By Frank Vinluan
RALEIGH - Under Progress Energy's plans to recover from ratepayers its costs for investing in renewable energy, a studio apartment resident would pay the same as the resident of a palatial home whose monthly electricity usage reaches 40,000 kilowat hours.
A backyard wood shop operating as a business and using 1,000 kwh a month would pay the same as a steel mill or aluminum smelter using 20 million kwh a month.
"Indeed, under (Progress') proposal, the backyard wood turner will pay 20,000 times as much as the steel or aluminum company for every kilowatt hour of renewable energy he consumes," Robert Gillam, an attorney for the Public Staff of the North Carolina Utilities Commission, writes in comments filed with the commission.
The Public Staff is charged with representing consumers before the NCUC.
Progress Energy's plans to bring more renewable energy onto the electric grid come with a price that consumer advocates say would be disproportionately borne by the state's smallest business and residential users. Utilities typically recover charges on a per-kilowatt-hour basis, so that customers who use more pay more. But Progress proposes a flat fee, which the utility says would be administratively easier and would best assure that the utility could recover all of its expenses.
The charge would be 45 cents a month for residential users, $2.26 for businesses and $22.62 for industrial customers.
The Public Staff filed a motion June 25 opposing Progress' flat-fee charge. The commission is accepting comments on the matter until July 9, and oral arguments will be heard July 14. Duke Energy has yet to make a filing on how it would seek to recover similar charges.
The charge itself is not what's in dispute. State law allows utilities to recover from ratepayers expenses that companies incur. For example, Progress is seeking to add charges for its fuel costs, mainly due to rising coal prices. The utility also is seeking to recover money for planned improvements to the infrastructure of the electric grid. Those charges would appear on customer bills as a per-kilowatt-hour charge.
What's in dispute is the manner Progress proposes to recover costs it will incur for complying with a state requirement that a percentage of utilities' electric generation come from renewable energy.
Progress intends to enter into contracts to buy power from producers generating power from sources such as wind, solar and biomass. Progress wants to recover the cost from a fixed monthly charge added to the bill for each class of customer.
Jeff Brooks, a Progress spokesman, says collecting the charge on a per-kilowatt-hour basis leaves open the possibility that the utility won't collect enough money to recover what it's spent on renewable energy because the amount the utilities can collect is capped. Brooks says residential usage might not reach the cap. Large consumers could reach the cap, but that level alone won't be enough to pay for all of Progress' costs.
Brooks says undercollection could have the unintended consequence of diminishing utility spending on renewable energy.
"If we can't recover the cost we've incurred in renewables, it can affect what we can forecast for investment in future years," he says.
Shana Becker, staff attorney for consumer group NC PIRG, calls Progress' proposal regressive. She says a flat fee favors the largest energy users, such as industrial customers.
Toni Wike, the Public Staff's chief counsel, says flat fees are typically used for basic charges that do not vary, such as a charge for reading a meter. She acknowledges that a flat rate would give Progress more assurance that it would recover its expenses. But she says the Public Staff wanted to point out that per-kilowatt-hour charges would be fairer. She says if Progress does not collect enough in one year, the utility could recover the expenses the following year.
