Center
Raleigh NC 27699-4325

Re: Docket No. E-7, Sub 790 (Cliffside)

Dear Ms. Vance,

The lack of transparency in the proposal by Duke Energy to build two conventional, 800 megawatt coal-fired units at its existing Cliffside Steam Station in Rutherford and Cleveland counties is a source of great concern to the undersigned. Based on the arguments presented in two rounds of formal evidentiary hearings before the Utilities Commission, it is our belief that information that was not made publicly available regarding the Cliffside project could pose substantial financial risks to North Carolina’s ratepayers. In order to better evaluate those risks, we recommend a 90-day temporary suspension of issuance of the Certificate of Public Convenience and Necessity and the release of information used to project the financial consequences of the project.

The project’s total cost, now estimated at $3 billion, a 50 percent increase in the last year alone, challenges the North Carolina Utilities Commission mandate to ensure the “public convenience and necessity” of the proposal. The opportunity for a fair and open comparison of costs between the project and alternative measures such as demand side efficiency and alternative energy sources should be provided to the citizens and ratepayers of North Carolina before they are forced to foot the bill for billions of dollars of expensive new investments.

The project’s price increase also calls into question the accuracy of certain other cost projections that were used by Duke Energy including coal prices, which have increased significantly in recent years. For instance, the respected energy consulting firm Hill and Associates said in their 2006 Central Appalachian Coal Summary: “Since 2003, mining costs in Central Appalachia have risen roughly 45% from the upper $20s to the lower $40s per ton, establishing a new base platform for coal pricing.” If Duke Energy did not adequately account for these increases, similar to what has already occurred with construction costs, the resulting increases in electric rates will fall to ratepayers, not to Duke Energy shareholders. A 2006 fuel clause adjustment for Duke Energy, for example, found an increase in the utility’s rates, and thus higher bills for ratepayers, without any direct benefits in the form of new jobs, economic growth or improved health and environmental quality.

Duke Energy may also have underestimated the long-term costs of the proposed units with regard to the risk of mandatory carbon regulations. It is likely that if these units are fully operational by 2011, and will operate for 40 or more years, they will be subject to federal regulation of carbon dioxide. Cliffside’s carbon liability and associated future costs would be borne by ratepayers.

Because Duke Energy’s proposal provided insufficient transparency and information to ensure a fair and unbiased decision on the risks, costs and benefits of expanding the facility, the proceedings should be temporarily suspended for a period of 90 days. During this period we request that the public be provided access to the inputs and assumptions of Duke Energy’s cost estimation models.

About Matt Wasson

As Appalachian Voices' Director of Programs, Matt has worked on all aspects of the "coal cycle" — from mining, transportation and combustion to the disposal of power plant waste — and is a nationally recognized authority on mountaintop removal coal mining and coal economics. Matt has testified before Congress and appears frequently on expert panels.