One word has been used repeatedly to describe the relationship between Duke Energy and its environmental regulatorsin the wake of itscoal ash spilllast month: cozy. Plenty of evidence exists to suggest that Duke and its utility regulators are pretty cozy too.
The cozy description has largely centered around a federal criminal investigation into Duke and North Carolinas Department of Environment and Natural Resources (DENR). Employees from Duke and DENR received subpoenas after an Associated Press article suggested that DENR had suppressed non-profit lawsuits against Dukes coal ash pollution.
Now the head of the North Carolina Utility Commission (NCUC), Ed Finley, has been subpoenaed regarding his oversight of Dukes coal ash. The development highlights NCUCs own conflicts of interest regarding Duke, and calls into question NCUCs objectivity toward two major upcoming decisions: whether Duke will get away with passing the cost of it coal ash dumps onto customers, and whether Duke Energy will get away with its plan to stop fair compensation for rooftop solar providers.
Disturbingly cozy associations
In many ways, NCUCs commissioner make-up reads like a utility all-star team.
Four of its 7 commissions, including Chairman Ed Finley, came to the NCUC with direct professional ties to the utility industry. The head of Public Staff, hired to protect customer interests before the NCUC, also has ties to the sector.
The same four NCUC commissioners were either appointed or reappointed by Gov. McCrory, a former Duke Energy employee of 28 years whose financial ties to the company have faced renewed suspicion in the wake of the coal ash spill. McCrory is also credited with pushing DENR away from environmental protection and toward customer service for businesses.
A quick rundown of the people in question:
EdFinley, Chairman
– Appointed in 2007. Reappointed by Gov. McCrory in 2013.
– Worked 27 years and was a partner at Hunton & Williams, where he represented numerous utilities. Hunton & Williams clients included Duke up until Finley became NCUC chairman. While Finley was chair, Hunton & Williams represented Progress Energy as the company merged with Duke.
– Acknowledging his own ties to the utility industry, Finley wrote to the State Ethics Commission: For several former clients, it will be necessary to refrain from participating in cases in which they are parties for a nite period of time.
Jerry Dockham, Commissioner
– Appointed by McCrory in 2013. Previously a state legislator of 23 years.
– As a legislator, Dockham was a member of the American Legislative Exchange Council (ALEC), a pro-industry lobby group of which Duke was a member as recently as 2013. ALEC has approved model legislationattacking homeowners whose solar panels contribute electricity back to the grid.
James Patterson, Commissioner
– Appointed by McCrory in 2013. Previously a public relations professional and founder of Webb Patterson (later Patterson Partners).
– Webb Patterson represented a subsidiary of Progress Energy, Carolina Power & Light, from 2004 to 2009.
– Patterson was president of B&C Associates, which lists Duke as a client.
Don Bailey, Commissioner
– Appointed by McCrory in 2013.
– Previously worked as an engineer at ATI Allvac. The companys products include heavy equipment for utilities.
Chris Ayers, Executive Director of Public Staff
– Worked as lawyer for Poyner Spruill, representing utilities before NCUC. According to Poyner Spruills website: The utilities practice group has signicant experience before the North Carolina Utilities Commission and other administrative agencies. Our attorneys maintain productive working relationships with utilities regulators in an effort to minimize adversarial proceedings and obtain positive client outcome while minimizing litigation expense.
– Was flagged by NC state ethics commission: “[Ayers] has the potential for a conict of interest and should exercise appropriate caution in the performance of his public duties should Poyner & Spruill or his clients come before him for ofcial action.
The background of the NCUC could have been even more slanted toward utilities. Last year, Republican state legislators attempted to pass a bill that would have allowed McCrory to replace the entire NCUC with his own appointees. One sponsor stated that the bill would allow for appointees who are more like-minded and willing to carry out the philosophy of the new administration.
Luckily, the bill failed.
The collapsed retention pond and the plume of coal ash flowing into the Dan River.
Big decisions and the public interest
Even before its current cast of commissioners, the NCUC has developed a track record of accommodating Duke. It has approved rate hikes in 3 of the last 5 years. And NCUC has routinely agreed to Dukes long-term energy plans, which continues to rely heavily on expensive coal, gas and nuclear plants that risk becoming stranded assets. All under Finleys watch.
With its objectivity increasingly called into question, NCUC will soon confront critical decisions regarding the future of two energy sources.
One is coal and its coal ash waste. Duke claims it will take on the cost of the most recent coal ash spill.
But the company appears confident that the cost of cleaning up its remaining coal ash pondsas much as some $1 billionwill be passed onto customers.
Another decision surrounds net-metering. The policy allows homeowners with solar panels on their roofs to be compensated via credits for any surplus electricity they contribute back to the grid. Duke says it intends to press regulators to reduce that compensation, and keep more of that money for itself. Such a decision would certainly please ALEC Commissioner Dockhams club when he was state legislator as well.
The majority of the NCUC has built at least some portion of its career serving utility clients. But NCUC is not a law firm, its a public office. NCUC has the opportunity to show its commitment to that office by deciding in the public interest on major upcoming decisions. Otherwise, it risks providing the same customer service to Duke as DENR.
