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BY L]tuSity SCHILL
<br />STAFF WRITER
<br />' ' ' North Carolina's two largest
<br />' ~ ~ ' ~ ' ' ~ ~ ~ utilities, Duke Power and Carolina
<br />Power & Light, could soon be
<br />ordered to spend hundreds ofmil-
<br />,lions of dollars to curb pollution
<br />' from their largest coal plants.
<br />The question is, who should
<br />'~ ` pay for such investments?
<br />In Texas, utilities and state
<br />decision-makers faced a similar
<br />,..
<br />. ~: problem -and found a solution.
<br />.. .. • .
<br />.. .;,., .: , :. , ,... Power companies in the Lone
<br />Star State mayrecover the money
<br />• . ' ~ they spend on stricter plant-emis-
<br />• ~ ~ ~ sion controls through~customers'
<br />bills. There's nothing new about
<br />that: Utilities have always used
<br />rates to help pay for investments.
<br />But in Texas, the clean air provi-
<br />sion was part of a new law that's
<br />opening up that state's electrici-
<br />. ty market to competition.
<br />' ~ ~ ~ Efforts to reduce air pollution
<br />go hand in hand with deregula-
<br />. , ~ ~ tion of the power industry, said
<br />~. ~ ~ ~ . ~ ~ ~ Mark MacLeod, director of state
<br />energy programs at the Envi-
<br />' ronmental Defense Fund in
<br />.. . . .. . ... ..::. ....:.. .:. ~ at h p d craft
<br />Austin, a group e e
<br />;;:.: ;.
<br />..
<br />the Texas plan.
<br />. "There have been a number of
<br />• studies showing that with elec-
<br />. „ , .::.... .:.:...:.:: ..:.. , ......,. , : tric [deregulation], the tenden-
<br />' cy is to get more production out
<br />: of these coal plants," he said. "If
<br />. you don't do something to coun-
<br />teract that as you're moving
<br />toward competition, you will lilce-
<br />', ly increase air pollution."
<br />Many. coal plants in the United
<br />States were built decades ago and
<br />` .. have grown relatively inexpensive
<br />to run over time as utilities have
<br />paid down the debt on them.
<br />They're also cheaper to operate
<br />.because Congress passed a law
<br />allowing them to run with fewer
<br />'environmental controls than a
<br />modern plant would have.
<br />. Environmentalists now
<br />.' worry that power companies
<br />n, ,: :will rely more heavily on those
<br />• ~ .. "grandfathered" plants as they
<br />: ~ ~ ~ try to cut costs in a competitive
<br />• ~ environment.
<br />North Carolina has yet to dereg-
<br />ulate its power market but is
<br />studying whether to do so in the
<br />next few years. Most states are
<br />expected to dismantle their cen-
<br />fury-old power monopolies early
<br />next century to let customers
<br />choose their power provider
<br />much the way they pick along-
<br />distancephone company today.
<br />In Texas, power companies,
<br />environmental groups and law-
<br />makersagreed touse deregula-
<br />tion as avehicle to reduce emis-
<br />sionsfrom polluting plants.
<br />Utilities in that state are
<br />expected to spend more than $1
<br />billion to reduce nitrogen oxide
<br />emissions 50 percent and sulfur
<br />dioxides 25 percent by 2003. The
<br />upgrades were included in the
<br />companies' so-called stranded-
<br />costplan, aprogram that lets
<br />them collect billions of dollars
<br />from customers to pay off plant
<br />investments on an accelerated
<br />schedule. If they didn't, those
<br />investments would become
<br />"stranded," orunrecoverable, in
<br />an open market, and the power.
<br />companies couldn't compete.
<br />The new emission controls will
<br />cost an average Texas consumer
<br />about 38 cents a month,
<br />MacLeod said. '
<br />"We had been looking for some
<br />direction for how to reduce emis-
<br />sions, but there were also costs
<br />involved in this and we needed
<br />away to recover those costs,"
<br />said Chris Schein, a spokesman
<br />for TXU, Texas' largest power
<br />company. "The restructuring of
<br />our industry provided anexcel-
<br />lentopportunity to do.that "
<br />The same thing can be done in
<br />North Carolina, said Richard
<br />Harkrader, a proponent of alter-
<br />native energy sources who
<br />serves on the state panel that's
<br />pondering deregulation.
<br />"The point of doing it this way
<br />is do it fast and without a lot of
<br />arguing -and to pay for it," he
<br />said. "We would get it out of the
<br />~,
<br />way.
<br />Maybe so, but North Carolina's
<br />Duke Power says it is premature
<br />to discuss aTexas-style solution
<br />to new plant controls in this state.
<br />"Not knowing when and what
<br />shape restructuring is -going to
<br />take," said Buddy Davis, the util-
<br />ity's vice president. of environ-
<br />ment,health and safety, "we don't
<br />see it fitting into the picture here:'
<br />Sinlf writer Karin Schill can be reached at
<br />E29.4521 or kschill@nnndo.com
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