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Testifying before the N.C. Utilities Commission, Richard Spellman laid out the case against the Save-a-Watt proposal after the company's experts and executives had advocated for the proposal during three previous days of hearings.
If approved by the commission, Spellman said, Duke's proposal would be the most expensive energy efficiency program in the nation, but it would produce negligible energy savings.
Save-a-Watt "is a bad deal for Duke ratepayers, but it is a great deal for stockholders in the company," Spellman said. "Do you want to be the one state in the U.S. that ends up with a [cost] that's a lot higher than what's being paid elsewhere?"
Spellman, who has analyzed energy conservation programs for three decades, previously calculated that Duke's proposal would end up costing customers $18.23 for a compact fluorescent light bulb that costs $1.65 at Wal-Mart. Spellman, president of GDS Associates in Georgia, is testifying as an expert for the Public Staff, the state's consumer advocacy arm in utility matters.
Duke dismisses Spellman's light bulb calculation as one of many examples of how critics distort and misrepresent Save-a-Watt.
Save-a-Watt is the Charlotte-based utility's bid to reduce customers' electricity usage by encouraging home energy audits, energy-efficient appliances and other upgrades. All customers would pay for operating the program in which Duke would offer incentives to participating customers to invest in efficiency at the home and office.
Duke touts Save-a-Watt as a national model that could be adopted by other utilities around the nation. Duke acknowledges Save-a-Watt would be more lucrative than conventional energy efficiency programs, but that's the point. The company says that without meaningful financial incentive, energy efficiency is not a viable business option.
Duke is presenting arguments from a dozen experts, including CEO James Rogers, who will testify next month in a grand finale. In addition to a retinue of lawyers and other experts, Duke has two public relations representatives on duty, brought from Charlotte to Raleigh to work the high-profile hearings.
Where the risk lies
Spellman told the commission that power companies typically charge customers a small premium over their cost to run efficiency programs, but Duke is proposing an exorbitant return on its investment. Critics say Duke has designed Save-a-Watt to reap as much as 2 1/2 times the program's costs.
What's more, Spellman said, in the first four years of Save-a-Watt, Duke would achieve only a quarter of the energy savings other utilities have realized in their efficiency programs.
Duke is alone in defending its efficiency proposal against a host of opponents, including the N.C. Council of Churches, the City of Durham, Wal-Mart, AARP and environmental organizations.
The commission could approve, reject or modify Duke's proposal. It has final say over matters affecting utility rates and electricity demand.
In this complex battle of lawyers and accountants, nearly every detail and fact cited by one side is challenged by the other. The Public Staff alleges Duke is seeking a huge 61 percent return on Save-a-Watt, whereas Duke says it's seeking a modest 18 percent. And the company says it profits only if it achieves results in energy efficiency, but will lose money if customers don't reduce electricity use.
"That's the key: The risk is on the company," Duke spokeswoman Paige Sheehan said during a break in the hearings.
Public Staff Executive Director Robert Gruber disputed that claim.
"They don't have much risk," he said. "They'll withdraw the program if it's not working."
Duke's lawyers grilled Spellman on his methodology and accuracy, focusing on a math error that Spellman shrugged off as a mere typo.
Sheehan said Spellman's methodology lacks credibility. She said the $18.23 light bulb is a glaring example. Under Save-a-Watt, Duke would offer $1 rebate coupons that would bring down the cost of compact fluorescent bulbs to less than $1. A typical residential customer would pay about $1 a month to finance the efficiency program in its first year, amounting to about $12 for the year.
Sheehan said customers who participate -- by investing in CFL bulbs, duct sealing, energy-efficient refrigerators and other upgrades -- could save $5 a month, or $60 a year.
"We are are very concerned that there are errors, typos, mischaracterizations, misrepresentations and inaccurate comparisons in his testimony," Sheehan said.
john.murawski@newsobserver.com or (919) 829-8932
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