Duke Dilemma: Can utility companies be clean and safe and keep costs down?

by J.J. Summerell

While I'm no apologist for Duke Energy, I understand the dilemma the company faces in responding to the Dan River coal-ash spill.

Because we must buy electricity, and Duke Energy is virtually the state’s only provider, it is a natural monopoly. Why would it have faced any financial barriers to ensuring the environmental safety of its power plants and transmission facilities? Microeconomics theory indicates that Duke could have easily raised prices to cover the costs of environmental-protection measures.

That didn't happen because Duke operates in a contradictory regulatory environment.

The Department of Environment and Natural Resources advocates for regulations and measures that protect the environment and ensure public health and safety – which cost money.

Meanwhile, the N.C. Utilities Rates Commission – the watchdog agency that represents consumer interests and sets electricity pricing – often prohibits companies from raising rates to pay for these added expenses.

This means the two agencies often work at cross purposes.

Because protecting the environment, public health and safety is a core function of government, regulations should encourage – not discourage – businesses from complying. Furthermore, companies should be allowed to raise their prices to pay for the cost of compliance.

As a Libertarian, I believe it's a fundamental tenet of civil society that property owners have the right to use their property as they deem best, so long as that use doesn’t infringe upon the rights of others. Environmental laws, in particular, must balance the rights of all property owners.

We Libertarians also believe that exposing people to pollution is a violation of their rights and should be treated as such. Polluters – both public and private – should be required to fully compensate people for any personal injuries or property damages they cause.

Duke Energy must realistically assess the cost to clean up all of their known environmental risks, with the utilities commission adjusting rates accordingly. I suspect the per-consumer cost would be very small.

There are hundreds of toxic waste sites across North Carolina. If we don't correct these environmental accidents – and take steps to prevent future ones – at the electricity consumers’ expense, the cost will fall on all taxpayers. Neither option is great, but the first is fairer.

The utilities commission has been quite successful at keeping consumers’ electricity rates low, but at what environmental cost? When the smoke billows out of the chimney and the ash pours into the river, we all pay indirectly.

Summerell is chair of the Libertarian Party of North Carolina. He manages a benefits communications and enrollment firm in Greensboro.

Comments

Low costs

When we operate in an environment where low cost is the be-all, end-all, the toll we take in other areas like health, environmental safety, risk, etc., is brushed away without so much as a second thought. Until people start dying.

Creative money

If Duke Energy can find a way to donate money to legislator's campaigns (upwards of more than $400,000 in 2013), then they can navigate the tricky terrain of being caught between two agencies' regulations. If you look where the money goes, you see it in our legislation (HB 74 Regulatory Reform Act of 2013) gave Duke plenty of room to move. That's buying your way out of your position at a discount to what it would cost to have a conscience. Since when does a large monopoly aquiesce to public protection agencies? They leverage their money and influence to adjust public policy to their advantage. It's NO accident that the head of the DENR is Duke friendly. With all that they bought, including a Duke friendly governor, did they set a course for a slow and steady rehabilitation of dilapidated coal ash plants? No. They sent the environmentalists away and buried them under political bureaucracy. I can't feel sorry for them. They are choosing a greedy path. Duke Energy needs to use their "power" for good, not evil.