In its fight against Duke Energy, NC WARN is challenging utilities commission’s use of 50-year-old law

In its fight against Duke Energy, NC WARN is challenging utilities commission’s use of 50-year-old law

- in Environment, Featured Articles
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Image: Duke Energy

It’s hard to know what state legislators were thinking in 1965 when they passed a law that favored utility companies over private citizens. But now the NC Utilities Commission is using that 51-year-old statute to deny an environmental group its constitutional right of due process, according to a complaint filed in state court this week.

Ryke Longest, director of the Duke Environmental Law & Policy Clinic, and several law students filed the complaint on behalf of NC WARN, an environmental nonprofit group that focuses on energy issues. “It’s an access to justice issue,” Longest said. “The courts are supposed to be open.”

Ryke Longest
Ryke Longest

Earlier this year, NC WARN appealed the utilities commission’s approval of Duke Energy’s two proposed gas-fueled power plants in Asheville. These commission approvals come in the form of a Certificate of Public Convenience and Necessity.

However, a 1965 state statute allows the energy company to request those challenging the certificate to post a bond in order for the case to be appealed. The utilities commission can then grant the request and determine the bond amount — even on an appeal of its own ruling.

Unless the challenger, in this case, NC WARN, posts the bond, it can’t continue appealing the certificate in court.

The utilities commission has never applied the statute, said general counsel Sam Watson, because no one has ever appealed a certificate after it was granted.

Duke Energy had originally asked for a $50 million bond; the utilities commission responded by setting it at $10 million. After NC WARN unsuccessfully petitioned the Court of Appeals to grant a stay on the bond, the commission increased the bond amount to $98 million. Duke Energy had argued that NC WARN’s appeal could cost the utility at least that much in construction costs.

NC WARN has not asked for construction to stop on the $1 billion project.

NC WARN’s support of clean energy and energy efficiency has often put it at odds with Duke Energy. NC WARN Executive Director Jim Warren has also criticized the commission, pointing out conflicts of interest that its members have had.

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Ed Finley

Commission chairman Ed Finley, who was appointed by Gov. Mike Easley in 2007, formerly worked for Hunton & Williams. The law firm has represented several utility companies, including Duke Energy, in environmental litigation and company mergers. Commissioners can’t hold other jobs during their terms and must file conflict of interest statements. When Finley joined the commission, he sold his $10,000 in shares of Duke Energy and Progress.

The new complaint signals a different strategy for NC WARN: to petition the court on constitutional grounds rather than statutory ones.

“The regulator is judge, jury and executioner, too,” Warren said. “A big part of our argument is the separation of powers doesn’t allow that.”

The utilities commission is an unusual government agency in that it blends several branches of government. It administers and enact rules like the executive branch and wields quasi-judicial power. For example, witnesses at its evidentiary hearings are sworn in under oath.

However, there are still constitutional limits on its power, Longest said.

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Complicating matters is a 2015 law, spearheaded by Sen. Tom Apodaca, a Republican from Hendersonville, that fast-tracked the approval process specifically for the Asheville project. (Apodaca has since resigned from the legislature and has said he could become a lobbyist.)

Tom Apodaca
Sen. Tom Apodaca

Senate Bill 716 expedites the approval process. It reduces the number of public hearings to just one, and shrinks the time the commission must rule on the proposal after those hearings finish, from 60 days to 45.

In other cases, the process has taken much longer. In 2008 and 2009, hearings on construction of the coal-fired Cliffside plant lasted nine months before the commission approved one, but not two plants, as Duke had requested.

These shortcuts, Warren said, allow the utility to keep some information secret during the hearing. The commission can ask for as much detail on construction costs as it wants, which could still fall short of full disclosure.

SB 716 passed overwhelmingly in both chambers. However, Apodaca sweetened the deal by requiring Duke Energy to shut down its coal-fired units at the site. It also mandates that Duke close its coal ponds “as soon as practicable” but no later than Aug. 1, 2022. Since the bill was negotiated after the disastrous 2014 Dan River coal ash spill, the measure would have been difficult to vote against.

Longest said the 1965 statute could be combined with future legislation to fast-track similar projects on a piecemeal basis. That’s why this court case, while esoteric, and the laws have ramifications for future energy projects.

“Now is the time to test it,” Longest said.