News-Record.com

Duke Energy’s plan to charge more for selling less power deserves careful review, but there’s undeniable value in creating incentives for conservation.

Duke Energy delivered what appeared to be an audacious proposal to the N.C. Utilities Commission last year: Let us charge more for selling less power.

In an extensive series of hearings over several weeks this summer, the commission is examining the merits of that request. There’s a lot to consider, including objections from some consumer groups and the commission’s own public staff.

At heart, the issue is conservation: How can demand for electricity be driven down? And who should benefit when consumption declines?

Duke contends it should profit if it provides programs that save energy. It didn’t invent that idea. The N.C. General Assembly enacted legislation declaring it state policy “to require energy planning and fixing of rates in a manner to result in the least cost mix of generation and demand-reduction measures which is achievable, including consideration of appropriate rewards to utilities for efficiency and conservation which decrease utility bills.”

The concept makes sense. What incentive would Duke have to push conservation if it was going to lose money? On the other hand, could a fast-food restaurant charge customers more for selling fewer burgers and fries on the premise that they’re all better off?

Of course, cutting energy consumption is sound policy. Duke calls conservation practices a “fifth fuel,” after coal, nuclear, natural gas and renewables, because they can soften future demand and eliminate the need to build more power plants. To compensate for possible lost revenues and to ensure profits, Duke asked the commission for permission to raise rates.

The conflict stems from critics’ charge that the level of profit requested for the potential benefit is too high. “It costs way too much and it does way too little,” Shana Becker, a staff attorney for the North Carolina Public Interest Research Group, said Tuesday.

The same could be said of other programs. For example, all Duke customers will share in the cost of a planned solar power farm in Davidson County that will produce electricity for the equivalent of fewer than 3,000 homes. Sometimes progress carries a high price tag.

Duke’s conservation plan, which it calls Save-a-Watt, would have to produce documented results as determined by independent experts. It would have to cut usage by participating customers, whose savings would more than offset the rate hike. Only then would Duke reap its “rewards.”

The Utilities Commission has the critical task of deciding what are “appropriate rewards.” As in any rate case, it must protect the interests of consumers but also allow a fair return on the company’s investment.

The test of this proposal is whether everyone can benefit. A strong conservation program should help the environment and save money for customers who do their part. Then, if Duke is due a reward for getting results, it should not be denied.