North Carolina gives incentive to cut utility pollution
Date: 20-Jun-02
Country: USA
Author: Chris Baltimore
Democratic Gov. Mike Easley will sign the so-called "Clean Smokestacks" bill, which was approved by both the state Senate and House, a spokeswoman for the governor said yesterday.
The bill offers a compromise for utilities and environmental groups. It will "dramatically reduce air pollution in North Carolina without increasing rates for consumers," Easley said in a statement.
It will benefit the state's two utilities - Duke Energy Corp. subsidiary Duke Power and Progress Energy Inc. subsidiary Carolina Power and Light - by offering them rate certainty over the next five years.
Without that rate freeze, the utilities faced a possible rate cut after recovering nuclear plant construction costs, which were passed along to customers.
In exchange, the utilities will reduce emissions of two harmful pollutants at 14 coal-fired power plants by 2013.
The cuts affect seven CP&L plants with total capacity of 5,278 megawatts and seven Duke plants with capacity of 7,218 mw, according to the state's Division of Air Quality. One megawatt is enough to power roughly 1,000 homes.
"Most people see this as a pretty good trade-off," said Tom Mather at the state's Division of Air Quality.
The new state law is expected to cut emissions of nitrogen and sulfur dioxide by about three-fourths. The two pollutants cause acid rain and haze that obscure views across the state, especially in its mountainous western region.
The plan does not allow utilities to buy so-called emission credits from other companies to achieve the cuts, Mather said.
Emission credits allow firms to swap the right to pollute among themselves. A firm that buys credits from another firm could keep its emission output steady and still satisfy some reduction requirements.
Wall Street analysts also said they liked the new law.
The measure will benefit Duke and Progress because it eliminates "the threat of traditional cost of service ratemaking," according to a report by Lehman Brothers analysts yesterday.
The rate freeze should give the firms extra flexibility to meet their earning goals, the report said.