CEO defends Duke plan to save energy: The conservation plan will be incredibly efficient, leader tells regulators, as environmentalists scoff

Aug 19, 2008 (The News & Observer - McClatchy-Tribune News Service via COMTEX) -- DUK | Quote | Chart | News | PowerRating -- Aug. 19--Facing a host of skeptics, Duke Energy's chief executive urged state regulators Monday to endorse an energy conservation program that critics say would be the most expensive of its kind in the nation.

Speaking before the N.C. Utilities Commission in Raleigh, CEO James Rogers said Duke's Save-a-Watt proposal would be the most ambitious energy-efficiency program in the world. Rogers laid out his vision, in which the Charlotte electric utility would take the lead in reducing energy use and fighting global warming.

"If our proposal is approved, we can begin to create a blueprint for a sustainable energy future," Rogers told the utilities commissioners. "This is about creating a new business model that at the end of the day translates into a more energy-efficient economy."

Rogers' testimony comes as hearings wind down before the commission, which is expected to rule on the proposal this year. The hearings consumed a week in July and are expected to conclude this week after more than 30 hours of testimony from two dozen experts and executives.

But even as Rogers denounced environmentalist critics as hypocrites, Duke's lawyers have been negotiating a compromise settlement with Save-a-Watt opponents.

Rogers would not discuss the details of the confidential negotiations but said the issue comes down to the profit that a utility should make from running efficiency programs. In other states, Duke has proposed versions of Save-a-Watt that are less profitable for the company and more palatable for regulators.

The Public Staff, North Carolina's consumer advocacy agency, has estimated that Save-a-Watt would reap a 61 percent return for Duke; the Public Staff has proposed a return of 6.8 percent instead.

Meanwhile, a coalition of 14 organizations urged the Utilities Commission to approve a different energy-efficiency proposal. The alternative -- filed Monday by AARP, the City of Durham, the N.C. Council of Churches, Legal Aid and others -- proposes creating an independent nonprofit agency to run efficiency programs instead of leaving the design and administration of the programs to monopoly power companies.

Jim Warren, director of the NC Waste Awareness and Action Network in Durham, was not moved by Rogers' presentation.

"Save-a-Watt is designed to limit energy efficiency so they can build big power plants," Warren said. "If they were serious, they'd put more than just a zero on the table. That plan is a dog."

Under Save-a-Watt, Duke would offer customers financial incentives to buy energy-efficient appliances and help their homes use less power. The program would be voluntary for customers who want to accept the incentives. But all Duke customers would pay for the incentives and administrative costs of the program through their monthly bills.

In this state, Save-a-Watt is opposed by church groups, environmental organizations, consumer advocates and Wal-Mart. Critics say the program would cost customers as much as 2 1/2 times more than efficiency programs in other states but would deliver paltry results.

Assistant Attorney General Len Green estimates that in the first four years, Save-a-Watt would reap Duke 35 percent to 40 percent in profit after corporate income taxes. Rogers did not dispute the analysis.

"This is an appropriate incentive," Rogers told Green during the hearings.

"You're suggesting that we want to make a quick profit and get out of town," Rogers said, gesturing at a table of opposing lawyers. "Over time, we'll blow through these profitable programs and get into more expensive programs. ... The margins of these investments will come down."

After the hearing, Rogers expressed frustration that critics depict Save-a-Watt as an example of corporate greed. Rogers said that without more lucrative profit margins, energy efficiency will always remain an option of last resort for corporations beholden to boosting shareholder value.

To appease critics, Rogers said Duke is willing to reinvest in Save-a-Watt the profit from the program during its first five years of operation.

As for the California model -- efficiency advocates often cite the state as one to emulate -- Rogers had only scorn.

"California would spend like drunken sailors. You look at the money they threw away on energy efficiency," Rogers said.

john.murawski@newsobserver.com or (919) 829-8932

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