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Duke’s failure to lead

By Stephen Smith
Special to the Observer

When Duke Energy merged with Progress Energy to form the largest utility company in the United States, our organization wondered what kind of leadership to expect from the new corporate giant. After 18 months, we are gaining insight into how Duke Energy defines leadership. Unfortunately, the trends to date in the four areas outlined below do not bode well for the new corporate leadership.

The third largest spill from a coal ash pond in U.S. history occurred last week at Duke’s Dan River plant near Eden. Duke officials struggled for nearly a week to contain the leak, which has sent toxic coal ash into the Dan River, threatening public drinking sources downstream. Several days into the spill, Duke Energy spokeswoman Lisa Hoffman said the company is looking for “alternatives” to their current coal ash management policies. However, Duke has a record of aggressively lobbying against Environmental Protection Agency rules that would tighten coal ash management which, if enacted, would have prevented the type of disaster we are seeing unfold in real time. In the aftermath of a major disaster, claiming that you will consider implementing recommendations you have lobbied against in the past is not leadership.

Over the past few months it is becoming increasingly apparent that Duke will attempt to aggressively roll back policies that support solar power development in its service territory. Duke CEO Lynn Good and other Duke executives are now engaged in a broad campaign to mislead the public about the “cost” of net metering. Net metering allows customers who place solar power on their homes to use the power they generate to offset their electric bill. Ms. Good and other Duke executives have characterized these homeowners as taking advantage of low-income customers and not paying their fair share. This inflammatory and misleading information is particularly dubious given the fact that our organization and others have requested that Duke conduct a transparent Value of Solar analysis that would calculate the cost and benefits of customer-owned solar power to the grid. Every time there has been such an analysis conducted in a transparent manner, it has demonstrated that net metering is not only fair, but often underestimates the true value that solar systems provide to the grid. Duke Energy’s hidden agenda in attacking solar net-metering policy is the simple fact that customer-owned solar generation challenges their central utility business model. Just as telecommunications companies had to adjust to cellular phone technology or how digital cameras changed the way we take photographs, Duke should embrace the technological advancement that allows customer-owned solar power rather than feebly attempting to cling to a crumbling business model. This is not leadership.

Before the merger, Duke Energy appeared to want to move into a national leadership position on energy efficiency. In cooperation with stakeholders, including ourselves, Duke’s modified Save-a-Watt energy efficiency program looked to be an innovative way of helping customers save money while capturing real energy efficiency savings across their service territory. A number of utilities have achieved greater than 1 percent demand reductions on an annual basis, which over a 10-year period would lead to a 10 percent reduction in demand. As part of the merger settlement, Duke Energy promised to move in that direction. More than a year after that commitment was made, Duke continues to reinterpret the agreement and projects savings significantly lower than the 1 percent annual goal by 2022. Duke’s energy efficiency plan is less than half of what leadership utilities in other states are doing over the same period. This is not leadership.

Shortly after the merger with Progress, Duke announced it would shut down the crippled Crystal River 3 nuclear reactor in Florida. Progress Energy had structurally damaged the reactor’s containment vessel while replacing a steam generator during a botched repair procedure. We agreed with the decision to shut the reactor down, given the significant risk associated with operating a cracked containment vessel into the future. Following the decision to stop throwing good money after bad, it has been breathtaking to watch Duke gouge Florida customers due to the Crystal River 3 mismanagement. Essentially, the company put ratepayers on the hook for more than $1 billion, sparing its shareholders any significant financial responsibility. This is not leadership.

I would simply ask Lynn Good and other senior Duke Energy executives, is this the leadership we should continue to expect from the largest utility in the country?

Stephen Smith is executive director of the Southern Alliance for Clean Energy.
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