Capitalism v. conservation

What with all the enthusiasm about the energy legislation now working its way through the U.S. Congress, it's easy to forget there is a fundamental contradiction between the goals of conservationists and those of the utilities involved in supplying the energy. And this inconvenient contradiction, between capitalism and conservation, is not easily resolved. A case in point is an ongoing marketing campaign by one of America's largest utilities, Duke Energy.

Duke just happens to be the supplier of the electricity that powers my family's ultra-efficient heat pump, compact fluorescent light bulbs and computer. So I get the odd brochure from its customer service department trying to interest me in such programs as paying an extra few dollars for the privilege of supporting "green" electricity (even though the pair of generators at the hydroelectric dam a few miles from my house is already capable of supplying all the electricity our part of western North Carolina will require for the foreseeable future). But that's not a real problem.

The real problem is Duke's irregular attempts to interest me and my wife in something called a "fixed payment plan," in which we relieve ourselves of the anxiety of a surprise electrical bill in month in favor of a predictable payment based on an average of my previous year's consumption. Regardless of how much power we consume, we pay the same fixed rate each month, losing the financial incentive to install any new Energy Star appliances, use less hot water or generally conserve power in any way shape or form.

This does not seem to square with Duke's efforts to paint itself with the broad strokes of a progressive, ecologically minded utility. So I put that incongruity to Paige Sheehan, who returned my call to Duke's public relations department.

She conceded that the fixed payment plan isn't quite what an environmentalist is likely to promote. But she said there is a similar plan available, the equal payment plan, in which any difference between the total power paid for and the value of that power over the first 11 months of predictable payments is settled in the 12th month, thus preserving the incentive to save.

Why then, has Duke never once in the two and half yeariley we've been repeatedly encouraged to sign up for the anti-conservation fixed-payment plan?

Sheehan, who is, I will be the first to admit, an excellent PR agent for her employer, didn't have an answer for that. But she did regale me with a long list of environmentally responsible initiatives that her company supports, including new state legislation that would allow utilities to raise money from their customers for "negawatts," or efficiency measures, as well as projects that involve new power plants. (Massachusetts is also considering such a plan.)

That's all very well, but the bottom line, and one that no amount of masterful spinmeistering can avoid, is the bottom line. Duke, as an investor-owned utility, is compelled by corporate charter and common law to maximize its profit margin. And there are only two ways to do that: charge more for its product (a strategy that requires negotiating state regulators, as weak as they may be), and selling more product.

Duke may be interested in conservation, but the profits to be made from efficiency pale in comparison to those associated with a coal-fired power plant, one of which Duke wants to build a few miles east of here on the road to Charlotte. (Duke also has its eye on a new nuclear power plant in Gaffney, South Carolina -- just a few miles south of the coal-fired site -- although whether that's an economically viable way to produce "clean" energy is perpetually debatable,)

Then there's this piece of news, from the Raleigh News and Observer:

RALEIGH - A new report ranks North Carolina among the dirtiest dozen states in the nation for air pollution from coal-fired power plants.

The Environmental Integrity Project, a Washington nonprofit that pushes for more effective enforcement of environmental laws, listed Progress Energy's massive Roxboro power generation plant among the country's 50 worst emitters of carbon dioxide, a major cause of global warming.

Two plants operated by Duke Energy, one north of Winston-Salem and the other near Charlotte, also made the list, based on emissions data the utility companies reported to federal agencies.

The fact remains that there is only one way for the Electric Company to make money and help reduce carbon emissions, and that is to stop building coal-, oil- and gas-fired power plants, and replace the existing ones with renewable sources. So far, Duke hasn't invested much in that direction. Neither have most other utilities.

The new U.S. legislation just passed by the House would force utilities to produce 15 percent of their electricity from renewable sources by 2020. Compare that with the modest goal advocated by most Democratic presidential candidates of reducing total carbon emissions by 80 percent by 2050 -- or the more realistic estimates from climatologists that we need a 90 percent cut by the 2030s if we are to avoid catastrophic climate change.

Also note that the House version of the bill leaves out automobile efficiency standards, without which meeting any kind of reasonable emissions reductions goal is hopeless.

I appreciate the dilemma facing the Duke Energy executives. It's the same one facing the entire US of A. But not other countries, such as Canada, where the utilities are publicly owned. In such contexts, reducing demand actually makes sense. Michael Moore ably demonstrated in Sicko the foolishness of leaving the health care system in the hands of corporations. The same applies to trusting corporate utilities to help reduce energy consumption.

The fact is, the only way to meet our climate mitigation goals while remaining nominally capitalist is to allow the government to play a heavy regulatory hand -- much heavier than most Americans are willing to tolerate, but there you have it.