Sierra Club Statement on S3

The North Carolina Sierra Club today expressed continued and significant reservations about an omnibus energy bill that received tentative approval today in the House. But the group also expressed appreciation to the House and Governor Easley for making several important improvements to the bill.

“We are pleased to be the first state in the South to adopt a renewable and energy efficiency standard. We appreciate the leadership of the House and Governor Easley for their diligence in making needed changes to the energy bill that better protect the environment and the consumer,” said Jerry Varner, Vice-Chair of the North Carolina Chapter, which has 19,000 members in the state

S. 3, Promote Renewable Energy/Baseload Financing, by Sen. Charlie Albertson was one of two companion bills introduced this session to require the state to acquire a portion of its energy from efficiency and alternative sources. The Senate version of the bill, however, became a vehicle for several changes to current regulation sought by the utilities that could encourage the building of new coal and nuclear plants, contrary to the purpose of establishing a renewable energy portfolio standard.

Most controversial is a provision that reverses a decades-old policy of not allowing utilities to recover costs for new nuclear facilities until they are producing energy. The ban against “construction work in progress” (CWIP) was put into place after consumers bore the costs of abandoned plants in the 1970’s and 1980’s.

“The incentive provided by CWIP for continuing the prevailing orthodoxy is a powerful one,” said Len Griffiths, a member of the Chapter’s steering committee.

Another key area of controversy is a provision in the bill that directs that a certain portion of energy come from swine waste. Sierra Club has advocated that those funds be linked to use of waste management systems that generate electricity while also reducing ammonia and odor and protecting water quality and public health.

“Sierra Club will work for improvements to the legislation in future sessions to address SB 3's weaknesses,” said Ginny Kloepfer of Greenville, also a member of the Chapter’s Steering Committee.

A list of improvements made to S.3 in the House follows:

Environmental issues:

• Strict air quality controls on burning of wood waste and poultry litter to make sure that that using these sources for energy will not create more pollution than power plants. These controls take into account the concentration of such industries in proximity to each other.
• Clarifies that the Environmental Management Commission has the authority to set standards for renewable energy technologies and to develop an environmental regulatory program to implement these standards.

Financing of new coal and nuclear plants:
• Requires utilities to prove to the Utilities Commission that nuclear and coal plants are more cost-effective and reliable ways to meet energy demands than efficiency, renewables, demand-side management and/or combined heat and power.
• Requires the Utilities Commission to take into account the inclusion of construction work in progress in a utility’s rate base. Because CWIP reduces utilities’ risk for building long-term projects such as coal and nuclear plants, it may in turn lower the rate of return, and thus save rate-payers money.