Delay snares energy plan: Duke Energy and its critics hit an impasse that may bog down Save-a-Watt proposal

Aug 22, 2008 (The News & Observer - McClatchy-Tribune News Service via COMTEX) -- DUK | Quote | Chart | News | PowerRating -- Aug. 22--Confidential talks between Duke Energy and opponents of its Save-a-Watt energy conservation plan have broken down, lawyers involved in the talks said.

Negotiations hit a dead end Wednesday when the state's consumer protection agency, the Public Staff, told Duke Energy's lawyers their compromise was a bad deal for customers that would yield unacceptably high profits for the company.

The state Utilities Commission has not reviewed the details of Duke's proposed compromise, which was discussed confidentially between Duke and its critics: the Public Staff, the state's attorney general, the Southern Environmental Law Center, N.C. Justice Center, Wal-Mart and the city of Durham.

If Duke asks the Utilities Commission to consider the compromise version of Save-a-Watt instead of the version debated in public hearings, there would likely be another round of legal filings and hearings.

"It could be months before any resolution if that happened," said Edward Finley Jr., chairman of the commission.

The impasse represents another setback in Duke's 15-month struggle to create an energy conservation program that the company's shareholders can live with.

Like all conservation programs, Save-a-Watt would pay customers financial incentives to make their homes and offices more energy efficient. The upgrades could include energy audits, duct sealing, remote-controlled air conditioners as well as new appliances, windows and insulation. All customers would pay for the program through their utility bills.

Unlike other conservation programs, Save-a-Watt is designed to be more profitable; that has focused debate on how much money Duke should be allowed to make on the program.

Duke officials have said conservation must be lucrative for corporations if it is to justify to Wall Street investing in such programs.

But Save-a-Watt ran into a wall of opposition that included environmentalists, consumer advocates and church groups.

Critics said the conservation plan would gouge customers, enrich shareholders and deliver paltry energy savings.

Not a single organization entered the case on Duke's side.

Despite the stiff resistance, Duke's CEO James Rogers crusaded for Save-a-Watt as the utility industry's white knight in the fight on global warming. The gambit apparently backfired.

"Duke overplayed their hand," said Sherri Zann Rosenthal, Durham's senior assistant city attorney, who participated in the failed negotiations.

"They know it's their own hubris and overreaching that's caused Save-a-Watt to stall."

The final say on the program is in the hands of the state Utilities Commission, which regulates utility rates and programs.

Commission hearings on Save-a-Watt, held in Raleigh, concluded Monday, but the original proposal may be all but moot now that the company has publicly acknowledged that it was willing to compromise.

Defending Save-A-Watt

Duke spokesman Andy Thompson said the company still believes in Save-a-Watt.

"We think that we made an excellent case and that Save-a-Watt is an excellent model," Thompson said.

North Carolina has emerged as the nation's primary battleground for Duke's energy conservation proposal. The state has put up by far the fiercest opposition to Save-a-Watt.

Concessions won here are likely to be adopted in Duke's five-state territory.

Robert Gruber, director of the Public Staff, would not say what changes Duke proposed to Save-a-Watt, but he said it wasn't enough to appease critics.

"We thought the profit margins here were too high," Gruber said.

"We spent lots of spreadsheets and analysis on the profit margins, just page after page."

The Public Staff and other critics also say that Save-a-Watt delivers only about a fourth of the energy savings achieved by leading conservation programs.

"Duke offered very little energy efficiency, and it charged a remarkable premium," Rosenthal said. "North Carolina would be paying more money for efficiency than anywhere else."

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

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