By John Downey, Senior Staff Writer
Environmental groups and consumer advocates oppose the provision, contending ratepayers could end up paying for plants that are never finished. And they say the proposal would shift the financial risk of plant construction to customers -- and away from utility shareowners.
But the measure remains in the version of the bill discussed this week by a 70-member working group the N.C. Senate established to find common ground on state energy legislation.
The bill was designed to require utilities to use renewable energy sources and expand conservation efforts. But Senate leaders have broadened the scope of the legislation to address several additional energy issues.
The state's utilities recently dropped their efforts to include a provision that would've let them collect financing costs for power-plant construction before a plant is built. But the bill still would allow utilities to file with the N.C. Utilities Commission for a return on their construction costs.
"It has nothing to do with renewables," says Shana Becker, a lobbyist with the N.C. Public Interest Research Group and a member of the working group that's crafting the energy bill.
At present, utilities are allowed to make a return on their construction costs before a plant is completed only if they can demonstrate financial distress. The proposal under consideration would remove the financial-distress requirement, says George Everett, Duke Energy Carolinas' chief lobbyist at the legislature.
The change would put North Carolina on the same legal footing as South Carolina, he says. Plus, the proposal is designed to reassure investors and the public markets that utilities will be able to make a return on major coal- and nuclear-plant projects that have high costs and take years to build.
But Becker views the proposal as one of several that would benefit utilities but hurt ratepayers. Her organization has also argued against a provision allowing utilities to pass on the costs for environmental regulation to ratepayers as part of annual fuel adjustments.
Those adjustments are essentially automatic pass-throughs on the utilities' fuel costs. But Elizabeth Ouzts, state director of Environment North Carolina, says the legislation would allow utilities to include the cost of pollution allowances in the fuel adjustments. That, she contends, would make it easier for utilities to pass on to ratepayers the cost of buying allowances that enable them to put more pollution in the air.
No timetable has been set for the working group to finish its efforts to reach a consensus on the bill, Becker says.
