News: CJ Exclusives

Duke Doubted Smokestacks’ Merits

But utility did not oppose costly legislation -- Part 3

RALEIGH—When the North Carolina Clean Smokestacks Plan was first presented to the Department of Natural Resources staff, several environmentalist groups and the state’s two investor-owned electric utilities already supported the legislation — if they could get cost recovery — according to documents.

Despite the state’s compliance with the EPA’s air quality standards for most pollutants, liberal environmental groups embraced the bill because it required Duke Energy and Progress Energy to place even stronger emissions controls on the smokestacks of their coal-fired power plants.

After the bill won the support of DENR Secretary Bill Ross, Gov. Mike Easley, and the state Senate, environmentalists faced a hurdle in the House. Representatives of ratepayer groups objected to the surcharge in the bill that would allow the utilities to recapture the costs for adding the new equipment, called Selective Catalytic Reduction. So utilities representatives, Division of Air Quality representatives, and Smokestacks Plan author Michael Shore of Environmental Defense began to negotiate “talking points” to promote the bill.

Statements and information culled from e-mails, obtained from state agencies by Carolina Journal, show that Duke did not agree that the Smokestacks bill improved air quality. Progress, previously known as Carolina Power & Light, remained mostly silent about the virtues, and problems, of the plan.

“I do not know of any data to assess the improvements in air quality as a result of our emissions reductions,” George Everett, Duke’s vice president for environmental and public policy, wrote in an e-mail to DAQ Director Alan Klimek on May 1, 2001, “other than the modeling being done by (DAQ).”

DENR officials and Easley embraced the plan before they knew whether the bill would produce real improvements in what was already an improving trend in ozone levels. In addition to the utilities, emissions from other manufacturing plants, from gas-powered vehicles, and from out-of-state sources significantly affect air quality here.

“The assessments of the impacts of our emissions included in the Clean Smokestacks Plan do not have a sound basis in my opinion,” Everett said in the e-mail, which was also sent to Charles Wakild, head of Progress’s environmental department, and to Shore. “Thus any estimates of improvement using the same logic would be compounding the mistake.”

First drafts of proposed talking points emphasized emissions reductions from the plants, which does not necessarily equate with improved air. Under federal law utilities are allowed to emit more pollutants than the EPA standard, but can make up for it by purchasing “credits” from utilities in other states whose emissions fall far below the standards. The Smokestacks law eliminated the credit buying, forcing Duke and Progress to find other means to meet the reduction standards in the bill. In an e-mail May 4, Klimek conceded that no air quality data informed the Smokestacks bill.

“We did not try to quantify benefits in any more detail (on the talking points) based on having only limited modeling to extrapolate from…,” he wrote to Everett, Wakild, and Shore, “…as well as [Everett]’s concern over using values such as listed in the material sent out by Michael Shore, et al.”

In later drafts of the memo, the negotiators dropped a point that described the cost recovery provisions of the bill as “reasonable,” in order to emphasize air quality benefits. However, cost was a big sticking point for many House members.

Further, Shore told the talking-points negotiators that he was concerned that no health benefits were included. He acknowledged disagreement with the utilities representatives on the benefits, but suggested that “a general health-related bullet” be included: “The emission reductions of both [sulfur dioxide] and [nitrogen oxides] will lower rates of asthma, respiratory illness, and other air-related health problems in North Carolina.”

However, Everett challenged the statement and said it should not be included.

“I have not seen data that supports the statement that Michael Shore proposes,” Everett wrote. “I have never seen a study by anyone who suggests that reducing emissions will reduce the cases of asthma or other respiratory illnesses.”

Brock Nicholson, DAQ’s deputy director, backed Everett’s assertion.

“George is correct in that there is not general belief that ozone is a causal agent for asthma,” Nicholson wrote, “even though there have been some suggesting that is the case (no demonstrated proof though).”

So if the utilities officials, at least Duke Energy, did not believe there were clear health benefits from Smokestacks, why did they support the bill?

“We [were] asked by leaders in the General Assembly to work collaboratively with the environmental groups and others to comment and help develop the legislation,” Duke spokesman Thomas Williams said in an e-mail. “We said we could support the legislation if:
• The targets were achievable;
• The timeframe was realistic — i.e., we were able to get the reductions done in a realistic timeframe and not have to shut down too many units at once;
• There was a financial plan for us to recover the costs.”

Williams did not explain why Duke’s problems with the merits of the bill were never an obstacle.

Progress Energy spokeswoman Dana Yeganian said the company also supported the bill because it provided for cost recovery and flexibility in implementing controls.

Tomorrow: The Utilities Commission allowed a rate freeze under Smokestacks despite a pending audit of Duke.

Part 1: Smokestacks Bill Helped Utilities
Part 2: Smokestacks Built on Dubious Data
Part 4: Rate Freeze Allowed Despite Audit

Paul Chesser is associate editor of Carolina Journal. Contact him at [email protected].